10.7 With this type of financing, the project company issues a bond. A bond is purchased by capital market investors such as pension funds and insurance companies. In a public offering, the bond must be rated by at least one, typically two, rating agencies. These are institutions whose sole purpose is to rate the creditworthiness of organisations and projects. The minimum rating acceptable to investors is the so-called "Investment Grade".
10.8 Unlike a bank deal, where the loan is drawn down throughout the construction period, in a bond issue the total amount of the bond is drawn down on day one. The funds are then held in a special interest accruing account (a "GIC") and drawn down from this to meet construction and other payments including interest on the bond. Repayments of principal and interest on the bond are made generally half yearly throughout the bond term, as in a bank financing.