To date most private sector water projects have been financed on a limited recourse basis, that is, with project cash flows and assets as the main security for lenders. The move from project to corporate (balance sheet) financing is occurring in stages. Financing project debt from the sponsor...

A project finance structure allows water projects with attractive cash flows and risk profiles to secure long-term private capital. But even in industrial countries the credit strength of off-taking municipal governments and the sector's traditional monopoly structure expose lenders to...