The Role of Public and Private Investors for Structured Finance in Emerging Markets

Abstract

This chapter presents the different roles and contributions of the main actors of structured finance (SF) transactions in development finance, namely donors, development finance institutions (DFI) and private investors (PI). We present in a simplified manner the different risk-return profiles and the resulting contributions of the various actors to successful SF deals. The paper analyses the interplay of the various actors based on empirical evidence. SF transactions in development finance are rapidly changing, reflecting changing behaviour and risk perceptions by the various players. However, structural differences between public and private stakeholders remain. At least for the time being public investors are needed to bridge private investors into markets and new asset classes in emerging market countries.