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Credit Guarantee and Investment Facility (CGIF)
What is the CGIF?
The CGIF was established in November 2010 to promote financial stability and boost long-term investment in the region. The pilot CGIF, due to start operations in 2011, will provide guarantees on local currency denominated bonds issued by companies in the region. Such guarantees will make it easier for firms to issue local bonds with longer maturities. This will help reduce the currency and maturity mismatches which caused the 1997-1998 Asian financial crisis and make the regional financial system more resilient to volatile global capital flows and external shocks.
What are the priorities? What kind of activities will be financed from the fund?
Its aim is to help companies, which would otherwise have difficulty tapping local bond markets to secure longer-term financing, reduce their dependency on short-term foreign currency borrowing, and address currency and maturity mismatch. Increased local currency bond issuance will also promote financial stability in the region and aid the development of ASEAN’s bond markets.
Who is eligible to receive the grant?
CGIF will provide guarantees for local currency denominated bonds issued by investment grade companies in ASEAN+3 countries. ASEAN+3 consists of 10 members of the Association of Southeast Asian Nations with the People’s Republic of China (PRC), Japan, and the Republic of Korea (ROK).
Who supports the fund?
CGIF has received capital contributions of $700 million from ADB, ASEAN, the PRC, Japan, and the ROK.