Non-Honoring of Financial Obligations

MIGA’s Non-Honoring of Financial Obligations (NHFO) coverage provides credit enhancement in transactions involving sovereign and sub-sovereign entities, as well as state-owned enterprises (SOEs). The primary beneficiaries that can benefit from this cover are commercial lenders that provide loans to these public sector entities for infrastructure and other productive investments.

Non-Honoring of Sovereign Financial Obligations

Non-Honoring of Sovereign Financial Obligations coverage protects against losses resulting from a government's failure to make a payment when due under an unconditional and irrevocable financial payment obligation or guarantee given in favor of a project that otherwise meets all of MIGA’s normal requirements. It does not require the investor to obtain an arbitral award. This coverage is applicable in situations when a sovereign’s financial payment obligation is unconditional and not subject to defenses. Compensation is based on the amount that the guarantee holder is entitled to recover from the host government pursuant to the terms of the obligation.

Non-Honoring of Financial Obligations by a State-Owned Enterprise

Non-Honoring of Financial Obligations by a State-Owned Enterprise coverage protects against losses resulting from a state-owned enterprise’s failure to make a payment when due under an unconditional and irrevocable financial payment obligation or guarantee given in favor of a project that otherwise meets all of MIGA’s normal requirements. It does not require the investor to obtain an arbitral award. This coverage is applicable in situations where the financial payment obligation is unconditional and not subject to defenses. Compensation is based on the amount that the guarantee holder is entitled to recover from the state-owned enterprise pursuant to the terms of the obligation.