1. Project Finance Risks Associated with the Jurisdiction of the Collateral Monica Futami Director – Structured Finance Energy WestLB AG, New York Branch monica_futami@westlb.commonica_futami@westlb.com - +1 212 852 6185

2. WestLB AG New York Branch Structured Finance Monica Futami Risk v. Return Primary goal of Banks and bankers: maximize RETURN and minimize RISK INVESTMENT GRADE TRANSACTION Project Risk Enhancement Country Risk EnhancementProject and Country Risk Enhancement CountryRiskCountryRisk Project Risk Investment Grade Non- Investment Grade Investment GradeNon-Investment Grade

3. WestLB AG New York Branch Structured Finance Monica Futami Project Risk Enhancement Strong Security Package: pledge on the company’s or project’s hard assets, pledge of project company’s shares, collateral accounts, Letters of Credit issued by eligible financial institutions, Assignment of Receivables, Assignment of Project Contracts, etc. Transfer of the economic (payment) risk to an acceptable counterparty. In most cases, however, performance risk remains uncovered. Mitigate the risks associated with actions of governmental authorities in connection with expropriation, nationalization and currency inconvertibility/transfer. Risk Mitigation Providers: Export Credit Agencies, Multilateral and Governmental Agencies and private credit and political risk insurers. Future Flow Mechanisms Country Risk Enhancement/Diversion

4. WestLB AG New York Branch Structured Finance Monica Futami Main Obstacles - Examples Main Obstacles when local collateral is needed:  Lack of “step-in” rights  Non-specialized and unsophisticated courts  Long foreclosure process