Debt financing

AfDB to open debt financing window for SEA economies

Southeast Asian countries like the Philippines will be the first to benefit from a new debt financing platform to help finance sustainable infrastructure projects, the Asian Development Bank (ADB ).

The Manila-based multilateral development bank announced that it has signed a memorandum of understanding with HSBC Holdings plc, Temasek Holdings (Pvt) Ltd. and Clifford Capital Holdings (CCH) Pte. Ltd. to create the debt financing platform, which will initially focus on projects in the Association of Southeast Asian Nations region.

The current objective of the platform will be to finance projects on clean transport, renewable energies and energy storage and water and waste management. Projects related to climate adaptation, agriculture and land use and technological solutions could be included in the future.

“As developing countries in Asia move towards a greener and more sustainable future, AfDB is stepping up engagement with governments and other aligned actors to expand the pool of sustainable and bankable infrastructure projects, raise their profile risk-return and attract financing from private investors. AfDB Vice President Ahmed M. Saeed said in a statement.

“[The] The AfDB will provide technical assistance in project development and sector reforms and will work with our partners to use blended finance and other risk mitigation solutions to mobilize sustainable infrastructure finance across Asia ” , he added.

The lender said the platform aims to turn marginally bankable projects into bankable ones by providing concessional capital and addressing policy and regulatory constraints that hamper private investment in sustainable infrastructure.

Marginal bankable projects typically face a series of barriers to accessing private sector finance. These can include a variety of capabilities, policies, and economic issues that can impact a project’s ability to attract commercial funding.

Following an initial feasibility assessment, AfDB has stated that HSBC and Temasek will be equity partners of the platform while the bank and CCH will be strategic partners.

“The initiative aims to close the financing gap by helping countries develop sustainable, bankable infrastructure projects based on global standards,” AfDB said.

The platform will apply international best practices in environmental, social and governance matters, in accordance with safeguard standards set by international financial institutions. It may also consider emerging initiatives such as the “Fast-Infra Sustainable Infrastructure” label.

Developing Asia must invest $ 26 trillion, or $ 1.7 trillion per year, from 2016 to 2030 to maintain its growth momentum, end poverty and fight climate change. Southeast Asia is one of the regions most vulnerable to climate change.

The public sector has funded most of the infrastructure projects in Asia, but it cannot meet the growing demand in the region. Increasingly, governments are encouraging the private sector to invest in infrastructure.

However, up to 65% of infrastructure projects in Asia are not considered bankable, and it requires significant upfront costs and preparation time to bring projects to a bankable stage.


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