The Green Guarantee Company, an instrument from the Lab’s 2022 cycle, is set to unlock billions in climate finance for developing countries by providing guarantees for institutional investors buying green bonds issued and listed on the London Stock Exchange (LSE) and green loans issued in the private credit market.

The Green Guarantee Company (GGC), is the first specialist guarantor for emerging market climate adaptation and mitigation projects, unlocking access to global investors by de-risking green bonds and loans. The instrument was created by the Development Guarantee Group, which was co-founded with Cardano Development.

The company is receiving capital from the United Kingdom’s Foreign Commonwealth & Development Office (FCDO) through its MOBILIST programme, the Green Climate Fund, the Nigeria Sovereign Investment Authority (NSIA), the United States Agency for International Development (USAID) with Prosper Africa, and Norfund.

GGC will leverage an initial $100 million from these investors to provide up to $1 billion of guarantees underpinned by an investment grade rating of BBB/Stable from Fitch Ratings. Initially, it will focus on private credit and the LSE green bond market but plans to expand to other major exchanges. It will seek to raise additional capital from the private sector as it scales its operations, targeting a guarantee capacity of $5 billion or more by 2035.

Development Guarantee Group CEO and Co-Founder Lasitha Perera and CPI Analyst Haysam Azhar celebrate the launch.

 “GGC will provide pivotal support to enable issuers from developing countries to gain the financing they need to combat the impact of climate change on their populations, particularly the poorest. This support is critical as both increased fiscal pressure post-pandemic and downward pressure of sovereign ratings of developing countries will limit their private sectors’ access to global debt capital markets at a time when climate action is becoming increasingly urgent.” 

 Christopher Marks, Director at GGC