Table of contents for Government guarantees : allocating and valuing risk in privately financed infrastructure projects / Timothy C. Irwin.

Bibliographic record and links to related information available from the Library of Congress catalog.

Note: Contents data are machine generated based on pre-publication provided by the publisher. Contents may have variations from the printed book or be incomplete or contain other coding.


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Contents
Preface	7
1	Overview	9
1.1	Allocation	13
1.2	Valuation	16
1.3	Rules	18
2	Lessons of history	21
2.1	Early guarantees	23
2.2	The popularity of guarantees	28
2.3	If you insist on something, prepare to bear the risks	32
2.4	Try not to guarantee risks investors can manage	37
2.5	Be careful that what you guarantee is what you want	43
2.6	Manage the risks you guarantee	47
2.7	Progress?	49
3	Obstacles to good decisions	53
3.1	Cognitive obstacles	53
3.2	Political obstacles	67
3.3	Overcoming the obstacles	70
4	Allocating exposure to risk	73
4.1	Definitions	73
4.2	A principle	84
4.3	Governments¿ special features	96
5	The allocation of three risks	103
5.1	Exchange-rate risk	103
5.2	Insolvency risk	111
5.3	Policy risk	123
6	Rules	141
6.1	Involving people with an interest in future costs	143
6.2	Charging fees	145
6.3	Setting criteria and requiring analysis	147
6.4	Using markets to value guarantees	151
6.5	Reporting according to modern accounting standards	153
6.6	Disclosing additional information	162
6.7	Budgeting for guarantees	164
6.8	Managing cash and the chance of extreme losses	172
7	Valuing exposure to risk	175
7.1	Identifying exposure	176
7.2	Measuring exposure	178
7.3	Valuing exposure	191
8	The valuation of exposure to three risks	207
8.1	Exchange-rate risk	207
8.2	Insolvency risk	214
8.3	Policy risk	228
Appendix to chapter 2	235
Appendix to chapter 3	237
Appendix to chapter 7	241
References	251
Figures
Figure 3.1 A typical prospect-theory value function	57
Figure 3.2 A typical prospect-theory decision-weight function	57
Figure 3.3 Stylized relation of confidence to accuracy	62
Figure 3.4 Intuitive forecasts	63
Figure 4.1 Characterizing total-project-value risk	77
Figure 4.2 Stakeholders¿ risks and total-project-value risk	78
Figure 4.3 Total-project-value risk and its components¿Demand and earthquake risk	81
Figure 4.4 Risks and stakeholders	82
Figure 5.1 Five developing-country currencies against the dollar, 1985 to 2002	104
Figure 5.2 Annual average inflation and currency depreciation against the U.S. dollar in a sample of 89 countries, 1976¿2001.	111
Figure 5.3 Creditors¿ and shareholders¿ interest in the firm as a function of the value of the firm at the maturity of its debt	112
Figure 5.4 Creditors¿ and shareholders¿ shares of the value of the firm and the volatility of the firm¿s value, holding debt and the value of the firm constant	114
Figure 5.5 An infrastructure-investment game	126
Figure 5.6 Expropriation risk and the price required for investment	129
Figure 5.7 Legitimacy, legal protection, and promised prices	140
Figure 6.1 Decision makers, incentives, and information	142
Figure 7.1 Termination-payment risk	179
Figure 7.2 Revenue guarantee¿Relative frequency of payments in various ranges	180
Figure 7.3 Construction-cost risk and government payments	186
Figure 7.4 A forecast and three possible paths for revenue	189
Figure 8.1 Histogram of guarantee payments	211
Figure 8.2 The value of the firm and guarantee payments	218
Figure 8.3 Value of the debt guarantee as a function of changes in leverage and volatility	221
Figure 8.4 Two possible paths of operating cash flows and government payments under a guarantee of a power-purchase agreement	227
Figure 8.5 Contractual and actual prices and consequent government compensation¿One trial	234
Figure 8.6 Relative frequency of possible values of pricing undertaking	234
Tables
Table 3.1 The fourfold pattern of risk aversion and risk seeking	59
Table 4.1 Four kinds of risk and examples thereof	94
Table 4.2 The principle for four kinds of risk	94
Table 6.1 Chile¿s disclosure of guarantee costs (billion pesos)	163
Table 7.1 Measures of risk for the revenue guarantee for year 1	190
Table 8.1 Summary measures of risk	219

Library of Congress Subject Headings for this publication:

Infrastructure (Economics) -- Management.
Risk management.
Public-private sector cooperation.