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.
Participating experts
You might also be interested in
Credit Enhancement for Green Projects
Risk mitigation is key to securing private financing. The credit enhancement method provides a medium wherein the exposure for the lending institution is comparatively less and the benefits for the recipient borrower are high.
Developing a Pathway for Universal Infrastructure Coverage
This discussion paper argues that, for developing countries in particular, structuring infrastructure as a business has many advantages over structuring infrastructure as a project.
It’s time to reveal the hidden value of Canada’s natural assets
The economic value of our abundant network of forests, wetlands and green spaces is not reflected in financial statements, even though it could be higher than our debt.
Sustainable Development in the Year of COVID-19
The global pandemic has brought challenges the likes of which this generation has never seen. But there have also been bright spots worth celebrating.