How does it work?
Through blended finance, the Canadian Climate Fund offers businesses much-needed mezzanine debt and longer payback options to incentivize investments in solar, reforestation and geothermal energy, among other sectors.
The US$250 million Canadian Climate Fund can co-finance debt:
- At higher risk
On concessional terms
Project limits include:
- 5 year investment period (through April 2017)
- Max of US$30 million C2F loan, no minimum size
- Equal or less than the IDB Group investment
- Tenors up to 24 years
- May not invest in equity
Loans in local currency without hedging for up to $125M
Projects may be considered for IIC financing if:
- they contribute to the development of an IIC borrowing member country
- the majority of the borrower’s voting shares are owned by entities from IIC member countries
- are financially and technically viable
- comply with the IIC’s environmental and social requirements
After eligibility is granted, the IIC signs a mandate letter and proceeds to carry out due diligence (technical, environmental, market, legal, financial, integrity).
The Canadian funds are approved via IIC’s loan approval process, and their disbursement is contingent on approval for an IIC loan. If a project appears to have climate change mitigation (greenhouse gas reductions) or climate change vulnerability (adaptation) benefits, and needs a tranche of lower cost and/or higher risk debt to be viable, then it can be co-financed with Fund resources.