Influence of credit risk on project financing

Abstract

This project report is about influence of credit risk on project financing. We have selected SAIF Group of Companies as our organization for project. We have gathered financial data from SAIF Group and applied our research on it. We have explained project financing and credit risk in detail and further we have studied and described the factors which can affect the project financing. The important factor in this concern is interest rate which affects the oil prices directly and oil prices are the indicators which influence the economy. The second most important factor in this concern is the fluctuation of oil prices, due to this we can also give recommendation that we can go for hedging the oil related contracts to overcome the risk to avoid the failure of project because the oil prices can not only have direct effect on the project financing but can also effect all of the other factors. Because of this direct relationship with all of these factors we have studied and observed the failure of different kind of projects. The third important factor in this concern is Sovereign risk, it is the risk associated with the foreign money rating of the country where the project is positioned. A supreme currency rating indicates the supreme government’s potential and enthusiasm to its commitment to service liability on time and in their completely. We have used some financial tools to access the credit risk of different projects. With the help of this report one can easily identify the risk associated with the equity of the project to be financed, the factors which are increasing this associated risk and last but not the least, it gives the way by which organizations can minimize the credit risk associated with different projects.