Table 1: Equilibrium solutions of the basic model.

EquilibriaEstablishing conditionsDefault

Aω1
ω2
ω3Δ

Bω1
ω2Δ
ω3Δ

Cω1
ω2
ω3×

Dω1
ω2×
ω3×

Note. The establishing condition column shows the establishing conditions of the relevant equilibrium solutions. shows the expected payoffs earned by the SPV under equilibrium strategy . The ○ sign in the default column implies that the debt contract is not modified; the Δ sign means that the bank extinguishes part of the debt and the project continues. The × sign means that the SPV is liquidated. Define , , , , and .