Local Government Unit Guarantee Corporation (LGUGC) is a private company offering guarantee services to companies in the Philippines that are involved in public–private partnerships. The guarantees are meant to support revenue-generating projects of eligible borrowers and social service infrastructure projects that are environmentally sound and comply with applicable laws and regulations. LGUGC guarantees the indebtedness of local government units, water districts, electric cooperatives, renewable energy technology providers and medium-to-large enterprises.
Eligible Projects and Transactions
Loan guarantees can be provided to developmental infrastructure projects and utilities, including power supply, water supply, power sanitation and water connection.
The borrower has to undergo a pre-qualification process and should pass a minimum credit score that will be determined by LGUGC for acceptance of guarantee applications.
Projects must comply with environmental, health and safety requirements under applicable Philippine laws and regulations. For local government units, projects that do not fall under basic services nor benefit from all or most of the constituents directly or indirectly should be self-liquidating. Those that do fall under basic services or benefit all/most of the constituents are eligible for LGUGC guarantee whether or not they are self-liquidating.
- Size of coverage: up to 85 per cent of the debt service for a private finance initiative; up to 80 per cent for electric cooperatives.
- Single guarantee limit: 25 per cent of LGUGC net worth.
- Costs: fees depend on the project risks and may range from .25 per cent to 2.00 per cent per annum.