Green bonds do not transform markets simply because they are green. In many emerging markets, the real constraint is whether projects and issuers can meet the credit, tenor and risk requirements of institutional investors. That is where guarantees become catalytic. They turn viable projects into investable propositions, unlock pools of long-term local capital and establish precedents that others can follow. For PIDG, through GuarantCo, this is not theory; it is a model we have built and proven across Africa and Asia for over two decades.
Market transformation matters most in emerging markets and developing economies, where sustainable infrastructure needs are greatest and climate risks most acute. These are the markets where renewable energy, resilient water systems, cleaner transport, sustainable urban infrastructure, digital connectivity and sustainable agriculture are urgently needed — and where long-term private capital still does not flow at scale.
This is where PIDG, through GuarantCo, has built a distinctive and proven position. Rated AA-, GuarantCo is one of the only specialist guarantee institutions focused on mobilising private capital for infrastructure in developing economies.
GuarantCo uses guarantees to turn sustainable infrastructure into investable opportunities. Green and thematic bonds are not one-off transactions; they are market-building tools that deepen local capital markets, crowd in institutional investors and create replicable pathways for climate finance. Since 2021 alone, GuarantCo’s guarantee has enabled issuance of more than USD 790 million of thematic bonds. The majority of which have been green bonds in respective local currencies.
The principle is straightforward. A green bond channels capital towards projects with clear environmental benefits and must be underpinned by clear use-of-proceeds commitments, transparent reporting and independent verification. For issuers, this can strengthen credibility, diversify funding and align financing with climate strategies. For governments, it can mobilise private capital towards national climate goals.
Yet in many emerging markets, the challenge is not whether green bonds are useful, but how to make them possible. First-time issuers, mid-sized corporates and early-stage operators often face higher perceived credit risk, shallow local markets, strict rating requirements and limited investor familiarity with new sectors.
This is where guarantees are catalytic. By improving a bond’s credit profile, a guarantee can support longer tenors, improve pricing, reduce perceived risk and help issuers access capital markets for the first time. It also creates confidence, showing that a new issuer, asset class or sector can be financed locally and, over time, return with less or no credit enhancement.
In Kenya, with Acorn Holdings, we showed what this looks like in practice. The KES 5 billion transaction, featuring a partial credit guarantee, was the first green bond and project bond in East Africa, financing clean, safe and affordable student accommodation in Nairobi. It helped reopen possibilities in the local corporate bond market, attracted domestic institutional capital and supported a greener model for urban development. A second issuance was significantly oversubscribed, showing how confidence can grow once the first transaction proves what is possible.
In Senegal, our credit enhancement for Senelec showed how sustainable finance can support national infrastructure. By backing a sustainability-linked USD 213 million securitisation for the power utility, GuarantCo demonstrated how guarantees can align infrastructure finance with development and climate objectives.
In Vietnam, the story is even more striking. GuarantCo has supported a sequence of landmark green bond transactions that, taken together, show how a market can evolve. EVNFinance in 2022 was an early milestone, with GuarantCo providing a VND-denominated partial credit guarantee to support Vietnam’s first internationally verified green bond. The issuance helped EVNFinance extend longer-term loans to green infrastructure projects aligned with its Green Bond Framework, including rooftop solar.
That transaction was followed by a series of firsts. AquaOne represented Vietnam’s first-ever 20-year project bond, longest tenor project bond to-date, and first green bond in the water sector, supporting a greenfield water supply and transmission project serving the Hanoi region. IDI Sao Mai marked Asia’s first green bond in the aquaculture sector, financing sustainable agriculture processing facilities and demonstrating that green finance can extend into sectors that are essential for livelihoods, food systems and climate resilience. Binh Thuan Plastic Group then showed how green bonds can support circular economy outcomes, with Vietnam’s first credit-enhanced green bond in the plastics sector.
Most recently, Verdant Energy has provided another signal of where the market can go next. Earlier this year, GuarantCo provided a payment default guarantee over VND 792 billion of green bonds issued by Verdant Energy’s commercial and industrial solar platform in Vietnam. This is Vietnam’s first certified green C&I solar bond financing and Verdant’s first capital market issuance globally.
These transactions are not isolated wins. They are building blocks of markets. Together, they show that credit-enhanced green bonds can support clean energy, water supply, aquaculture, sustainable urban infrastructure, digital infrastructure, circular economy and distributed solar. They show that domestic institutional investors can participate in long-term infrastructure finance when risks are understood and appropriately addressed.
India offers another important frontier. The country’s renewable energy ambitions are vast, but its domestic corporate bond market remains dominated by larger issuers and state-backed or highly rated players. Mid-market renewable energy companies often struggle to meet the thresholds required by institutional investors, even when their projects are aligned with national climate goals. Our support for KPI Green Energy is therefore highly significant. By backing the first externally credit-enhanced green bond issuance in India for KPI Green Energy, GuarantCo helped enhance the bond’s rating and enable participation from domestic insurance and pension funds.
In Indonesia earlier this year, a new market for GuarantCo, Triasmitra demonstrates how guaranteed bonds can support essential infrastructure beyond energy. By backing bond issuances for a subsea fibre optic cable system, GuarantCo is helping finance long-tenor digital infrastructure that will improve connectivity for millions of people. While every market and sector is different, the underlying principle is consistent – credit enhancement can make long-term infrastructure investment accessible to a broader investor base.
Across these examples, the common thread is market creation. The first successful transaction in a market does more than finance one project. It creates evidence. It gives regulators, arrangers, issuers and investors a structure to study, adapt and improve. It helps build confidence in standards, reporting and verification. It encourages new issuers to consider capital markets. It gives institutional investors practical experience of financing sustainable infrastructure. It can also reduce the level of support required over time as the market becomes more familiar with the risks and opportunities.
This approach speaks directly to PIDG’s wider purpose. We exist to mobilise private investment for infrastructure where it is most urgently needed, to improve lives and support sustainable development.
The next phase will require ambition from more than one institution. Policymakers can help by creating enabling frameworks, credible taxonomies and incentives that support high-quality green issuance. Regulators can strengthen disclosure, verification and investor protection. Issuers can invest in the systems and governance required to report with confidence.
We are poised to build on the foundations we have already laid. We have the track record, the technical expertise, the team, organisational credibility and the mandate to keep pushing green bond markets forward. We have seen what is possible in Kenya, Senegal, Vietnam, Cambodia, India and Indonesia across a range of sectors. With the right partnerships, standards and risk-sharing mechanisms, green bonds can become one of the defining instruments of inclusive, climate-resilient growth across emerging markets and developing economies.
Ultimately, the success of a guarantee should not be measured only by the bond it enables, but by what happens afterwards: the next issuer, the next investor, the longer tenor, the deeper market and eventually transactions that require less, or no, credit enhancement at all. That for us is market transformation. We have spent over 20 years demonstrating that well-designed guarantees can move institutional capital into markets, sectors and structures it would not otherwise reach. The opportunity now is to take that model from individual breakthroughs to market-wide scale.
