Multilaterals
Name : MIGA - Multilateral Investment Guarantee Agency
Group : World Bank
Headquarters location : Washington DC
Products / Services : Political Risk Insurance - Currency inconvertibility and transfer restriction, Expropriation, War, Terrorism, Civil disturbance, Breach of contract, Non-honoring of financial obligations.
Eligibility : MIGA insures cross-border investments made by investors in any MIGA member country into a developing member country.
Sectors covered : Infrastructure, Oil, Gas, Mining, Agribusiness, Financial Markets, Manufacturing, Services
Terms and Conditions
- Pricing : Premium rates are decided on a per-project basis and vary by country, sector, transaction and the type of risk insured. Premiums are due at the beginning of each contract period.
- Tenor : minimum of 3 years (more than 1 year for loans) and a maximum of up to 15 years (and possibly 20 years if justified by the nature of the project).
- Penalties : once a guarantee is issued and effective, MIGA may not terminatethe contract unless a default occurs, but the guarantee holdermay reduce or cancel coverage without any penalty on anycontract anniversary date starting with the 3rd anniversary.
- Amount of coverage : No minimum amount. An investor is requiredto remain at risk for a portion of any loss. MIGA can currentlyissue up to $220 million of coverage on its own account fora single project, and can cover significantly higher additionalamounts through reinsurance arrangements.
- % of coverage - Equity Investments : 90% of the investment, plus up to an additional 500% of the investment contribution to cover earnings attributable to, and retained in, the project.
- % of coverage - Loan & Loans guarantees : up to 95% of the principal (or higher as determined on a case-by-case basis), plus up to an additional 150% of the principal to cover interest that accrues over the term of the loan. For technical assistance contracts and other contractual agreements, MIGA can insure up to 90% of the total value of payments due under the insured agreement (up to 95% in exceptional circumstances).
Name : Guarantco - Guarantees for Development
Group : PIDG and FMO, Dutch development finance company. Guarantees are backed by KfW and Barclays.
Headquarters location : London
Products / Services : Guarantees of local currency loans and bonds
Eligibility : see Guarantco list of eligible countries. Guarantoc can support Greenfield projects of Private sector companies, Municipalities / sub-nationals - if funded largely through user fees (or ring-fenced structures providing satisfactory security) and Parastatals if privatisation is planned (or case by case if operations are on a commercial basis). GuarantCo can also support refinancing of existing projects if hard currency financing is substituted by local currency debt, and Specialist Financial Institutions focused on infrastructure.
Sectors covered : Infrastructure, Water and Agribusiness. Oil, Gas, Mining sectors are non-eligible.
Terms and Conditions - A-Loan (IFC's own account)
- Pricing : fixed and variable rate
- Tenor : 7 to 12 years at origination (up to 20 years on case-by-case study)
- Amount : usually limited to 25% of the total estimated project costs for greenfield projects, or, on an exceptional basis, 35% in small projects. For expansion projects, IFC may provide up to 50% of the project cost, provided its investments do not exceed 25% of the total capitalization of the project company. Generally, A-loans range from $1 million to $100 million.
Terms and Conditions
- Pricing : varies according to risk but floor of 3% pa (no wish to displace commercial risk takers)
- Tenor : up to 15 years
- Penalties : non-disclosed
- Amount of coverage : no minimum / maximum amount
- % of coverage : up to 100% cover but this will only be available in limited circumstances and when dictated by the market. Typically, the financing covered by a guarantee will be up to three times the size of the guarantee (30% to 70% cover), although this can be significantly more for securitisation transactions
Name : IFC - International Finance Corporation
Group : World Bank
Headquarters location : London
Products / Services : A-Loans, B-Loans, Equity & Quasi-Equity investments
Eligibility : see Guarantco list of eligible countries.
Sectors covered : Infrastructure, Oil, Gas, Mining, Agribusiness, Financial Markets, Manufacturing, Services
Terms and Conditions - B-Loan (IFC sells participations in the remaining portion to participants)
- Pricing : fixed and variable rate
- Tenor : 7 to 12 years at origination (up to 20 years on case-by-case study)
- Amount : usually limited to 25% of the total estimated project costs for greenfield projects, or, on an exceptional basis, 35% in small projects. For expansion projects, IFC may provide up to 50% of the project cost, provided its investments do not exceed 25% of the total capitalization of the project company. Generally, A-loans range from $1 million to $100 million.
- Benefits for participants : Preferred Creditor Status,
Terms and Conditions - Equity & Quasi Equity investments
- Subscription : between 5% and 20% of a project's equity
- Tenor : period of 8 to 15 years