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Nonsovereign Public Sector Financing Facility (NSP)

2008
Innovation and Efficiency Initiative

NSP
Loans and guarantees No central government guarantees Public sector clients
government agencies state-owned enterprises subsovereign governments subsovereign government- owned enterprises

Innovation and Efficiency Initiative

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

Fundamentals
Country Partnership Strategy Development objectives Project soundness Transaction structure Governance framework

Innovation and Efficiency Initiative

Rationale
Revenue generating public good or service Off-budget Professionalizes business Corporatization & privatization agenda Cofinancing

Innovation and Efficiency Initiative

Key Elements
Development Impact Rationale for NSP Modality Compliance with Safeguard Policies

Due Diligence

Transaction Structure

Security Package

Pricing & Terms

ADB Policies

Innovation and Efficiency Initiative

Pricing
Sovereign Guaranteed

Pricing line

Security Package (including reforms)

Commercial

Innovation and Efficiency Initiative

Due Diligence and Structuring


Due Diligence
technical commercial corporate legal and regulatory governance and capacity financial economic safeguards management

Debt and Equity Collateral or Security Package Reforms

Innovation and Efficiency Initiative

Approved NSPs
(August 2005 December 2007)

Program IND: NTPC Capacity Expansion INO: South Sumatra to West Java II Gas Pipeline IND: SME Financing Facility SRI: Leasing Facility (People's Leasing Company Ltd-PLC) LtdVIE: Vietnam Bank Financing Leasing Company

Direct $75M $75 $75 75 $10 $20

CFS $225M $125 $225

Approval Date 27 Jul 2006 10 Aug 2006 22 Feb 2007 23 Nov 2007 11 Dec 2007

Innovation and Efficiency Initiative

Structuring Possibilities

National Government

Equity

SOE

Loan

ADB

Corporate Budget
(CAPEX, O&M)

business plan revenue stream collections & receivables debt stock repayment schedule other creditors and lien holders legal capacity

Innovation and Efficiency Initiative

Structuring Possibilities
Local Government
Issues bond for development program

Indemnity or Counter-guarantee

ADB

Guarantees LGs bond payments

development program tax base revenue collection debt stock repayment schedule other creditors and lien holders legal and political capacity

Bond Holders

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Innovation and Efficiency Initiative

Structuring Possibilities
Guarantee

Local Government

Equity

LG Enterprise
Equity

Loan

ADB

LGEs business plan LGEs revenue stream LGEs debt stock, repayment schedule, other creditors and lien holders project and

Private Sponsor

Equity/ Shareholder Loan

Project Company

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Innovation and Efficiency Initiative

Structuring Possibilities
Indemnity or Counter-guarantee

Local Government

Equity

LG Enterprise
Off-take Agreement

Indemnity or Counter-guarantee for Offtake

ADB

Guarantees LGEs Off-take Payments


LGEs business plan LGEs revenue stream LGEs debt stock, repayment schedule, other creditors and lien holders project and off-take arrangements

Private Sponsor

Equity/ Shareholder Loan/ Bond

Project Company

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Innovation and Efficiency Initiative

Thank You!

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Innovation and Efficiency Initiative