Asian Development Bank

The Asian Development Bank (ADB) offers a partial credit guarantee to projects it has participated in. This guarantee covers payments defaults by the borrower or issuer on the guaranteed principal and interest to be paid, irrespective of the reason for default. The guarantee will usually be provided to a private financial institution or an investor that issues debt to a project that is eligible for ADB financing. It can also be provided to public institutions if the respective project operates on a commercial basis. It is required that both the secured debt instrument and the guarantee target the same development objectives and relate to the same sector in the applicable country or project.

The following infrastructure sectors are eligible: energy, transportation, water supply, wastewater treatment and telecommunication.

The guarantee can be provided to lenders of most forms of debt: bank loans, loans made by shareholders, loans guaranteed by shareholders or third parties, capital market debt instruments, bonds, financial leases, letters of credit, promissory notes and bills of exchange. The debt instrument can be issued by private and public sector projects, public–private partnerships, corporates, and (sub-) sovereign entities.

Any developing member country of the ADB.

• Size of coverage:

  Counter-indemnity available: No upper guarantee limits.

  No counter-indemnity available: The guaranteed amount depends on risk profile, sector, country context, obligator exposure limitations and whether ADB has risk exposure to the project, obligor or transaction through direct financing. If no counter-indemnity applies and no other risk-sharing mechanism is in place, the guarantee will not exceed the lesser of the following:

  • 25 per cent of the total project costs in project finance transactions, and 100 per cent of the costs in case these do not exceed USD 50 million
  • 25 per cent of total assets in corporate transactions
  • 50 per cent of net worth in bank transactions
  • USD 250 million

• Tenor of coverage: Up to 15 years. In exceptional cases the tenor can be longer, provided that ADB´s risk policies are followed and the tenor is justified.

• Costs: Three types of fees to be paid by the guarantee recipient:

  • Front-end fee: One time
  • Guarantee fee: Annual, based on risk exposure for ADB
  • Commitment fee: Applied to amount of guaranteed principal that has not been disbursed

• Currencies: Any currency in which ADB can efficiently intermediate

https://www.adb.org/publications/partial-credit-guarantees-brochure