Non-recourse redoubt

Non-recourse financing has been big business for banks, as companies have continued to look for investment opportunities despite the turbulence in the markets. Many of these loans were collateralised with shares held by the borrower. How has the drop in equity markets affected these deals? Duncan Wood reports

Banks have done a roaring trade in non-recourse financing in recent years - a trend that, for some, has continued into 2008 as investors seek out bargain basement investment opportunities thrown up by the tumult in the financial markets. The concept is relatively simple: a loan is guaranteed by a pool of shares rather than a claim on the borrower itself, enabling companies to raise fresh financing without trampling on the toes of their existing creditors. Meanwhile, the bank knows that if the