Blended finance structures are key to deploying catalytic capital coming from public, philanthropic, and private sector sources. The combination of the three allow for investors to pool essential capital meeting sustainable or development financing needs (e.g., SDGs, NDCs) in Emerging Markets and Developing Economies (EMDEs).
Blended finance is a structuring approach, and while seen as an effective means to deliver on both sustainable impact and risk-adjusted return objectives, questions on scalability and the complex nature of these structures remain.
Within the ecosystem of development finance, scaling up the use of these structures to mobilize larger flows of capital into EMDE starts with understanding what kind of blended finance structures exists, and what investors should be considering when entering these types of investments. Investors need to get familiar with the risks and opportunities of this structuring approach and the techniques available in the market, to understand how to mitigate perceived risks.
This paper provides clarity for investors on key characteristics of credit enhancements in blended finance structures. We address perceived investment risks in EMDE, and demonstrate which credit enhancement characteristics at the portfolio and transaction level can mitigate those perceived risks.
You can now read the full whitepaper at the link below
