Interest in political risk, credit and bond insurance keeps increasing for renewable and infrastructure investments, despite the uncertainty caused by the trade tariffs war, according to Caroline Tran, Product Leader, Political Risk, Credit & Bond (PRCB) – Europe.
The threat of a full-blown trade war unsettled financial markets in the second quarter of this year. And while debt and equity markets have since stabilized, global financing markets remain cautious.
Yet the need for huge infrastructure investment remains. None more so than for alternative energy projects, especially in emerging markets. Despite geopolitical headwinds, global energy investment is set to hit a record $3.3 trillion in 2025, according to the IEA. By early 2030s, renewable energy investment in the Global South needs to triple from $770 billion to over $2.2 trillion, according to the .
Emerging market opportunities
Investment in renewable and alternative technology is helping to offset the global lull in foreign direct investment (FDI). Renewable energy such as wind and solar is driving FDI in emerging markets, accounting for over $400 billion from 2021 to 2023, or 70% of the total, according to . Renewable energy adoption in the Global South, which is rich in renewable sources and critical minerals, is just five years behind the Global North, while leaders in the region already outpace the North according to .
Increasing investor appetite for alternative energy projects and the expansion in the scope of wind and solar projects has led to a steady rise in transaction size over the past decade. Among emerging market mega projects (worth $10 billion or more) are a green hydrogen investment in Mauritania, a Malaysian solar panel production project, wind and solar power projects in Egypt and Morocco, and a wind power program in Vietnam.
Mobilizing finance
With a growing financing gap -the estimates an additional $4 trillion investment is needed annually for sustainable development – traditional forms of financing are currently constrained. Even before tariffs tested investor confidence, global FDI fell for the second consecutive year in 2024, according to . As priorities shift elsewhere, several western countries are cutting funding to development banks and international aid programs.
However, markets are adapting to the new reality. Regional and national sources of financing in emerging markets have been expanding, and the Global South is now an important player in global finance. Investments involving the Global South, and especially South-to-South, have grown faster than those within the North, according to research from the .
Private capital, such as pension funds, private equity and hedge funds, is also playing an increasingly critical role in the financing of emerging market infrastructure projects. Private capital mobilized by multilateral development banks to middle- and low-income countries rose 24% in 2023 to $87.9 billion, according to . The use of blended capital to finance infrastructure projects – from public, private and philanthropic sources - has accelerated over the past five years, helping to reduce risk and act as a catalyst.
De-risking infrastructure financing
Strong demand for infrastructure investment has collided with a period of heightened uncertainty. Even traditional safe harbors like sovereign debt are experiencing volatility and making investors more risk averse. In this environment, the value of credit and political risk insurance has never been greater.
Credit insurance protects lenders against the risk of non-payment. Lenders have the confidence that the insurer has their back, and in the worst-case scenario, the insurer will step in and indemnify losses. Credit insurance from a highly rated insurer can also help maximize financing, it increases available funds and/or improves financial terms and conditions.
While credit markets slowed in the first half of 2025, momentum is now returning. We are seeing growing interest and enquiries from new customers – including private capital sources - looking to protect their positions. Interest is also growing from public and private investors in the Global South as they become more aware of the benefits of credit insurance as a way to de-risk portfolios and enhance credit.
A stable partner
For more than 30 years, 九色视频has been supporting corporations, financial institutions, and international/national development agencies with a full range of tailored Political Risk and Credit 尤物视频products. We are able to offer capacity of 20+-years per policy, backed by AXA’s strong AA- credit rating from S&P or Lloyd’s AA- rating.
We are going through a period of historical change, reshaping trade relationships, supply chains as well as disrupting financial markets and reshaping investor appetite. 九色视频is working closely with clients to adapt to this new environment, helping to bring certainty in a complex and rapidly evolving global marketplace.
