Equinox EBA Scorecard Workflows
Project Finance Credit Risk Analysis may involve arbitrarily complicated tools and risk models, depending on the nature, size and complexity of the project being financed. As a common denominator, regulatory frameworks starting with Basel II Specialized Lending articulate a simplified (standardized scorecard). This Workflow discusses how Equinox provides a simplified workflow to implement a standardized scorecard workflow.
In the context of European regulation, the EBA Guidelines on Loan Origination and Monitoring specify concrete requirements:
Institutions should assess the primary source of repayment of the loan, which is the income generated by the assets (project) being financed. Institutions should assess the cash flow associated with the project, including future income-producing capacity once the project is completed, taking into account any applicable regulatory or legal restriction (e.g. price regulation, rate-of-return regulation, revenues being subject to take-or-pay contracts, environmental legislation and regulations affecting the profitability of a project).
All the required data points for deriving a score according to the regulatory assessment criteria are implemented in Equinox. The scorecard information is organized along Risk Factor Groups:
- Financial Strength
- Political and Legal Environment
- Project Characteristics
- Strength of Sponsor
- Security Package
with each group including a number of Risk Factors and Sub-Factors. In equinox these data points are grouped according to an expanded ontology of parties (legal entities) and concepts involved in Project Finance:
- The Asset being financed and associated revenue analysis
- The Project Company (e.g SPV)
- The Sponsor entity(ies)
- Contractors and Operators
- The Loan(s) and other products involved (e.g Swaps)
- The Stakeholders
Data entry for numerical or text inputs is via convenient web forms. For example a segment of the Sponsor information:
Further Reading and References
Check out other Equinox use cases and Workflows
- The GHG Scope 2 Workflow focuses on Scope 2 (purchased electricity) accounting and reporting.
- The Green Public Procurement Workflow that supports analysis conforming to the data models of the European Union TED platform.
- The CIRIS Workflow for compiling a City-wide emissions report
- The PCAF Mortgages Workflow for compling the emissions profile of a portfolio of mortgages (loans secured against real estate with measurable GHG emissions).
- The PCAF Project Finance Workflow
- The GHG Project Workflow that focuses on individual Project impact analysis (thus this is an example that does not need involve a portfolio).
- The Emission Factor Database Workflow illustrates working with reference data (in this case the IPCC emissions factor database)