ADB signs risk-transfer deal that lifts its lending capacity

The Asian Development Bank says it has signed an agreement with the Swedish International Development Cooperation Agency (SIDA) on a risk-transfer scheme under which SIDA will guarantee $155 million out of ADB's $455 million basket of five loans to India — a first for a sovereign loan portfolio for any multilateral development bank.

The Manila-based lender said Monday that the pilot guarantee arrangement with SIDA, which has triple-A credit rating, will increase ADB's lending capacity by an estimated $500 million over a 10-year period and is being eyed by other multilateral development banks as way to increase capital amid expanding financing needs for development goals.

Risk-transfer agreements pass specified risks from one party to another in return for a fee.