Types of Guarantees
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enterprising – transport services in Cambodia |
Development Credit Authority (DCA) is a broad financing authority
that allows the Agency to use credit guarantees to pursue any of the development
purposes specified under the Foreign Assistance Act (FAA) of
1961, as amended. DCA provides USAID with the flexibility
to choose between appropriate financing tools - guarantees,
grants, or a combination to achieve developmental outcomes. DCA activities are designed and managed by USAID's overseas missions, and are priced and financially monitored by USAID's Office of Development Credit in Washington.
The following links provide graphic information on the four types of partial guarantees:
- Loan guarantee
Provides up to 50% coverage on principal
Both Lender(s) and Borrower(s) are identified up-front
Lump sum or multiple disbursements
- Loan Portfolio guarantee
Provides up to 50% coverage on a series of loans from a lender(s) to a pool of borrowers
USAID mission decides on definition of “borrowers”
- Bond guarantee
Provides up to 50% principal coverage to bond investors
Issue rating strengthened
Capital market deepening
- Portable guarantee
Provides up to 50% coverage on principal
Allows target institution (borrower) to “shop” around for best loan package
Becomes a Loan Guarantee once the lender is identified
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