Government investment projects can be financed. Local government financing platform generally refers to the state-owned enterprises invested and established by local governments to allocate resources for local governments and integrate a large amount of funds. Most of them appear in the form of investment management companies. The operation is that platform companies integrate funds, and local government loan funds are used for local construction.

Financing characteristics

The exclusiveness of financing subject, project financing mainly depends on the future cash flow and assets formed by the project itself, rather than relying on the credit of project investors or sponsors and assets other than the project itself to arrange financing. The exclusiveness of the financing subject determines that creditors are concerned about how much of the future cash flow of the project can be used for repayment, which is closely related to the future cash flow and asset value of the project.

Due to the limitation of recourse, traditional financing methods, such as loans, creditors pay more attention to the credit and real assets of project borrowers while paying attention to the investment prospects of the project, and the recourse is complete. As mentioned above, the project financing method is project-based, and creditors cannot pursue any form of assets other than the project itself unless otherwise specially agreed with the contracting parties.

The dispersion of project risks, due to the exclusiveness of financing subjects and the limited recourse, determines the full display of various risk factors and benefits as project signatories, determines the maximum risk that all participants can bear and the possibility of cooperation, and designs the most favorable financing scheme by using all advantages.