MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 2015
PROVIDING POLITICAL RISK INSURANCE
AND CREDIT ENHANCEMENT SOLUTIONS
Investors and lenders in today’s dynamic investment climate
understand the potential benefits of investing in emerging markets.
They also understand the critical importance of addressing the
perceived political risks that may accompany these investments.
Our products offer protection for equity sponsors and lenders
while helping countries attract investment and financing to meet
their development goals.
MIGA offers political risk insurance solutions to protect investors
in the following scenarios:
MIGA is a member of the World Bank Group. We contribute to
the World Bank Group’s goals of ending extreme poverty and
promoting shared prosperity by facilitating private investment
into our developing member countries and supporting projects
that bring broad developmental impact.
MIGA-supported investments help bring jobs, innovation,
technology, and skills transfer.
Inability to convert or
transfer dividends or
loan payments due
to foreign exchange
restrictions
Government
nationalizes or
otherwise makes
it impossible to
operate the project
through discriminatory
measures
Destruction or
interruption of
business due to
political violence
Arbitral award default
by government when
it is determined
through a dispute
resolution mechanism
that the government
has failed to honor
obligations under key
project documents
(e.g. concessions, off
take agreements).
Currency
inconvertibility and
transfer restriction
cover
Expropriation
cover
War and civil
disturbance
cover
Breach
of contract
cover
Provide long-term
debt financing to
emerging market
governments
Provide long-term
debt financing to
emerging market
state-owned
enterprises
Non-honoring of
sovereign financial
obligations
Non-honoring of
financial obligations
for state-owned
enterprises
MIGA also offers credit enhancement solutions that can help eli-
gible countries and state-owned enterprises attract commercial
debt financing and improve ratings for capital markets transactions.
The primary beneficiaries of this cover are commercial lenders
that provide loans to public sector entities for infrastructure and
other productive investments. This cover protects lenders against
losses resulting from a failure to make a payment when due under
an unconditional financial payment obligation or guarantee.
For detailed descriptions of MIGA’s products, please visit miga.org.
MIGA AT A GLANCE
r Issued more than $33 billion in coverage since 1988
r Supported more than 750 projects in over 100 countries
r Outstanding guarantees portfolio of over $12 billion
r 181 member countries
WHAT CAN MIGA COVER?
MIGA can cover foreign investments in the form of equity, share-
holder loans, shareholder loan guarantees, and non-shareholder
loans. All loans and loan guarantees, including those issued by
shareholders of the project, must have a minimum maturity of
more than one year provided that MIGA determines the project
represents a long-term commitment by the investors. Other forms
of investment, such as technical assistance and management
contracts, asset securitizations, capital market bond issues, leas-
ing, services, and franchising and licensing agreements, may
also be eligible for coverage. In keeping with our objective of
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 2015
promoting economic growth and development, investment proj-
ects must be financially and economically viable and contribute
to the development objectives of the host country.
SECTORS SUPPORTED BY MIGA
r Agribusiness
r Capital Markets
r Energy
r Extractive Industries
r Financial
r Manufacturing
r Services
r Telecommunications
r Tourism
r Transport
r Water
WHERE WE WORK
MIGA insures cross-border investments made by investors in
a MIGA member country into a developing member country. A
current list of member countries is available on miga.org.
MIGA’s VALUE
In the political risk insurance market, MIGA stands out for support-
ing investments in challenging environments that other insurers
may be hesitant to enter. We are able to issue large, long-term
guarantees for complex projects in higher-risk markets. MIGA can
provide insurance for up to 15 years (in some cases 20), thereby
increasing the tenor of loans available to investors. Through
reinsurance, MIGA mobilizes extensive capacity in the market.
We have a proven record in managing risk through our rigorous
underwriting practices, convening power, and dispute resolution
ability, which contribute to our low long-term claims ratio.
Our staff has extensive global experience in political risk
insurance, with backgrounds including banking and capital
markets, environment and social sustainability, project finance and
sector specialties, and international law and dispute settlement.
Structuring Transactions for Emerging Market Risk
MIGA aims to provide solutions that serve our clients’ risk-mit-
igation needs while also providing maximum benefits to host
countries. In many cases, MIGA’s ability to find innovative ways
to support complex or unusual deal structures enables transac-
tions that otherwise would not have moved forward, benefiting
both investors and developing countries.
Dispute Resolution
It is important to MIGA that projects remain operational, generate
revenue, and achieve their developmental objectives. In order
to prevent a potential claims situation from escalating, MIGA
provides dispute resolution services to all of its clients. MIGA
maintains close contact with investors and monitors projects
and potential issues so that the Agency can respond at the first
sign of trouble. Our access to officials at the highest levels of
government and our status as a member of the World Bank Group
significantly strengthen our ability to resolve potential disputes
and deters some government actions that otherwise could disrupt
guaranteed investments. MIGA’s proactive facilitation efforts have
been pivotal in the resolution of more than 100 project-related
disputes since the Agency’s founding in 1988.
Protecting People and the Environment
Investors increasingly recognize that having a “license to oper-
ate” is an important element of risk mitigation. As a multilateral
development agency, MIGA only supports investments that are
developmentally sound and meet high social and environmen-
tal standards. MIGA applies a comprehensive set of social and
environmental performance standards to all projects and offers
extensive expertise in working with investors to ensure compli-
ance to these standards.
Integrity
Corruption damages policies and programs that aim to reduce
poverty, so attacking corruption is critical to the achievement
of MIGA’s and the World Bank Group’s overarching mission of
poverty reduction.
MIGA’s approach to combating fraud and corruption is part of
a larger World Bank Group effort, and MIGA works closely with
the relevant World Bank Group departments on these issues.
MIGA carries out an integrity/corporate risk assessment in all
projects considered for MIGA guarantees.
WORKING WITH MIGA
MIGA’s underwriting process typically begins when a client sub-
mits a Preliminary Application. The application is free, confidential,
short, and can be completed online. As soon as we receive the
application, we assign an underwriter who determines whether
the project meets our eligibility criteria. MIGA will then contact
the client to discuss the project. At this point the underwriter
discusses preliminary pricing, the potential size of the guarantee,
and the MIGA covers that are most appropriate for the investment.
We also work with the client to identify environmental and social
impact assessments that must be undertaken.
Definitive Application and Client Documentation
The next step is for the client to submit a Definitive Application
and supporting documentation. MIGA will then begin a thorough
review of the project. The supporting documentation we require
to begin the formal underwriting process typically may include:
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 2015
r Feasibility study or a business plan supporting the eco-
nomic viability and financial soundness of the project
r Financial forecast/model
r All loan documentation, including shareholder and non-
shareholder loans (drafts acceptable during underwriting)
and all loan-related documents
r All loan guaranties (including back-stop guarantees from
parent companies)
r
Financial statements and incorporation documents/by-laws
from the investor and the project enterprise in the host
country
r Environmental permits/environmental impact assessment
if applicable
r Land purchase/lease agreements
r
All other applicable project licenses/ permits/ agreements/
contracts
Underwriting Fees and Pricing
Definitive Application Fee: $5,000 for cover of less than $25
million and $10,000 for larger amounts. The application fee is
applied toward the initial premium. If MIGA rejects the project
for any reason, the fee is refunded.
Processing Fee: Additional fees may be required for complex
projects. For example, fees may be required to cover the cost
of site visits for environmental and social due diligence.
Syndication Fee: If applicable, a fee will be applied when MIGA
arranges a project’s total insurance requirements through rein-
surance.
MIGA prices its guarantee premiums based on a calculation of
both country and project risks. Fees average approximately one
percent of the insured amount per year, but can be significantly
lower or higher.
Underwriting Process and Timeline
Origination,
Structuring,
Application
Environmental
and Social Due
Diligence
Technical and
Commercial Due
Diligence
Project Due Diligence
Contract
Negotiation
Monitoring
Disclosure
period
30/60 days
Initial
Management
Approval
Management
and Board
Approvals
Contract
Execution
PROJECT SNAPSHOTS
In Bangladesh, MIGA is providing guarantees of $251 million
to HSBC covering its non-shareholder loan to Ashuganj Power
Station Company Ltd. as well as a swap arrangement to hedge
against long-term interest rate risk. The project consists of the
construction of a 450-megawatt combined cycle gas-fired plant
that will help meet the country‘s growing demand for power, using
a domestic gas resource and efficient technology.
In Côte d’Ivoire, MIGA is providing guarantees of $145 million
for the construction of the Henri Konan Bedié toll bridge. MIGA
is providing coverage against the risks of transfer restriction,
expropriation, war and civil disturbance, and breach of contract
to the equity investor and all of the project’s private sector lend-
ers as well as FMO, the development finance institution of the
Netherlands. The African Development Bank is also providing
financing for this public-private partnership, the country’s first
since the civil conflict.
In Egypt, MIGA is providing guarantees of $36.7 million covering an
investment by Elif Global of Turkey in Elif Global Packaging S.A.E.
MIGA’s coverage is against the risks of transfer restriction, expro-
priation, and war and civil disturbance, including temporary busi-
ness interruption. As a greenfield investment in the manufacturing
sector, the project will contribute significantly to Egypt’s economy.
In Hungary, MIGA is providing guarantees totaling €424.4 million
($574.9 million) covering a €400-million financing by a special
purpose entity, Magyar Eximbank Secured Funding Limited of
Ireland, by Magyar Export-Import Bank (Exim) of Hungary. MIGA’s
coverage is for a period of up to five and a half years against
the risk of non-honoring of sovereign financial obligations for
95 percent of the principal and interest on the notes issued by
Exim. This represented the first time MIGA used its non-honoring
of financial obligations cover for a capital markets transaction.
MIGA’s guarantee enhanced the credit quality of the issue—
boosting the bond ratings from non-investment to investment
grade. This lowered the longer-dated borrowing costs of Exim,
thereby enabling these savings to be passed on to the Hungarian
export sector.
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 2015
In Kenya, MIGA is backing equity investments and commercial
bank financing for a series of independent power producers
(IPPs). This includes the Thika IPP, where MIGA is covering the
first long-term financing provided by an international commercial
bank in Kenya’s power sector. The Thika IPP also benefited from
the synergies of three World Bank Group instruments: an IFC
loan, a World Bank partial risk guarantee, and a MIGA guarantee.
The World Bank Group institutions worked together closely to
coordinate and share due diligence, maximize efficiency, and
reduce the burden on the sponsor and other lenders.
In Nicaragua, MIGA is covering a $27 million equity investment
that is financing the purchase and conversion of degraded land
into commercial bamboo plantations for the sale and export of
bamboo fiber. The company’s initial investment into Nicaragua
has generated over 300 jobs in a region with high unemployment
and has restored 4,800 acres of degraded land into bamboo
plantations.
In Vietnam, MIGA is providing guarantees of $500 million against
the risks of non-honoring of sovereign financial obligations to
a syndicate of commercial banks financing the rehabilitation of
National Highway 20. The MIGA-insured loan funds the rehabili-
tation of a severely deteriorated section of the road, a source of
significant transportation bottlenecks and accidents.
CONTACT
General Inquiries
t. 1.202.458.2538
Agribusiness and General Services
Nabil Fawaz, Sector Manager
t. 1.202.473.8437
Energy and Extractive Industries
Marcus Williams, Sector Manager (acting)
t. 1.202.473.1023
Finance and Capital Markets
Olga Sclovscaia, Sector Manager
t. 1.202.458.2823
Infrastructure
(Telecommunications, Transportation, and Water)
Carlo Bongianni, Sector Manager
t. 1.202.473.4615
