General Bond Guarantee
The Credit Guarantee and Investment Facility (CGIF) was established in 2010 by 10 countries of the Association of Southeast Asian Nations (ASEAN), China, Japan, Republic of Korea and the Asian Development Bank. The CGIF is part of the Asian Bond Markets Initiative and serves to provide credit guarantees for local currency denominated bonds issued by investment-grade companies in ASEAN+3 countries.
CGIF´s general bond guarantees aim to enable companies to successfully issue local currency bonds with longer maturities and reduce their dependency on short-term foreign currency borrowing. The guarantees are irrevocable and unconditional commitments by CGIF to cover 100 per cent of principal and interest payments. In case of any payment defaults throughout the tenor of the bonds, CGIF will pay the bondholders.
Eligible projects and transactions
Eligible companies/projects have to:
- Successfully pass a credit risk assessment.
- Comply with the Environmental and Social Safeguards of CGIF.
- Prove that proceeds are not used for any prohibited activities as defined by CGIF, such as weapons production, alcoholic beverages, tobacco, gambling etc.
The company and its principal shareholders need to be from an ASEAN+3 country.
- Size of coverage: Limited to an amount up to an equivalent of USD 140 million for a single bond issuance. For issuances below this size, 100 per cent of principal and interest payments are covered.
- Tenor of coverage: Up to 10 years. Exceptions of up to 15 years possible, subject to credit quality and justification.
- Currencies: Guarantees are provided for local currency denominated bonds in ASEAN+3 countries. In case of a foreign currency denominated issuance, the currency of issuance has to be adequately hedged with the corporate entity’s export receipts, inward foreign currency remittances, or via financial hedge arrangements.