Project Finance
Foreign exchange risk has been shown to be particularly significant and particularly damaging for very large, one-off investment megaprojects. Such projects are typically financed by very large debts denominated in foreign currencies. Megaprojects have been shown to be prone to ending up in debt traps where, due to cost overruns, schedule delays, unforeseen foreign currency and interest rate increases, the costs of servicing debt become larger than the revenues available to do so. Financial restructuring is typically the consequence and is common for megaprojects.
Read more about this topic: Currency Risk
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