Public services such as transportation infrastructure, energy projects, and water treatment facilities require significant capital investments that may not be feasible for governments or private investors to finance solely through their own resources. Non-recourse or limited recourse financial structures are used to facilitate these investments.
Non-recourse financing is a type of financing in which the lender can only recover the collateral in the event of a default, and has no recourse to other assets of the borrower. In limited recourse financing, the lender has limited recourse to assets beyond the collateral in the event of a default. These structures provide greater risk protection to lenders and may lower the cost of financing for borrowers.
In public services, non-recourse or limited recourse financing may be used to develop large infrastructure projects such as highways, airports, and renewable energy plants. These financing structures may involve multiple parties, such as government entities, private investors, and financial institutions, and require complex legal and financial arrangements.
Non-recourse or limited recourse financing structures can provide benefits to both borrowers and lenders. For borrowers, these structures may enable access to lower-cost financing, longer repayment terms, and reduced financial risk. For lenders, these structures may provide greater certainty of repayment and asset protection in the event of default.
Overall, non-recourse or limited recourse financing structures can play an important role in facilitating the development of public services that require significant capital investments. By using these structures, governments and private investors can better manage risks and ensure the long-term viability of these essential services.