Credit Enhancement for Sustainable Development
Credit enhancement is a collective term for de-risking instruments that transfer key project risks of an infrastructure projects to third parties and by this, enhance the financial viability and investment conditions of the project.
Policy-makers and infrastructure planners are tasked with spurring economic and social development by deploying infrastructure projects and closing the infrastructure gap.
They face difficulties due to budgetary constraints, debt ceilings, narrow capital markets, and a wide range of commercial and political risks. All these challenges affect the financial attractiveness of infrastructure projects.
IISD developed the inventory on credit enhancement instruments to address these challenges. The inventory covers a range of instruments offered by multilateral development banks, bilateral development finance institutions, guarantee facilities, insurance companies and export credit agencies. Explore the inventory online today.
We also interviewed a wide range of representatives of credit enhancement providers to gain a comprehensive understanding of the current landscape. Based on their inputs and IISD´s experience in the space, the research paper discusses key supply and demand side barriers that impede a more widespread use of credit enhancement instruments and highlights possible ways forward. Read the paper online.
Credit enhancement is a collective term for de-risking instruments that transfer key project risks of an infrastructure projects to third parties and by this, enhance the financial viability and investment conditions of the project.
Over the last four years, IISD’s infrastructure advisory services have shed light on the reality that policy-makers and infrastructure planners have limited expertise in infrastructure finance. This includes a lack of knowledge on how to financially structure infrastructure projects and make use of credit enhancement instruments that mitigate risks and enhance the financial attractiveness of projects. This knowledge gap is particularly problematic in scaling up sustainable infrastructure. In most countries, sustainable infrastructure calls for higher capital costs. Credit enhancement hence becomes even more valuable, as policy-makers can use these instruments to increase the financial feasibility of the project.
Project team
Funded by
Latest
You might also be interested in
Second Opinions for Green and Sustainability Bonds
We assessed the green and sustainability credentials of these bond issuance frameworks. IISD provided this service jointly with CICERO Shades of Green (now a part of S&P Global), a leading global provider of Second Opinions.
The Sustainable Asset Valuation (SAVi)
IISD developed the Sustainable Asset Valuation (SAVi) to demonstrate to governments, investors and citizens why sustainable assets can deliver better value for money and more attractive internal rates of return.
The SAVi Data Sources
The Sustainable Asset Valuation Tool (SAVi) is built and customised based on sound science, rigorous research and careful data verification. Learn more about the sources and rationale for each asset category in these Data Briefs.
Webinar: Credit Enhancement for Sustainable Infrastructure
Register for our webinar taking place April 2 at 9:00 a.m. CEST, where we will discuss credit enhancement solutions, trends and innovations.