Soft loans

A soft loan is provided by the procuring authority. It is usually a subordinated loan, but senior to the equity, including subordinated debt provided by the equity investors. It is also common that the soft loan is in the form of a participative loan, that is, the government receives part of the upside of the project in exchange for the below-the market conditions. Remuneration and rights to receive distributions have to be clearly described in the contract.