In its analysis of infrastructure and project finance transactions Scope Ratings adjusts its analytical assumptions according to the applicability of certain legal concepts to a transaction. The report published today by Scope elaborates on the legal aspects involved in infrastructure and project finance transactions and highlights possible legal risks.

These legal considerations play a key role in Scope’s analysis because they are linked to analytical assumptions. Such assumptions would be adjusted to the extent that the legal considerations mandate. Most of these legal principles translate into the features shared between projects commonly identified as ‘bankable projects’.

Scope scores the contributions to total loss of the different risk factors in the context of its General Project Finance Rating Methodology. Scope’s analysis generally considers three sources of possible legal risks: i) the contract structure; ii) the issuer of the rated debt; and iii) the transactional parties and documents.

These legal considerations examine the three main sources of legal risk in further detail and discuss elements that could give rise to possible legal risks. The document further stresses the need for robust expert legal and tax opinions to support the analysis of these elements.

The complete report can be downloaded here.