Asian Development Bank

Political Risk Guarantee

The Political Risk Guarantee (PRG) program of the Asian Development Bank is designed to facilitate commercial cofinancing by providing lenders to an ADB-assisted project with cover against specifically defined political risks.

Risks Covered

Coverage is available against any combination of the following risks:

• expropriation
• currency inconvertibility or nontransferability
• political violence
• breach of contract

Extent of Coverage

• Loans and other forms of debt instruments
• Equity investments are not eligible for coverage
• Loans covered can have tenors of up to 15 years or more depending on the merits of the underlying project
• All or part of the outstanding debt service obligations to a lender
• May include principal and/or interest payment obligations

Participation Requirement

The PRG cannot be issued on a stand-alone basis and is provided only for projects where ADB has direct participation.

Exposure Limit

ADB can issue a PRG without a counter-guarantee from the host government for a maximum amount of US$150 million or 50 percent of the project cost, whichever is lower.

This limit is also reduced to the extent of ADB's direct exposure to the project.

Under certain circumstances, the government's counter-guarantee may be required.

Fees

Fees are market based and comprises a guarantee fee, a front-end fee and a standby fee.

Trigger Events

The PRG is callable under two conditions:

• a guaranteed event has occurred; and
• such an event has resulted in a debt service default to the guaranteed lender

Download a policy paper here.

Contacts