Bermuda-based Sovereign Risk Insurance Ltd. (Sovereign) yesterday announced it had signed a "landmark" political risk insurance agreement with the Asian Development Bank (ADB) for a power plant project in Vietnam.

Sovereign is supporting ADB's $25 million Political Risk Guarantee (PRG) that covers a commercial financing tranche for the Phu My 2.2 power project.

This transaction marks the first Political Risk Guarantee issued by ADB under its Coguarantee Programme. The 12.5-year Political Risk Guarantee covers a syndicate of commercial lenders for Phu My 2.2, a 715 MW gas-fired power project located near Vung Tau in southern Vietnam.

It is the first build-operate-transfer (BOT) power project in Vietnam and is the first large, international project financing in Vietnam.

The project was recently named "Project Finance Deal of the Year" by Finance Asia and AsiaMoney and "Asian Power Deal of the Year" by Project Finance. Sovereign president Price Lowenstein said: "We are very proud to have been the private political risk insurer selected by ADB to support the structuring and launching of ADB's inaugural Political Risk Guarantee under the Coguarantee Program.

"We believe that this structure, which brings private sector underwriting experience and capacity under an ADB Political Risk Guarantee, will be applicable for other large infrastructure project financings in Asia.

"Sovereign works with financial institutions and bilateral and multilateral agencies on a global basis, and we are very pleased to be the first private sector underwriter to participate in an ADB PRG transaction."

Sovereign is a Bermuda-based specialised political risk insurer and reinsurer.

Its portfolio exceeds $6 billion of exposure spread over 65 emerging markets.

It is a joint venture between XL Insurance (Bermuda) Ltd, and ACE Bermuda Insurance, Ltd.