Credit Enhancement for Infrastructure Deals in Emerging Markets
$240 bn
Annual funding gap on EM infrastructure (World Bank)
90–180 bp
Average spread cut after an ECA or MIGA wrap
B+ to BBB
Typical rating jump on wrapped bonds
48 h
Time to receive soft terms when data pack is ready
1. The pain we solve
You line up a 25-year power-purchase agreement. The cash flows look solid, yet commercial banks balk at sovereign risk and construction overruns. Project equity feels the squeeze as margins creep above double digits. Our job is to drop that margin, pull heavyweight lenders back in, and keep covenants sane.
2. Core instruments on the table
| Instrument |
Main use |
Tenor guide |
Fee guide |
| ECA-backed Buyer Credit |
Capex for EPC contracts sourced from OECD suppliers |
8–12 y |
0.8–1.4 % p.a. plus base rate |
| MIGA Political-Risk Insurance |
Sovereign breach, currency transfer, expropriation |
Up to 20 y |
0.45–1.5 % p.a. |
| Standby Letter of Credit (ISP 98) |
Performance cover during construction |
12–36 m |
1.6–3.0 % p.a. |
| Parent-company Guarantee |
Support for offtaker payment risk |
Matches loan |
0.5–1.2 % flat |
3. Our three-step method
Step 1: Stress-map the risk.
We dissect the cash-flow waterfall, flagging exposure at construction, ramp-up and operating phases. Every hotspot gets a probability and severity score.
Step 2: Insert the right cushion.
Maybe a MIGA wrap tackles political risk while a standby L/C covers the EPC contractor. We present side-by-side cost and timing so you pick with eyes open.
Step 3: Drive to close.
Our team polishes financials, steers wording talks and shepherds the file through credit committees. You keep the timetable; we carry the paperwork.
4. Quick case study
A 50 MW solar plant in East Africa needed $35 m senior debt. Banks quoted SOFR + 650 bp. We wrapped the loan with a 95 % MIGA guarantee. Final spread: SOFR + 460 bp. Debt tenor stretched from seven to twelve years, cutting equity payback by eighteen months. That difference felt sweet when dividend time came around.
5. Watch-outs we neutralise
- Guarantee expiry that outlasts the PPA. We lock dates to the day.
- Currency-transfer caps buried in PRI policies. Our legal team negotiates full-convertibility clauses.
- Disputed draw wording on SBLCs. We follow ISP 98 templates to keep banks honest.
6. Where to dig deeper
• See clause-by-clause L/C examples in our letter of credit consultancy.
• Compare guarantee options in the corporate-guarantee guide.
• Project sponsors can run scenarios with our wrap modeller under project-finance credit enhancement.
7. Ready to explore terms?
Share your teaser and cash-flow model. We’ll circle back inside two business days with preliminary pricing and a document checklist. No strings, no surprises—just a clear route to cheaper, longer money.