Project-Based Loan Guarantee for Private Sector Borrowers

For private sector borrowers, this guarantee covers debt service defaults on a commercial debt where the private borrower default is caused by a government’s failure to meet covered obligations under the project contract to which it is a party. . It covers defaults caused by a government's failure to meet contractual obligations, regulatory changes, or other sovereign actions that impair the project's ability to service its debt. By transferring government payment risk to us, we enhance the project's creditworthiness, enabling it to secure limited-recourse financing on more attractive terms. For example, in an independent power project, our guarantee might cover debt service defaults caused by a state-owned utility's failure to make contractual payments. By mitigating these risks, we make the project more bankable, allowing it to access longer-tenor loans or lower interest rates from commercial banks. This guarantee is particularly valuable in sectors such as energy, transportation, or telecommunications, where government actions or inactions can significantly impact project revenues.