Commercial Cofinancing for Nonsovereign Projects
Partnerships with the private sector are crucial to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific region by 2030.
Cofinancing amplifies the impact of ADB’s private sector operations by attracting financing from other parties, facilitating investment, trade, and capital flows into developing member countries (DMCs). Both private and public institutions provide commercial cofinancing to ADB’s nonsovereign projects – funds are usually sourced from financial markets and priced at commercial terms. Such arrangements are particularly effective for projects and programs that would be considered risky without ADB involvement.
In 2020, total cofinancing for ADB’s nonsovereign projects amounted to $5.20 billion1 – $4.93 billion (95%) came from commercial cofinancing partners, with the remainder from official sources. Of the 38 nonsovereign projects closed in 2020, 21 had cofinancing from official and commercial partners.
ADB’s Strategy 2030 sets a cofinancing target ratio2 of $2.50 for every $1.00 of Ordinary Capital Resources (OCR) deployed for private sector operations. Steady progress toward this goal is underway as ADB continues to work on projects with the private sector. In 2020, the cofinancing ratio was 2.1; every $1.00 of ADB’s own funds for nonsovereign projects was matched by $2.10 in cofinancing.
1 This amount excludes amounts mobilized after an Office of Public–Private Partnership advisory mandate.
2 The cofinancing ratio is the ratio of long-term cofinancing to NSO borrowers divided by private sector operations ordinary capital resources (net of risk transfers). Long-term cofinancing to NSO borrowers includes concessional funding, B-loans, parallel cofinancing, bonds and equity, risk transfers of ADB exposure to independent counterparties, the uncovered portion of loans and bonds guaranteed by ADB, and financing by third parties of projects that are closed following a PPP advisory mandate.