CGIF’s guarantee can substantially improve a bond’s credit rating, making the bonds more attractive to investors and potentially resulting in a lower coupon rate.

The terms and covenants agreed between the issuer and CGIF and compliance with CGIF’s Environmental and Social Safeguards Policy requirements.

Yes, the issuer would need to comply with CGIF’s Environmental and Social Safeguards Policy. The use of proceeds should not contravene ADB’s policy on prohibited investments as set out in their prohibited investment activities list.

Yes

Yes

CGIF offers irrevocable and unconditional guarantees for principal and interest for up to 15-year tenors, up to USD 230 million (in local currency equivalent within ASEAN+3), exclusively for debt capital market instruments such as bonds, asset-backed securities, corporate notes, and medium term notes.

The key advantages are:

• Accessing a new funding avenue in the capital markets

• Broadening investor base

• Extending debt tenors, better aligning long-term liabilities with assets

• Obtaining fixed-rate financing in local currency

• Increasing visibility in the debt capital markets

• Reaching investors across borders or in new local markets

• Preserving existing credit limits

Yes, as long as it is for refinancing other debt and not CGIF-guaranteed bonds

No, but CGIF can provide support in finding grants from third parties.

Three main agreements are involved:

1. A Guarantee Agreement between CGIF and bondholders’ Representative/Trustee governed by English law setting out terms of the CGIF guarantee.
2. A Reimbursement and Indemnity Agreement (RIA) between the issuer and CGIF, governed by English law, which allows CGIF to reclaim from the issuer any guarantee payments made to the bondholders pursuant to the Guarantee Agreement.
3. A Guarantee Fee Letter between the issuer and CGIF, governed by English law, which outlines the terms of guarantee fee payment to CGIF.
   • Documentation related to bond issuance will be required.
   • Collateral agreements as agreed between the issuer and CGIF may also be required.

Prospective issuers must be ultimately owned or controlled by ASEAN+3 nationals and must be operating in this region. If the issuer is not owned or controlled by nationals or companies from the region, the bond proceeds must be used for ‘Eligible Developmental Purposes’ such as infrastructure, thematic issuances or for issuances in frontier markets.

CGIF’s preliminary criteria include:

1. Creditworthiness of the issuer and its ability to meet CGIF’s minimum internal rating;
2. Proceeds of bond issuance are not used for any activities listed in ADB’s prohibited investment activities list*;
3. No material environmental, social and integrity risk issues; and
4. Deal supports development of the ASEAN+3 local currency bond market.

*Available on https://www.cgif-abmi.org/issuers/issuer-pathway/pial

All deals guaranteed by CGIF undergo a risk assessment and structuring process. This involves several stages from eligibility check, concept approval, due diligence, underwriting approval and bring-down due diligence, each assessing and confirming eligibility of the prospective issuer.

The fastest deal so far from submission of a formal application to an issuance took approximately four months. The overall timeline largely depends on the issuer’s information turnaround and the deal’s complexity including security package. Project bonds typically take longer than straightforward corporate bonds.

Guarantee fees are generally priced at market and take into consideration, among other things, the project, sector, and country risks.

Issuers would need to bear costs for due diligence and out of pocket costs. For simple businesses, the due diligence costs are generally low. Project bonds and securitizations, however, may require technical experts, leading to higher due diligence expenses.