TITLE:
Risk Component Based Infrastructure Debt Valuation Analysis and Long-Term Investment
AUTHORS:
Chunlan Wang, Satheesh Kumar Sundararajan
KEYWORDS:
Infrastructure Debt Valuation, Credit Asset Pricing, Default Probability, Component Approach
JOURNAL NAME:
Journal of Financial Risk Management,
Vol.5 No.3,
September
9,
2016
ABSTRACT: Long term financing to infrastructure and mobilization of private long term capital has been recognized as a key agenda in advancing the global economic development. There are several barriers in infrastructure financing and big gaps between expectation and reality. A highly pronounced barrier is the lacking of capacity of investors to price risks in a structured manner. This paper has discussed component-based infrastructure valuation analysis and modeling blocks. The component-based valuation mechanism is very useful for issuers and investors to categorize, analyze and price specific risks transparently and can provide a basis for structuring the risks on an ex-ante basis so as to make project investments suitable for investors of different risk preference.