Financing Solutions

Financing Solutions

Guarantees

The IDB offers guarantees to enhance financing of sovereign and non-sovereign borrowerswith or without sovereign counter-guarantees. IDB guarantees improve financial terms in project financing and capital market instruments and help promote investment in Latin America and the Caribbean.

General aspects of guarantees:

  • Types of guarantees: partial credit guarantees or political risk guarantees.
  • Uses of guarantees: enhancement of bond issues, project finance, asset-backed securities, securities backed by future flows, structured trade transactions.
  • Amounts: calibrated to optimize impact on the underlying instrument’s rating.
  • Tenor: for sovereign guarantee operations, maximum guarantee tenor of up to 20-years for policy-based interventions with a maximum weighted average life (WAL) of 12.75 years, and up to 25 years for investment operations with a maximum WAL of 15.75 years; for non-sovereign guarantee operations determined on a case-by-case basis.
  • Fees: for sovereign guarantee operations, pricing neutrality applies between guarantees and loans; for non-sovereign guarantee operations fees are determined on a case-by-case basis.

Sovereign Counter-Guaranteed (SCG) Guarantees

Proposed Policy for a Flexible Guarantee Instrument (PFGI) for Sovereign-Guaranteed (SG) operations

The Flexible Guarantee Instrument (FGI) is the IDB’s guarantee policy for sovereign guaranteed operations. The FGI is a single platform that allows borrowing member countries, subnationals, and local governments to structure partial credit guarantees and partial risk guarantees, both for investment projects and policy based interventions.

For more information, see Flexible Guarantee Instrument for Sovereign Guaranteed Operations(PDF) and Flexible Guarantee Instrument for Concessional Sovereign Guaranteed Operations(PDF).