Are there synergies between World Bank partial credit guarantees and private lending?

Since 1994, the World Bank has provided partial credit guarantees to private financiers of several large infrastructure projects in developing countries. A major objective of the partial guarantee program is to leverage Bank resources so as to provide developing countries with better private credit terms. A real test of the efficacy of World Bank partial credit guarantees is whether they also lower the interest rate and lengthen the effective maturity of the part of the credit not covered by the World Bank guarantee. On the basis of deals closed so far, the author finds no evidence that guarantees have affected nonguaranteed interest rates favorably, while the duration of the nonguaranteed credits remains relatively short.