International Bank for Reconstruction and Development (World Bank Group)

The International Bank for Reconstruction and Development (IBRD) offers Partial Risk Guarantees (PRGs) as a risk mitigation instrument. PRGs can cover risks that cause performance failures of a government or government-owned entity with respect to contractual obligations for a private project. A wide range of risks can be covered, including:

• Currency inconvertibility/non-transferability
• Political force majeure risks: expropriation, war and civil disturbance, material adverse government action
• Regulatory risks, change of law and regulations, negation/cancellation of license and approval
• Frustration of arbitration
• Payment defaults and performance failures of a government/ public counterparty

PRGs are available to private lenders or investors that use commercial debt instruments to provide funding for such projects.

Projects with private participation dependent on government undertakings, such as build–operate–transfer and concession projects, public-private partnership projects and privatizations. The projects can be both greenfield or brownfield.

Available for all countries eligible for IBRD loans, which include 69 middle- and high-income countries. The complete list can be found here:

https://policies.worldbank.org/sites/ppf3/PPFAnnex/993431d6-2d14-406e-a923-69984923e494Annex2.pdf

• Size of coverage: PRGs typically cover outstanding principal and accrued interest of a debt tranche in full.
• Tenor of coverage: Extended maturities necessary to make the project financially viable.
• Costs:
  • Front-end fee: one-time fee of 0.25 per cent on the amount of the guarantee.
  • Initiation fee: one-time fee of 0.15 per cent on the amount of the guarantee or a minimum of USD 100,000.
  • Processing fee: one-time fee of up to 0.5 per cent on the amount of the guarantee, to cover the cost of out-of-pocket expenses.
  • Guarantee fee: 0.3 per cent per annum on the disbursed and outstanding guarantee amount.
• Currencies: PRGs can cover foreign currency and local currency debt.

http://siteresources.worldbank.org/INTGUARANTEES/Resources/IBRD_PRG.pdf