The Transferability and Convertibility (T&C) Facility
Utilising energy resources for agricultural productivity (e.g., grain milling, irrigation, water pumping, cold storage and refrigeration, agricultural processing, etc.) Credit/loans offered with assets (e.g., inventory and equipment used as collateral). Transaction is recorded on the balance sheet as a debt affecting the financial position of a company. Credit/loans offered with assets (e.g., inventory and equipment used as collateral). Transaction is not recorded on the balance sheet as a debt but recorded as part of a separate entity known as a Special Purpose Vehicle (SPV) or Special Purpose Entity (SPE). Involves utilising a company’s accounts receivables as collateral for a loan. Funds used to purchase physical assets such as property, plants, buildings, technology, and equipment. Brick and mortar only (including construction and labour), no soft costs included. Cooking that utilises cleaner fuels and technologies, instead of polluting fuels or inefficient equipment. In this context, this term covers fuel and stove as well as fuel only (biomass, biogas, LPG, etc.) solutions. Securities pledged to ensure repayment of a loan. Refers to power generation systems for commercial and industrial facilities; applies to both on-site power and heat production systems. Debts that have longer than commercially available loan tenors, lower than commercially available interest rates, less restrictive collateral requirements, or forgiveness for all or some part of the principal. A specific type of debt that is dependent on uncertain future developments. Contingent debt is not a definitive liability, as it is based on the outcome of a future event. Development finance institutions (DFIs) are specialised development organisations that invest in private sector projects in developing countries to promote job creation and sustainable economic growth. DFIs are typically majority owned by national governments. Independent Power Producers that are in the pre-PPA stage but are in the process or have already obtained relevant permits. A metric used in financial analysis to estimate the profitability of potential investments. Refers to the timeframe within which an investment will be held before being sold. As opposed to “pari passu” guarantee coverage, where the guarantor covers loan losses on an equal basis with a lender, (i.e. where the loan principal is $1000 and $100 is lost and the pari passu cover is 50%, the guarantor pays out only 50%). With first loss, the guarantor provides a pay-out of 100% of the losses up to first loss cover, (i.e. where the loan principal is $1000, and the first loss coverage is 10%, on the same $100 lost, the guarantor provides a pay-out of the full $100, since it is not greater than 10% of the loan amount). According to the Gender Lens Investing Initiative, Gender Lens refers to a strategy or approach to investing that takes into consideration gender-based factors across the investment process to advance gender equality and better inform investment decisions. A form of financial assurance used to secure debt liabilities. Can be called upon (called a guarantee call) by the lender in the event of a loan default or payment arrears. The guarantee provider is called a guarantor. An investor who only considers investments meeting certain economic, environmental, and social criteria, while also generating financial returns. Refers to an enterprise with the majority of ownership by nationals of a Sub-Saharan African country, the Caribbean or the Pacific. Given the widely varying definitions of the term in this sector, a financier focusing on the origin of the management team (or another aspect, or a combination of aspects) is also considered valid. Financial assurance provided for one individual transaction. Involves utilising a company’s purchased inventory as collateral for a loan. A type of debt that is only paid out after other debts are settled when a company gets liquidated due to insolvency. IPPs that have equity partners but no EPC contract and no debt financing. A claim put on installed equipment to be used as collateral. Funds paid out to an organisation based on some percentage contribution made to the total project cost by the grantee. A form of debt instrument that is subordinated to senior debt. Mezzanine debt is typically classified as “equity,” given that it can be converted into equity in the company in case of default. However, for funds with no additional equity offerings (i.e., those that only provide debt instruments), mezzanine debt is classified as a debt offering. IPPs that have acquired land, PPA, and the relevant permits. Grants that do not have to be paid back. A one-time fee charged by a lender/guarantor for processing and approving a loan/guarantee application. Where the guarantor assumes only partial risk of non-payment (usually 50%). Taking individual responsibility as a business owner or majority owner to repay credit issued in the event the business defaults. All owners take responsibility to repay credit issued in the event the business defaults. Assets owned by the company, such as equipment or a building, are collateralised to secure a loan. For IPPs, this is the ideation stage prior to the acquisition of relevant permits. Restructuring a debt. A form of grant financing in which funds are disbursed once recipients meet specified performance objectives. Initial funding for a business to turn an idea into a product or service. Debt that is paid out first when a loan is in arrears, after a loan is called into default or when a company is dissolved. Post seed capital funding, used to ensure continued growth of the company. Series A funding is raised once a company has consistent revenue figures or other key performance indicators. Series B funding is used to grow the company to meet rising levels of demand. Series C funding is raised once the company is almost at maturity and looking to scale or enter new markets. A privately-owned entity that generates and sells electricity to utilities and/or end-users. A specialised investment fund that pools resources to invest equity solely in the energy sector. A fund set up to solely provide debt financing for the off-grid energy sector enterprises. A large corporate investor that invests for strategic gain (e.g. to access a promising technology). Used for loans, guarantees and insurance contracts to indicate the length of time a loan is valid until it’s due. Third affiliated party that agrees to back a loan or debt. Average amount of funding made available for each individual recipient. Projects or companies that have a majority (51% or more) female ownership. Day-to-day operational expenses.
The Transferability and Convertibility Facility (T&C) is an EU-funded guarantee product managed by EDFI MC, in sub-delegation structure with Proparco. It covers the debt service of on-grid independent power producers in case of inconvertibility of the local currency into hard currency, or inability to transfer hard currency out of the country. The facility is open for licensed EU DFIs.
Financial instrument type
Financing entity type
Development Finance Institution (DFI), Third Party Guarantor
Independent Power Producers
(SE4All developing countries are eligible)
(SE4All developing countries are eligible)
The Facility covers inconvertibility and non-transferability risks between local currencies and Euros and/or US dollars
- The facility is open for pillar-assessed (licensed) European DFIs
This instrument covers
Types of guarantees provided
Individual transaction guarantees
Range of guarantee tenors
Up to 12 months of principal and interest over a covered period of up to 7 years
Parties eligible to apply for guarantee
Financial Intermediary (lender/investor)
Total guarantee exposure limits
Yes, there are limits on the total amount of guarantee exposure that can be assumed.
Guarantee manager description
EDFI Management Company (EDFI MC) was established in 2016 on behalf of European Development Finance Institutes (EDFI) Association’s members. EDFI MC provides development finance solutions that enable European DFIs, development banks and private sector companies to increase the scale and impact of their investments.