What is credit enhancement?
Credit enhancement is a collective term for instruments used by infrastructure project sponsors to transfer a diverse array of infrastructure development and financing risks to creditworthy third parties who are better placed to mitigate them. These third parties include multilateral development banks, bilateral development finance institutions, guarantee facilities, insurance companies and export credit agencies.
Value of the inventory
Infrastructure planning and financing is a complex and expensive endeavour. If governments and project sponsors have information on credit enhancement and de-risking opportunities early on in the infrastructure deployment cycle, it will greatly aid both the planning and financial structuring of projects. This is particularly important when planning sustainable infrastructure, which requires rigorous due diligence, careful siting and design, and the use of greener and cleaner technologies that may call for higher upfront capital.
This inventory covers eight categories of credit enhancement instruments offered by a diverse range of providers. It also displays which countries are eligible for each instrument. Moreover, this inventory demonstrates the continuous innovation in the de-risking and insurance sector.