RISK MITIGATION: What are Updates & Proposals on Risk Mitigation Products?

Product Name Syndicated Loan
Link to Product Website
Provider Name IFC (International Finance Corporation)
Product Definition Through our syndicated loan (or B-loan) program, IFC offers commercial banks and other financial institutions the chance to invest in IFC-financed projects that they might not otherwise consider.

These loans are a key part of IFC's efforts to mobilize additional private sector financing in developing countries, thereby our development impact. Through syndications, financial institutions share fully in the commercial credit risk of projects, while IFC remains the lender of record.

In FY11, IFC syndicated a record $4.7 billion in loans—more than twice as much as in the previous year. This included B-loans, parallel loans, and A-loans participation sales. About 29 percent of this amount was in IDA countries and frontier regions, and 67 percent was in infrastructure sector.

Participants in IFC's B-loans share the advantages that IFC derives as a multilateral development institution, including preferred creditor access to foreign exchange in the event of a foreign currency crisis in a particular country. Where applicable, these participant banks are also exempted from the mandatory country-risk provisioning requirements that regulatory authorities may impose if these banks lend directly to projects in developing countries.

B Loan Structure and Benefits:

When an IFC loan includes financing from the market through the B Loan structure, IFC retains a portion of the loan for its own account (the "A Loan"), and sells participations in the remaining portion to participants (the "B Loan"). The borrower signs a single Loan Agreement with IFC, and IFC signs a Participation Agreement with the participants. IFC is the sole contractual lender for the borrower. While IFC is the lender of record, the participants' involvement is known to the borrower, and is included in any transaction and publicity.

The A/B Loan structure allows participants to fully benefit from IFC's status as a multilateral development institution. All payments including principal, interest, and fees gain the advantages of IFC's Preferred Creditor Status. IFC commits to the participants to allocate payments pro-rata between the A and B Loan. As a result, IFC cannot be paid in full until all participants are paid in full. Similarly, a default to a participant would be a default to IFC.

Below is an overview of the advantages of the B Loan structure for IFC, Borrowers, and Participants.

Benefits to Participants:

1. Participants share IFC's Preferred Creditor Status, and therefore mitigate transfer & convertibility risk;
2. Participants benefit from universal recognition of IFC's risk mitigation;
3. Participants can benefit from IFC’s relations with governments through the World Bank Group;
4. Participants benefit from IFC’s structuring & restructuring skills;
5. Participants benefit from IFC's environmental & social leadership; and
6. Participants can be introduced to new clients/countries through a B Loan participation.

Benefits to Borrowers:

1. The B Loan can complete the client's financing package;
2. Borrowers can achieve financing with longer tenors than otherwise available;
3. The entire IFC financing is exempt from withholding taxes;
4. The A/B Loan structure allows simplified administration and documentation since IFC is the sole lender of record; and
5. The B Loan syndication can introduce new banking relationships to the borrower.

Product Type Co-financing
Defined Risks Covered n.a.
Eligible Form of Investments All
Eligible Currency of Underlying Investment Covered by this Product Both local and foreign currency
Eligible Countries & Regions n.a.
More on Eligible Countries
Eligible Applicants n.a. More on Eligible Applicants
Eligible Sector No Specific Sector
Maximum Tenor 0 to 5 years
Max. Absolute Amount (USD) 0 to 50 MM
Max. % of Project Costs Covered 25+% to 50%
Max. % of Export Content Covered Over 85+%
Fees Market-based

Other Conditions Sovereign Counterguarantee: No
Anti-Corruption and Governance Standards: Yes link
Environmental standards: Yes link
Social standards (incl. Human Rights Standards; Labor Rights Standards): Yes
Source(s) n.a.
For more information, contact
International Finance Corporation
Email: syndications@ifc.org
Phone: (202) 473-1000
Attachments n.a.
Additional Links www1.ifc.org/wps/wcm/connect/3c285c00 ... chure+-+February+2013.pdf?MOD=AJPERES
www1.ifc.org/wps/wcm/connect/Topics_E ... +Syndications/Upcoming+Opportunities/
www1.ifc.org/wps/wcm/connect/Topics_E ... ite/IFC+Syndications/Data_Statistics/
www1.ifc.org/wps/wcm/connect/Topics_E ... C+Syndications/Current+Co-Financiers/
Deals n.a.

Provider Name IFC (International Finance Corporation)
Institution Type PUBLIC: Multilateral Development Bank
Ownership 179 member countries
Head Office 2121 Pennsylvania Avenue, NW, Washington, DC, 20433
Provider Home Country United States
Rating n.a.
Main Risk Mitigation Products IFC Partial Credit Guarantee
IFC Single Asset Risk-Share
IFC Portfolio Risk Sharing Facility
IFC Guarantee Offshore Liquidity Facility
Attachments n.a.
Additional Links www1.ifc.org/wps/wcm/connect/publicat ... xternal_publication_site/publications
www1.ifc.org/wps/wcm/connect/corp_ext ... /ifc_external_corporate_site/ifc+news
www1.ifc.org/wps/wcm/connect/corp_ext ... c15&useDefaultText=0&useDefaultDesc=0
www1.ifc.org/wps/wcm/connect/CORP_EXT ... C_External_Corporate_Site/What+We+Do/
www1.ifc.org/wps/wcm/connect/region__ ... /regions/regions/regions+landing+page
Entered On: 06/29/2007 at 01:06 PM
Updated On: 05/08/2013 at 03:16 PM