Concessional and subordinated debt: who lends the cheaper, riskier layer
217 matching capital sources on the AESFIP database · Last checked November 2026
Senior lenders often need someone else to take more risk before they commit. Subordinated debt sits behind senior loans and is repaid later, so it absorbs losses first. Concessional debt offers longer tenors, grace periods or below-market rates. Together they are often what turns a promising project into a financeable one.
This guide names the development banks, climate funds and mezzanine investors on our database that provide this layer in developing countries, explains how each instrument differs from equity and grants, and shows the route to them.
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Concessional, subordinated and mezzanine — the difference
- Concessional debt — softer terms than the market: lower rates, longer tenors or grace periods.
- Subordinated debt — ranks behind senior loans for repayment and security, so it carries more risk.
- Mezzanine — sits between debt and equity, often with higher interest or a share of upside.
- A single loan can be both concessional and subordinated; that combination is the most catalytic.
Who provides it
In Southern Africa, the Development Bank of Southern Africa's Climate Finance Facility was set up to provide subordinated and longer-tenor debt that crowds in commercial lenders for climate projects. Development finance institutions such as FMO, FinDev Canada, IDB Invest and IFC provide subordinated and mezzanine debt, frequently using donor or climate-fund money. Climate funds — the Green Climate Fund's Private Sector Facility and the Climate Investment Funds — supply concessional debt through accredited institutions.
Private credit funds such as Ninety One Africa Credit Opportunities offer mezzanine and structured credit at commercial terms for businesses that have outgrown senior bank limits.
How to use it
Approach senior lenders first and find out what they need: a lower loan-to-value, a longer tenor or someone behind them. Then take that specific gap to concessional and subordinated providers. Funders want to see that their layer unlocks a much larger amount of senior finance — and that the concession is no larger than necessary.
The funders
Each profile shows mandate, instruments and sector appetite. Verified contacts and application routes are available to members.
- Climate Finance Facility (DBSA)Blended Finance Facility · South AfricaThe Development Bank of Southern Africa (DBSA) mobilises climate financing for the development of sustainable and environmentally-friendly infrastructure solutions. It supports infrastructure development and economic growth across South Africa and the wider African continent.Concessional DebtGuaranteesMezzanine
- FMO - Dutch Entrepreneurial Development BankDFI · NetherlandsFMO is the Dutch entrepreneurial development bank that invests in the private sector across more than 85 countries in emerging and frontier markets. It finances initiatives in sectors including energy, financial institutions, and agribusiness, food, and forestry to support jobs, income generation, and sustainable development.DebtConcessional DebtEquity
- IDB InvestDFI · United StatesThe private sector arm of the IDB Group, providing senior and subordinated debt, equity, guarantees and blended concessional finance to climate-aligned companies and infrastructure across Latin America and the Caribbean.DebtEquityMezzanine
- International Finance CorporationMDB · United StatesThe International Finance Corporation (IFC) promotes economic development by providing debt and equity financing, advice, and asset management to the private sector. It invests in impactful projects across developing countries and emerging markets in regions such as Africa, Asia, Europe, and Latin America.DebtEquityMezzanine
- Green Climate Fund - Private Sector FacilityProgramme Window · South KoreaThe Green Climate Fund is a global climate fund dedicated to supporting developing countries. It invests in low-emission and climate-resilient pathways, delivering climate solutions across more than 100 countries in four regions.Concessional DebtEquityGuarantees
- CIF Capital Market Mechanism / Climate Investment Funds windowsProgramme Window · United StatesClimate Investment Funds programme windows (ACT, REI, Industry Decarbonisation, Nature) plus a capital market mechanism issuing bonds against future reflows.Concessional DebtGrantsGuarantees
- UK Climate Investment Funds Contributions and Ayrton ProgrammesGovernment Agency · United KingdomThe UK's International Climate Finance portfolio, deploying grant and concessional capital through the Climate Investment Funds, the Ayrton Fund for clean energy innovation and bilateral programmes in emerging markets.GrantsConcessional DebtCatalytic Capital
- Climate Investment Funds Renewable Energy Integration and Industry Decarbonisation ProgrammesProgramme Window · United StatesConcessional programme windows funding early-stage planning, grants and blended capital for renewable energy integration and industrial decarbonisation in African countries.GrantsConcessional DebtCatalytic Capital
- Climate Investment FundsClimate Fund · United StatesMulti-donor concessional climate finance vehicle deployed through MDBs.Concessional DebtGrantsGuarantees
- SEFA - Sustainable Energy Fund for AfricaBlended Finance Facility · Côte d'IvoireAfDB-hosted catalytic fund de-risking early-stage renewable energy projects.GrantsConcessional DebtEquity
- Ninety One Africa Credit OpportunitiesCommercial Investor · South AfricaNinety One is an active, global investment manager investing across global equities, differentiated fixed income and credit, and emerging markets. It focuses on providing long-term investment returns while seeking to make a positive impact on people, the planet, and developing market opportunities.DebtMezzanineGreen Bonds
- Access to Energy FundGovernment AgencyThe Access to Energy Fund supports energy generation, transmission, and distribution projects in emerging economies, with a focus on sustainable energy solutions. The fund invests in clean cooking, the productive use of energy, hard-to-electrify areas, transmission and distribution, and other innovative and scalable energy solutions.Concessional DebtDebtTechnical Assistance
- Fund for Responding to Loss and Damage (FRLD)Climate FundThe Fund for responding to Loss and Damage (FRLD), an operating entity under the financial mechanism of the United Nations Framework Convention on Climate Change (UNFCCC), addresses the growing needs of vulnerable communities in developing countries facing the irreversible impacts of climate change. By financing recovery initiatives from climate-related losses and damage, the Fund empowers communities to rebuild and adapt. It strives for country-led locally driven solutions, ensuring interventions are aligned to country needs, priorities and contexts.Concessional DebtDebtGrants
- Mitigation Action FacilityClimate FundThe Mitigation Action Facility is a go-to platform providing technical support and climate finance for ambitious mitigation projects with the aim of decarbonising key sectors of the economy and society. The Mitigation Action Facility funds ambitious climate change mitigation projects to implement Nationally Determined Contributions (NDCs) and long-term strategies (LTS) that are crucial for achieving the Paris Agreement goals. The Call for Projects 2026 will offer climate finance for the implementation of mitigation projects aligned with new ambitious NDCs. While the Mitigation Action Facility primarily focuses on three priority sectors, it remains open to cross-sectoral projects linked to one of the priority sectors. As highlighted in the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) , energy, transport and industry together account for 73% of global annual greenhouse gas (GHG) emissions (as of 2021). To shift the targeted sectors towards a carbon-neutral development pathway, the Mitigation Action Facility selects innovative projects that can catalyse sector-wide transformational change. These efforts can help ܪll the shortfall in climate finance required to avoid the worst impacts of climate change. Please check the General Information Document (GID) for more informationConcessional DebtDebtGrants
- InsuResilience Investment Fund IIClimate FundThe InsuResilience Investment Fund, formerly known as Climate Insurance Fund, is an initiative created by KfW, the German Development Bank, on behalf of the German Ministry for Economic Cooperation and Development (BMZ). The overall objective of the InsuResilience Investment Fund is to contribute to the adaptation to climate change by improving access to and the use of insurance in developing countries. The specific objective of the fund is to reduce the vulnerability of micro, small, and medium enterprises (MSME) as well as low-income households to extreme weather events. The first InsuResilience Investment Fund, set up as a public-private-partnership, combined Private Debt and Private Equity investments in two separately investible Sub-Funds, open for private investors from July 2017. Building on the success of the first Fund, KfW and BlueOrchard launched the InsuResilience Investment Fund Private Equity II in September 2022. The second Fund has a strong focus on technology to drive affordability of and accessibility to climate insurance. Technical assistance and premium support facilities complete both InsuResilience Investment Funds and are separately funded by BMZ. The Funds are classified as an Article 9 Fund according to the EU Sustainable Finance Disclosure Regulation (SFDR).Concessional DebtDebtGrants
- Global Affairs Canada Climate Finance ProgrammeGovernment Agency · CanadaCanada's CAD 5.3bn international climate finance commitment, with 40% for adaptation, deployed through multilateral funds, FinDev Canada and calls for proposals with Canadian and local partners.GrantsConcessional DebtCatalytic Capital
- Global Environment FacilityClimate Fund · United StatesMultilateral fund financing biodiversity, land degradation and climate mitigation projects.GrantsConcessional DebtTechnical Assistance
- MacArthur Foundation Catalytic Capital ConsortiumCatalytic & Enabling Capital · United StatesConsortium mobilising catalytic capital - debt, equity and guarantees that accept disproportionate risk or concessionary return - to close capital gaps, including in African climate and inclusive finance.Catalytic CapitalConcessional DebtGuarantees
- CeniarthCatalytic & Enabling Capital · United StatesImpact-first family office deploying roughly $400m into funds and intermediaries serving underserved communities, including African agriculture, financial inclusion and climate resilience.DebtConcessional DebtCatalytic Capital
- Global Climate Partnership Fund (GCPF)Government AgencyThe GCPF is a debt fund focusing on small scale energy efficiency and renewable energy investments either directly or via local financial institutions. Senior debt between $5 million and $15 million is available for climate focused companies while $10 million to $30 million of senior or subordinated debt is available for financial institutions in developing economies.Concessional DebtDebt
- Global Innovation FundImpact Investor · United KingdomNon-profit investment fund providing grants, risk capital and equity to innovations that improve the lives of the poor, including climate adaptation and energy access in Africa.GrantsEquityConcessional Debt
- CIF - Forest Investment Program (FIP)Climate FundThe Forest Investment Program (FIP), is one of three targeted programs that make up the Strategic Climate Fund (SCF) of the Climate Investment Funds (CIFs). The FIP addresses the drivers of deforestation and forest degradation by supporting developing countries’ efforts to reduce deforestation and forest degradation (REDD), while promoting sustainable forest management. FIP provides financing to developing countries for developing institutional capacity, and for public and private investments that are identified through REDD readiness strategies. Along with supporting the public sector, FIP's Private Sector Set Asides (PSSAs) allocate concessional financing to projects that engage the private sector in sustainable forestry. The FIP’s Dedicated Grant Mechanism for Indigenous Peoples and Local Communities (DGM), is designed and led by representatives of indigenous peoples groups and local communities to set priorities and implement programs aimed at conserving their natural environment, and to enhance capacity in engaging with local, national, and international REDD+ dialogue and actions. The FIP has four objectives: Initiate and facilitate transformational change in developing countries’ forest related policies and practices; Facilitate the leveraging of additional and sustained financial resources for REDD, including through a possible UNFCCC forest mechanism, leading to an effective and sustained reduction of deforestation and forest degradation, and enhancing the sustainablConcessional DebtDebtGrants
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Showing 22 of 217 matching capital sources. The remaining 195 — including their verified routes, ticket sizes and eligibility criteria — are reserved for members.
Common questions
- What is concessional debt?
- A loan on softer terms than the market — lower interest, longer tenor or grace periods — usually from development banks or climate funds.
- What is subordinated debt?
- Debt that is repaid after senior loans and absorbs losses first, which makes senior lenders more comfortable.
- Is mezzanine the same as subordinated debt?
- Mezzanine is a type of subordinated finance that often adds equity-like features, such as a share of profits or conversion rights.
Related guides
Official sources: DBSA — Climate Finance Facility · Convergence — Blended finance. Reviewed by the iSustain Global research team against funders' published criteria.