Four Traits Shared by Projects Rejected at Credit Committee

1. Revenue not secured by contract

In project finance the credit decision rests not on the company's past but on the project's future cash flow. If that cash flow is not tied to a contract — an offtake guarantee, a long-term sales agreement, a lease or a regulated tariff — then for the lender the revenue is no more than an assumption.

Merchant projects are not unfinanceable; but in that case the equity share rises, the required debt service cover ratio increases and the tenor shortens. If the file has not been built around that reality, the gap between expectation and offer ends the process.

2. Uncertainty over who bears a cost overrun

The construction period is the riskiest phase of a project. The lender expects the source that will step in on a cost overrun to be defined in advance: a sponsor undertaking, a turnkey contract, a contingency allowance or a third-party guarantee.

If that line is blank in the file, the committee automatically treats the risk as written to the lender, and declines.

3. Mismatch between revenue and debt currency

A project with lira revenue and foreign currency debt carries currency risk inside the structure. That risk can be priced but not ignored. If no currency sensitivity is shown in the file, the committee will assume the worst case itself.

The right approach is either to hedge naturally (create foreign currency revenue), to pass the risk on by contract (price indexation) or to cap it with financial instruments — whichever it is, it must appear explicitly in the file.

4. No stress case

A single optimistic scenario creates suspicion rather than confidence in a lender. What is expected, alongside the base case, is the debt service cover ratio under scenarios where revenue falls by a given margin, costs rise and commissioning is delayed.

If the ratio drops below the critical threshold in those cases, the answer is not to change the model but to change the structure: raise the equity share, add a grace period or extend the tenor. In our experience most files are, before rejection, still recoverable with that adjustment.