The primary objective of ADB’s Guarantees and Syndications Unit is to assist developing member country (DMC) governments and private sector borrowers in securing debt financing on commercial terms for ADB projects through engagement with commercial financial institutions.
To catalyze capital flows into and within its DMCs, ADB extends guarantees for eligible projects that enable financing partners to transfer to ADB certain risks that they cannot easily absorb or manage on their own. ADB also mobilizes additional debt resources for financing through loan syndication.
Commercial cofinancing supports ADB’s developmental objectives by facilitating investment, trade, and capital flows into DMCs.
For borrowers (DMCs and the private sector)
- additional financial resources to close financing gaps
- debt financing on best possible terms with ADB’s commercial cofinancing products
For cofinancing partners (shareholders/investors)
- share ADB’s due diligence, financial, technical, environmental and social safeguards
- risk mitigation where applicable
- where applicable, regulatory relief
- lower risk of rescheduling in the event of an external debt crises in the borrowing country
Role of commercial cofinancing
ADB plays an active role in identifying and arranging commercial cofinancing for its projects or programs. Examples of such assistance include:
- formulating risk mitigation structures to attract public and private sector participation,
- preparing invitations and soliciting financing offers from public and private market sources,
- evaluating offers received for commercial cofinancing, and
- arranging, negotiating, executing, documenting, and monitoring of commercial cofinancing instruments.
Direct participation requirement
ADB’s commercial cofinancing products are, in general, only used to support projects or sectors in which ADB has some direct participation. Any ADB financing instrument can be used to fulfill this requirement, including project loans, program loans, multitranche facilities, sector loans, sector development programs, equity investments (for private sector projects), project grants, and technical assistance grants. For ADB’s B Loan, a direct ADB loan is required in the project to fulfill ADB’s direct participation requirement.