Upon completion of this course, participants will be able to:

• Customize and apply **Project Finance Modeling (PFM)** techniques to assess the creditworthiness of long-term infrastructure and development projects.
• Integrate non-financial factors, including **political, environmental, and social risks**, into quantitative PD and LGD models.
• Develop robust **scenario analysis and stress testing** frameworks to assess the resilience of project cash flows to macroeconomic and policy shocks.
• Master the use of **structured finance techniques** and risk mitigation instruments (e.g., guarantees, blended finance) in credit modeling.
• Design a **risk rating system** for development projects that balances financial sustainability with achievement of the DFI's mandate.
• Understand the legal and contractual frameworks (e.g., off-take agreements, sovereign guarantees) and their impact on credit risk.
• Apply principles of **Expected Credit Loss (ECL)** modeling (IFRS 9) to DFI project portfolios with extended time horizons.
• Formulate policy recommendations for optimizing project risk-taking while maintaining capital adequacy requirements.

• Credit Risk Analysts and Modelers at Development Finance Institutions (DFIs).
• Project Finance Specialists and Investment Officers.
• Risk Management and Stress Testing Teams at Multilateral Development Banks (MDBs).
• Financial Regulators overseeing DFIs and Specialized Lending.
• Internal Auditors focused on the Validation of Credit Models.
• Economists and Analysts involved in Long-Term Project Appraisal.

• Project Finance Credit Risk Modeling Workshops (Using Financial Software)
• Case Studies on Default Analysis in Infrastructure Projects and Emerging Markets
• Group Activities on Integrating Political Risk Scoring into PD Estimation
• Expert Lectures on IFRS 9 Expected Credit Loss (ECL) for Long-Term Assets
• Scenario Analysis and Stress Testing Simulations for Project Cash Flows
• Individual Exercises on Calculating LLCR and DSCR under Stress Conditions

Unit 1: Foundations of Development Project Risk

• Characteristics of development projects: long tenure, high capital intensity, reliance on public sector.
• Key differences between traditional corporate credit risk and project/infrastructure finance credit risk.
• Identifying and quantifying non-traditional credit risks (e.g., completion risk, policy reversal, off-take risk).
• The alignment challenge: integrating developmental impact goals into a prudential risk framework.
• Review of international best practices for DFI credit risk management.

Unit 2: Project Finance Modeling (PFM) Techniques

• Structuring the project finance model: debt service coverage ratio (DSCR), loan life coverage ratio (LLCR).
• Applying **sensitivity analysis** to key project variables (e.g., commodity prices, exchange rates, utilization).
• Customizing **Probability of Default (PD)** estimation for non-recourse and limited-recourse project structures.
• Modeling the **Loss Given Default (LGD)**, considering security packages and workout feasibility in emerging markets.
• The role of special purpose vehicles (SPVs) and their legal ring-fencing in PFM.

Unit 3: Integrating Non-Financial and Emerging Risks

• Methodologies for scoring and quantifying **Environmental, Social, and Governance (ESG)** risks in credit models.
• Integrating **political risk** (e.g., expropriation, war, transfer risk) through specialized risk insurance and scoring.
• Developing **vulnerability metrics** for climate change and transition risks on project feasibility.
• Using expert judgment and qualitative overrides to adjust quantitative model outputs for complex risks.
• Scenario design for simultaneous stress across financial, political, and environmental factors.

Unit 4: Risk Mitigation and Structured Finance

• Modeling the credit enhancement impact of **sovereign guarantees** and third-party insurance.
• Evaluating the risk reduction achieved through **blended finance structures** (e.g., first-loss tranches, subordinated debt).
• Protocols for monitoring covenant compliance and establishing triggers for early intervention.
• The use of macro-hedging and financial derivatives to mitigate market risk in long-term debt.
• Accounting for the true economic value of security packages and collateral in emerging markets.

Unit 5: Model Governance and Policy Alignment

• Developing the **validation framework** and backtesting procedures for specialized credit risk models.
• Applying IFRS 9/ECL principles to development projects with multi-year disbursements and highly varied tenures.
• Designing the **risk appetite statement** and project acceptance criteria based on modeling results.
• Protocols for model documentation, internal audit review, and regulatory submission.
• Translating credit modeling results into effective portfolio management and concentration limits.