Credit Spread Determinants and Interlocking Contracts: A Clinical Study of the Ras Gas Project Mansoor Dailami The World Bank Washington, DC 20433 and Robert Hauswald * Kogod School of Business American University Washington, DC 20016-8044 September 2005 JEL Classification: G15, G32, L140 Keywords: Credit Spreads, Project Finance, Nexus of Contracts, Contractual Incompleteness The views expressed in this paper are the authors’ alone, and in no way reflect those of the World Bank, its Executive Directors, or the countries they represent. The authors would like to thank Peter Christoffersen, Tim Crack, Lutz Kilian, Nagpurnanand Prabhala, John Strong, Alex Triantis and Volker Wieland for stimulating discussions and suggestions, Long Dai and Panos Kogkalidis for excellent research assistance, and seminar participants at the 2000 Asia Development Forum Workshop on Project Finance, University of Technology Berlin, the World Bank and American University for comments. We are particularly grateful to an anonymous referee whose suggestions considerably broadened the scope of our analysis and improved the exposition. Special thanks are due to Greg Randolph, Bim Hundal and Ghassan Abdulkarim, Heads of Structured Finance, Capital Markets (London) and Middle East/North Africa at Goldman Sachs, respectively, and Rik Rikkola, former Treasurer of Ras Laffan, for talking with us and providing a wealth of background information on the Ras Gas project. * Corresponding author; email: hauswald@american..edu , phone: 202-885-1996, fax: : 202-885-1946.