Financial toolkit
The AFD Group isn't a commercial bank and can't support directly an important number of projects. Therefore AFD collaborates with thai banks and municipalities which have good knowledge about the local needs and economic agents. Regardless of the chosen economic sector, any project that leads to a major reduction in CO2 emissions can be eligible for AFD financing.
AFD financing in Thailand can be provided thanks to several tools, which permit the financing to be adapted to the project under consideration. Thus loans, subsidies and guarantees can be used to fund projects.
Loans
Thanks to its AAA rating, the best possible for the long term, the AFD grants loans using very favourable conditions compared to the market conditions. In most cases, they receive concessional financing from the French government, which makes it possible to lower the interest rate. The conditions are determined according to the nature of the project, its degree of profitability and implementation guarantees.
The AFD has increased its ability to provide non-sovereign loans at his own risk, without any guarantees from the involved Sates. This approach requires precise analysis of the borrower’s risk. It is the favoured way for AFD to operate in Thailand.
A new approach recently developed, and for which AFD is a leader, is the financial intermediation. Instead of providing a direct loan for a single project, AFD proposes a sector-focused credit facility to banks which on-lend to several project proponents. This mechanism is a tripartite win-win-win operation and is being successfully implemented by AFD in almost all the emerging countries of its geographic scope.
Subsidies
AFD can provide small amount grants in Thailand to support the preparation or the implementation of projects, for example to produce sector analysis and identify project opportunities or to provide technical assistance and training. Besides, AFD can help its partners to identify other sources of financing and obtain the grants proposed.
Guaranties
The AFD can provide guarantees for operations that aim to enhance the mobilization of local resources. These guarantees also make it possible to reduce the risk inherent to issuing bonds in local currencies. Coverage is also made available for political risks or States' non-fulfilment of their obligations.
