Credit Enhancement for Sustainable Infrastructure
As a part of the IISD Global Survey on Credit Enhancement, we conducted interviews with users and providers of credit enhancement instruments, including multilateral development banks, development finance institutions, export credit agencies, private guarantors and other de-risking facilities.
Our objective was to find answers to the following questions:
- Why do we not see more infrastructure deals taking advantage of credit enhancement solutions?
- What can be done to increase the use of credit enhancement instruments?
- Do we need more instruments? If yes, which project risks should they address?
IISD has started this project with the hypothesis that the answers to these questions lie in the lack of public sector expertise in planning and preparing infrastructure projects. Financial structuring is the primary responsibility of the financial advisors to the public sector, but governments also need to have a general understanding of the de-risking
solutions available to them. How else can they instruct their advisers and negotiate with donors and private financiers on the cost of capital? Moreover, how can they integrate this into their preliminary financial viability assessments and raise it with the relevant parties throughout the procurement and financial structuring processes?
Our research confirms that, while this hypothesis is correct, the reasons behind the limited uptake of credit enhancement are complex.
You might also be interested in
Sustainable Asset Valuation of the Kalivaç and Poçem Hydropower Projects
The SAVi results suggest that the hydropower assets cannot be considered a preferable solution to generate electricity for the Albanian people.
Sustainable Asset Valuation (SAVi) of Senegal’s Saloum Delta
The assessment provides an economic valuation of the contribution of the Saloum Delta to local livelihoods and regional development.
An Application of the Sustainable Asset Valuation (SAVi) Methodology: Assessing the economic value of restoring the wetlands of S'Ena Arrubia and Corru S'Ittiri-Marceddì-San Giovanni in the Gulf of Oristano in Sardinia, Italy
This assessment uses the Sustainable Asset Valuation (SAVi) tool to calculate the economic and societal value generated by the S’Ena Arrubia and Corru S’Ittiri-Marceddì-San Giovanni wetlands in the Gulf of Oristano in Sardinia, Italy.
SAVi Database: A primer
IISD has developed a database of available knowledge on the valuation of infrastructure project externalities, costs and climate risks. This publication demonstrates how we use the database for the assessments of infrastructure projects with the SAVi methodology.