RISK MITIGATION: What are Updates & Proposals on Risk Mitigation Products?

Product Name Partial Credit Guarantee
Link to Product Website
Provider Name AfDB (African Development Bank)
Product Definition Partial Credit Guarantees (PCGs) cover a portion of scheduled repayments of private loans or bonds against all risks. PCGs could be utilized to support mobilization of private funds for project finance, financial intermediation and policy- based finance.

a. Project Finance. PCGs can be used for both public sector and private sector investment projects, especially in infrastructure. These guarantees can be used to encourage the extension of maturity and improvement in market access. The guarantee could cover the principal for bullet maturity bonds, or later maturity principal payments of amortizing syndicated loans. (Example of MTN in Box 1)

b. Financial Intermediation. Institutions such as Banks can use PCGs to support the mobilization of long-term resources from both international and domestic capital markets. The ADB guarantee can be structured to cover the bullet principal repayment on a bond, or later maturities of a syndicated loan. PCGs for financial intermediaries can also be used from the financial sector development perspective to help deepen domestic money and capital markets. In this context, the Bank can also guarantee short and medium term instruments such as commercial paper issued by both private and public financial institutions.

Product Type Partial Credit Guarantee
Defined Risks Covered Comprehensive Risk
Eligible Form of Investments Bonds
Bank Loans
Non-Bank Loans
Shareholder Loans
Eligible Currency of Underlying Investment Covered by this Product Both local and foreign currency
Eligible Countries & Regions
Algeria   Angola   Benin  
Botswana   Burkina Faso   Burundi  
Cameroon   Cape Verde   Central African Republic  
Chad   Comoros   Congo, Democratic Republic of  
Congo, Republic of   Djibouti   Egypt  
Equatorial Guinea   Eritrea   Ethiopia  
Gabon   Gambia   Ghana  
Guinea   Guinea Bissau   Ivory Coast  
Kenya   Lesotho   Liberia  
Madagascar   Malawi   Mali  
Mauritania   Mauritius   Morocco  
Mozambique   Namibia   Niger  
Nigeria   Rwanda   Sao Tome and Principe  
Senegal   Seychelles   Sierra Leone  
Somalia   South Africa   Sudan  
Swaziland   Tanzania   Togo  
Tunisia   Uganda   Zambia  
Zimbabwe  
Eligible Applicants All
Eligible Sector Energy: General
Electricity Generation: Renewable (hydro, wind, biomass, geothermal, solar)
Maximum Tenor 15+ to 20 years
Max. Absolute Amount (USD) 0 to 50 MM
Max. % of Project Costs Covered 25+% to 50%
Max. % of Export Content Covered Max./under 50%
Fees Fixed
o front-end fees: no front-end fees for public sector borrowers and 1% of possible max exposure under guarantee for NSG
o standby fee: 0.75% for public sector borrowers and 1.0% for NSG.
o guarantee fee: lending spread (for AfDB loans) + risk premium associated with particular guarantee structure
o appraisal fee: fees for private sector projects to cover legal and other expenses incurred by the bank during initiation, appraisal, and underwriting process

Other Conditions Sovereign Counterguarantee: No
Anti-Corruption and Governance Standards: No
Environmental standards: Yes
Social standards (incl. Human Rights Standards; Labor Rights Standards): No
Others:
Source(s) n.a.
For more information, contact
Director, Private Sector Services Department, AfDB (African Development Bank)
Email: private-sector@afdb.org
Phone: 216 71 850 270
Attachments Bank Policy on Guarantees.PDF
Financial Products - Offered by the African Development Bank-1.pdf
Additional Links n.a.
Deals n.a.

Provider Name AfDB (African Development Bank)
Institution Type PUBLIC: Multilateral Development Bank
Ownership n.a.
Head Office Statutory Headquarters Rue Joseph Anoma, 01 BP 1387 Abidjan 01 Côte d'Ivoire
Provider Home Country Cote dIvoire
Rating n.a.
Main Risk Mitigation Products Partial Credit Guarantee (AfDB)
Policy-Based Guarantee (AfDB)
Sub-sovereign Finance (AfDB)
Attachments n.a.
Additional Links
Entered On: 11/02/2007 at 03:31 PM
Updated On: 04/23/2013 at 11:26 AM