CGIF’s innovative structuring for a Cambodian solar project bond marked a number of firsts for the country’s capital markets – and snagged two awards in the process. CEO Noriko Nasu talks to Environmental Finance
Environmental Finance: Can you introduce the Credit Guarantee and Investment Facility (CGIF) and explain the role it is playing in sustainable finance in the Asia-Pacific region?
Noriko Nasu: CGIF is a multilateral trust fund of the Asian Development Bank, established by the members of ASEAN+3 (the ASEAN countries plus China, Japan and Korea) with paid-in capital of $1.16 billion. Its mandate is to develop and strengthen local currency and regional bond markets across the region.
Since commencing guarantee operations in May 2012, CGIF has provided credit enhancements to creditworthy bond issuers domiciled in the region, primarily in local currencies.
CGIF’s role in sustainable finance has grown significantly in recent years – and we recently celebrated guaranteeing a cumulative $1 billion of thematic bonds. By providing credit guarantees, CGIF helps issuers in frontier and emerging markets to access domestic and international capital markets that might otherwise be out of reach. This is particularly important for green and sustainable infrastructure projects, which often require long-tenor financing that local investors have historically been reluctant to provide.
EF: CGIF has won awards for green bond structure innovation (APAC) and green project bond, for the SchneiTec Dynamic Green Project Bond. What is the bond financing?
NN: The SchneiTec Dynamic Green Project Bond, issued in March 2025 and listed on the Cambodia Securities Exchange, raises KHR196.64 billion ($49 million) to finance Cambodia’s first utility-scale solar photovoltaic plant, with battery storage, in Kampong Chhnang province. The 60 MWac solar facility operates under a 20-year power purchase agreement with state-run utility Électricité du Cambodge, providing the stable, long-term cash flows essential to project bond financing.
It is Cambodia’s first-ever project bond and its longest-tenor corporate bond to date at 15 years – a significant milestone for a market where institutional investors have historically lacked access to long-duration, high-quality assets.
EF: What was CGIF’s involvement in structuring the bond?
NN: Our involvement went well beyond providing a credit guarantee. We acted as anchor creditor throughout the transaction – a role that was critical to getting the deal done in Cambodia’s nascent capital market.
Before issuance, CGIF led the technical, legal, and environmental and social (E&S) due diligence workstreams to align the transaction with international project finance standards. We were instrumental in designing, in collaboration with lead manager/underwriter Yuanta Securities, the innovative multi-tranche structure and in negotiating the finance documents and security documents with the Issuer.
Post-issuance, our anchor creditor role continues to add value: by holding voting and acceleration rights on the guaranteed tranches, we provide an important safeguard in a market where creditor co-ordination mechanisms are still developing.
EF: What were the challenges CGIF and the bond needed to address?
NN: First, Cambodia’s capital market lacked the infrastructure and track record to support a 15-year project bond. There were no precedents, no established creditor co-ordination mechanisms and considerable perceived country risk. CGIF’s anchor creditor role and its leadership of the due diligence and documentation process to international standards directly addressed this gap and instilled confidence in both domestic and foreign investors.
Second, the bond needed to attract a diversified investor base with markedly different risk appetites, ranging from conservative domestic life insurers and foreign banks, to local banks willing to take direct project risk.
The solution was an innovative three-tranche, risk-tiered architecture. CGIF guaranteed two tranches: KHR80 billion with a floating rate coupon, linked to 180-day Secured Overnight Financing Rate (SOFR), with a floor and cap, set at 4% and 6%. A second KHR60 billion tranche carries a standard floating rate coupon, of 1.8% over SOFR.
An unguaranteed tranche, paying 180-day SOFR plus 3%, met the requirements of local investors willing to price and assume direct project risk when confidence is underpinned by the broader structural framework.
A particular point of innovation was the design of the floating rate note with a floor and a cap. This addressed the lack in Cambodia of an interest rate swap market that financiers in long-tenor infrastructure deals typically require to manage interest rate risk. This bespoke solution sets a useful precedent for future long-tenor deals in similar frontier markets.
EF: How was the bond received by investors?
NN: The multi-tranche structure successfully attracted a diversified book comprising local banks, foreign banks and life insurance companies – with approximately 50% domestic and 50% foreign participation. The placement of the unguaranteed tranche was particularly significant: it demonstrated that, with the right structure and credible due diligence, investors are prepared to assume direct project risk in a frontier market such as Cambodia.
EF: How do you expect Cambodia’s sustainable finance market to develop from here?
NN: This transaction has established a genuine benchmark and a replicable template for sustainable infrastructure finance in Cambodia and beyond. We are confident this momentum will continue, supported by the government’s commitment to renewable energy development, with a government-backed pipeline that will generate an ongoing need for long-tenor, project-level financing of exactly the kind this bond pioneered.
The deal also directly addressed the shortage of long-term, stable assets for domestic institutional investors. We expect its success to unlock further institutional demand.
EF: What is next on the agenda for CGIF?
NN: We continue to develop CGIF’s guarantee capabilities across the ASEAN+3 region, with a particular focus on deepening sustainable and climate-aligned capital markets in frontier and emerging market economies. We are looking to replicate this project bond model in other ASEAN markets where long-term infrastructure financing gaps remain significant.
More broadly, we are deepening our engagement with the sustainable finance ecosystem: working with regional partners on policy frameworks, capacity building and market infrastructure to support the issuance of green, social and sustainability bonds.
Noriko Nasu is CEO at CGIF, based in Manila. For more information, see: www.cgif-abmi.org