Trade-related financial services - ADB

Investment Fund Operations deliver private equity to Developing Member Countries (DMCs), which stimulates domestic market development and capacity-building and increases access to debt financing in its DMCs. Private equity is in high demand from ADB’s DMCs, and is a standard modality for investment within ADB’s peer institutions.

ADB provides loans, without government guarantees, to private sector projects and enterprises. In general, these loans are denominated in the major international currencies. However, Local currency financing is also available in selected countries. Loans to private sector companies or projects may be co-financed by commercial banks and other development banks.

ADB’s guarantee instruments cover those risks that the private sector cannot easily absorb or manage on its own. Mitigating these risks can make a crucial difference in mobilizing debt funding for private sector projects.

B loans are funded by commercial lenders with ADB acting as “lender of record”. Although B loans do not provide co-financiers with recourse to ADB for debt service, such loans do enjoy the same privileges and immunities given to ADB direct loans.

ADB's Trade Finance Program fills market gaps by providing guarantees and loans through over 200 partner banks in support of trade. The program has done over 14,000 transactions supporting over US$26 billion in trade and over 9,300 small- and medium-sized enterprises (SMEs) since 2004. In 2016, the program supported almost US$ 3.1 billion in trade through over 2,000 transactions. Of the 20 countries where ADB’s TFP operates, its most active markets in 2015 were Bangladesh, Pakistan, Viet Nam, and Sri Lanka.

ADB’s TFP will continue to support trade in emerging Asia and is expanding to challenging markets such as the Pacific region. ADB has recently launched and is building its Supply Chain Finance Program to complement the TFP. The new SCFP will enable ADB to broaden its support for trade in developing Asia, especially among SMEs operating on an open account basis.

The TFP:

• Provides guarantees to confirming banks and revolving credits to issuing banks located in DMCs
• Enhances banks’ abilities to offer importers and exporters access to financial services
• Works in partnership with the private sector to provide capacity, liquidity, and stability to the trade finance system