Financial Products

ADB undertakes private sector operations to provide financing to eligible recipients in developing member countries (DMCs), comprising the provision of any financing arrangements to privately-held, state-owned, or subsovereign entities, in each case, (i) without a government guarantee; or (ii) with a government guarantee, under terms that do not allow ADB, upon default by the guarantor, to accelerate, suspend, or cancel any other loan or guarantee between ADB and the related sovereign.

Loans and Debt

ADB offers hard currency loans, both senior and subordinated, as well as mezzanine financing. We also offer local currency loans in selective markets on a case to case basis. Interest rates and other terms vary, depending on a company’s or project’s needs and risks.

• Rates - In pricing its loans, ADB considers prevailing market rates in the relevant country and sector, factoring in country and transaction risks. ADB provides floating rate loans at a spread above the Secured Overnight Financing Rate (SOFR) or Euro interbank rate, depending on the currency. It also offers fixed-rate loans at the fixed-rate swap equivalent of floating-rate loans.
• Fees - Market-based fees are charged. Typically, on floating-rate loans, ADB charges a once-only front-end fee as well as an ongoing commitment fee on the undisbursed balance. We may also charge a fee to cover upfront costs associated with due diligence. Project sponsors or clients will reimburse out-of-pocket expenses, such as travel and external advisory services (i.e., legal counsel, technical consultants, and environmental and insurance advisors, if any).
• Security - We will seek security appropriate for the loan and type of financing.

¹ Including, by way of example, (i) senior, subordinated, mezzanine, and convertible debt; (ii) project or limited recourse finance; (iii) tier 2 capital raised by banks; (iv) capital market debt instruments including synthetic or structured securities, and the related underwriting and liquidity support arrangements; (v) letters of credit, promissory notes, and bills of exchange (vi) performance, bid, advance, and other payment bonds and forms of bond issuances; and (vii) other forms of financial indebtedness or instruments.

Equity Investment

ADB offers financing through equity investments in enterprises and private equity funds. It focuses on non-controlling interests and may appoint board nominees or observers while exercising shareholder voting rights. ADB maintains regular contact with company management and requires periodic reports on performance, development outputs, and compliance with environmental and social safeguards. Upon achieving investment objectives, ADB divests shares at fair market prices, preferably to host country nationals, to broaden local ownership and develop capital markets.

For private equity funds, ADB may appoint an advisory board nominee, requiring detailed quarterly reports on investment progress and financial performance. ADB commits long-term capital, typically remaining invested throughout the fund’s life. This approach aligns with ADB’s focus on promoting private sector development in emerging markets.

Guarantees

ADB extends guarantees for eligible projects which enable financing partners to transfer certain risks that they cannot easily absorb or manage on their own to ADB. Guarantees can be provided when ADB has a direct or indirect participation in a project or related sector, through a loan, equity investment or technical assistance.

Loan Syndications

ADB assists DMC governments and private sector borrowers in securing debt financing on commercial terms for ADB projects through engagement with commercial financial institutions.

ADB also partners with commercial banks, impact investors, institutional investors, and development finance institutions to provide debt for projects through B loan, complementary financing scheme, and parallel loan structures.

Blended Finance

ADB utilizes blended finance to de-risk private sector projects in Asia and the Pacific’s emerging economies. ADB blends small amounts of concessional capital, from dedicated funds under its management, with its own ordinary capital. Concessional capital involves the deployment of any number of instruments to absorb a share of a project’s real or perceived risk, mobilizing additional investment and serving to catalyze the private capital need to fill a market gap. Blended finance is leveraged, in particular, to kickstart and accelerate green growth, helping to propel the region’s transition to a sustainable and decarbonized future. By prioritizing climate mitigation, adaptation and fostering inclusion, ADB contributes to improvements in the standard of living and quality of life for all people while prioritizing poorer communities and those most at risk from the consequences of climate change.

Blended Finance FAQs

Trade and Supply Chain Finance Program (TSCFP)

TSCFP has two broad streams of activity. First, it provides guarantees and loans to fill market gaps. Second, TSCFP undertakes special initiatives, in partnership with key stakeholders, to make global trade green, resilient, inclusive, transparent, and socially responsible.

Microfinance Program

A credit enhancement program designed to address a market gap by sharing risks to promote local currency lending to microfinance institutions. Because of its risk-sharing nature, the program encourages private sector participation.

Technical Assistance (TA)

In addition to financial products, ADB also offers technical assistance, on a selective basis, for public and private sector operations. This may include the following:

• Transaction TA (TRTA), which directly benefits a project or is financed by ADB (e.g., project preparation, project implementation support, or policy advice). TRTA can also help develop a public–private partnership as part of transaction advisory services.
• Knowledge and support TA (KSTA) includes all TAs other than transaction TA (e.g., general institutional capacity building, policy advice, and research).