Detailed Product Development
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Detailed Product Development Presentation Transcript

  • 1. Unlocking credit opens the door to clean energy in Asia: Development Credit Authority CTI Industry Joint Seminar Kathleen Wu Beijing, China Office of Development Credit February 22, 2008 USAID
  • 2. Importance of Credit Domestic Credit Provided by the Banking Sector (as a percentage of GDP) 182% 85% 45% High-income Middle-income Low-Income 2 Source: World Bank 2005 World Development Indicators
  • 3. Importance of Credit Impact of Credit Guarantees Risk Perception Collateral Requirements Longer-term Financing 3
  • 4. Guiding Principles Development Credit Authority (DCA) • True private sector risk-sharing (50% guarantees) • Leverage local capital and financial resources • Demonstration effect & sustainability • Additionality; Guarantor of Last Resort • DCA most effective when linked to TA or Policy Reform 4
  • 5. Products • Loan Guarantee (LG) • Portable Guarantee (PG) • Loan Portfolio Guarantee (LPG) • Bond Guarantee (BG) • Structured Guarantee (SG) 5
  • 6. DCA Portfolio 185 guarantees in 54 countries leveraging $1.3B Other 6% Hous 14% SME 31% Infra + Wtr 13% Micro Agri 15% 21% 6
  • 7. Examples of credit support Increasing Access to Finance USAID Loan Portfolio Guarantee ESCO/ End User ESCO/ Identified End User Lender ESCO/ End User 7
  • 8. Examples of credit support Bond Issuance – System Expansion & Upgrading Bond Investors USAID Funds Bond Guarantee Bonds Utility Projects 8
  • 9. Examples of credit support Pooled Loan Facility Government/ Lender Donor Grant or USAID other Funds support Guarantee Debt Special Purpose Vehicle Service (The Special Purpose Vehicle pools government grants and private funds to on-lend to a group of low to high creditworthy utilities) Loan Loan Loan Utility Utility Utility 9
  • 10. Examples of credit support Pooled Loan Facility Government/ Lender Donor Grant or USAID other Funds support Guarantee Debt Special Purpose Vehicle Service (The Special Purpose Vehicle pools government grants and private funds to on-lend to a group of low to high creditworthy utilities) Loan Loan Loan Utility Utility Utility 10
  • 11. Co-Guarantee Facility – Double the Leverage Private USAID 25% Loan Enterprise Portfolio Guarantee Loans Private Enterprise Private All For Lender(s) Loans Enterprise Energy Private Efficiency Enterprise Projects Private Additional Donor Loans Enterprise 25% Loan Portfolio Guarantee Private 11 Enterprise
  • 12. LPG Example Loan Portfolio Guarantee in India India Yes Bank Partner Bank Yes Bank Total Loan Amount $20 million USAID variable Guaranteed guarantee up to 50% Portion $10 million on loan repayments Term 10 years Purpose Facilitate financing to SME SME small-scale projects and SMEs in RE, EE, and water conservation Private Enterprise 12
  • 13. Bulgaria – Energy Efficiency Loan Portfolio Guarantee Facility Size: US$10 million Term: 10 years United Bulgarian Development Goal: To Bank promote investment in energy efficient technologies at the USAID 50% municipal level in order to Guarantee enable municipalities to Loans for energy efficiency purposes deliver energy in a cleaner, more cost efficient manner. Purpose of Guarantee: To encourage private Private Private Municipality Municipality investment in the Enterprise Enterprise energy sector. 13
  • 14. Multi-Bank Example Cleaner Production and Energy Efficiency LPG Five Different Banks in Central America Summary – BAMER Banco Cuscatlan Bancentro Facility Size: US$10 million Banco Cuscatlan de Panama Lafise • Term: 7 years with sub-loan tenors of 2 years. USAID 50% • Qualifying Projects: Guarantee Investments designed to Loans for energy Loans for cleaner efficiency purposes production purposes encourage the adoption or expansion of cleaner production practices or environmental management plans Forestry Tourism Agri- while generating enterprises enterprises businesses sufficient revenue to meet operating and debt service costs 14
  • 15. Contact DCA: Kathleen Wu Office of Development Credit USAID kwu@usaid.gov 15