The first project to make use of the European Investment Bank’s (EIB) new credit enhancement tool is expected to pave the way for future deals.
The senior debt credit enhancement (SDCE) instrument evolved from the popular and successful project bond credit enhancement (PBCE), which improves bond ratings by providing a letter of credit to mitigate the construction risk by guarantee.
The EIB itself calls the SDCE a subordinated loan equivalent to the PBCE. It allows both bank and bond financing to participate, providing for a more efficient, and in some cases cheaper, arrangement.
“The new SDCE has proven itself to be particularly suitable for...