Bridge

Products and Benefits

Credit solutions that help close the infrastructure funding gap

GuarantCo provides local currency credit solutions, guarantees that bridge the gap between the financial requirements of a project and the financial terms available from the local market. Our high credit ratings make GuarantCo’s credit risk equivalent to, or lower than, sovereign risk in lower income countries across Africa and Asia.

By developing local capital markets and providing credit solutions to finance infrastructure projects we help boost economic growth, improve the quality of people’s lives, alleviate poverty and deliver against the United Nation’s Sustainable Development Goals.

TRANSFERRING RISK FROM INVESTORS

Investors in lower income countries are still unaccustomed to providing guarantees and loans with a tenor of more than 3-5 years, largely because they do not have the experience to assess the credit risk of long-term infrastructure projects which can take 5-15 years to deliver. By providing credit solutions that transfer the risk from investors, GuarantCo makes long-term local currency infrastructure guarantees and loans an attractive asset class for capital markets. By giving local banks and institutional investors, such as pension funds and insurance companies, the confidence to engage, infrastructure project financing can be given in sufficient quantum and tenor.

FLEXIBLE PRODUCTS

To meet the specific requirements of financing an infrastructure project in local currency, GuarantCo’s products are deliberately flexible as a standard format may not be appropriate in every case.   Our business model is structured to allow for risk transfer rather than following a risk mitigation model. We can provide a variety of contingent products as required for a particular project including: partial credit and partial risk guarantees; first loss guarantees; tenor extension or liquidity guarantees; and can also provide joint guarantees or counter guarantees.   Our portfolio demonstrates the flexible nature of our products.

Guarantee examples

Products and Benefits - Local Currency Loan

Guarantee over local currency loan

Typically, this structure will involve a partial credit guarantee provided by GuarantCo (in collaboration with other guarantors if required) to the beneficiary or the provider of the debt. This guarantee will cover the non-payment of scheduled debt service of the underlying loan between the beneficiary and the borrower up to the limit of the guarantee. A recourse agreement will be required between the borrower and GuarantCo to cover, amongst other provisions, the payment of fees to GuarantCo and the rights and obligations among the borrower, GuarantCo and the beneficiary following a potential call under the guarantee.

Guarantee over local currency bond

Guarantee over local currency bond

A guarantee over a local currency bond will involve a similar structure to a guarantee over a local currency loan except that the beneficiary will usually be the note trustee acting on behalf of all of the noteholders.

Guarantee benefits

FOR THE

Financier

Risk transfer (instead of risk mitigation) counterparty risk to AA- / A1 entity.

Efficient capital treatment for long dated transactions.

Build capacity in sustainable long-term finance using myriad types of financing solutions.

FOR THE

Borrower / Issuer

Enhance overall return on investments.

Access new proof of capital (e.g local currency loans and bond markets).

Positive signalling.

FOR THE

Supplier (EPC, equipment etc.)

Offer more flexible terms.

Opportunity to accelerate mobilising of projects whilst capital is being finalised.

Risk mitigation counterparty risk in event financing is extended.