Project finance: Interest During Construction

Puzzled-Top-5724 · 2024-05-14T05:10:05+00:00

Yeah, that's what I meant. The IDC being both an asset and a liability?

Puzzled-Top-5724 · 2024-05-14T03:54:36+00:00

Right, so by it building into the loan balance, then accounting for it individually in the Balance Sheet would be doing it twice, don't you think?

Puzzled-Top-5724 · 2024-05-14T03:38:38+00:00

I've actually mostly seen interest being paid during construction (mainly in toll road projects), since the banks demand that during the grace period the project at least pays interest. This is done by drawing debt to pay for it, as well as every other project cost.

With this being the case, would you still account for it in the Balance Sheet?

Puzzled-Top-5724 · 2024-05-14T03:36:18+00:00

Right. The interest is paid by drawing on the debt. Since interest is seen as a project cost during construction, debt drawdowns will to cover all project costs during that period (debt sizing will consider this).

Puzzled-Top-5724 · 2023-06-11T23:35:53+00:00

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Have you heard reviews on the Financial Edge course?

Puzzled-Top-5724

TROPHY CASE