MIGA Improves Political Risk Insurance for Project Debt: MIGA Convention Amended to Delete Requirement for Insured Equity

Sullivan & Cromwell LLP - January 4, 2011
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On November 14, 2010, the Multilateral Investment Guarantee Agency (“MIGA”) Council of Governors approved changes to MIGA’s governing convention (the “Convention”) that may increase the usefulness of MIGA political risk insurance (“PRI”) in project financings. Previously, project debt could not be insured by MIGA unless equity or shareholder loans also were insured. In practice, project owners often had no desire to insure their own investments and, if they did, the existence of equity and debt PRI in the same project sometimes led to difficult structural and intercreditor issues. Other amendments to the Convention expand the scope of insurance by MIGA for pre-existing investments.