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1
Inter-American Development Bank
June 4, 2004June 4, 2004
Inter-American Development BankPrivate Sector Department
Kevin CorriganHead-SyndicationsTel.: 202-623-1594
E-mail: [email protected]
Capital Markets for DevelopmentCapital Markets for Development
June, 2004June, 2004
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Inter-American Development Bank
June 4, 2004June 4, 2004
Private Sector Department
Preferred Creditor Status
Financial Instruments
Sector Experience
Operating Results
Contents
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Inter-American Development Bank
June 4, 2004June 4, 2004
Began Operations 1/1/95
Promote private investment in basic infrastructure and public utility services (greenfield projects, rehabilitation and expansion programs)
Supports project debt
Limited recourse (project finance) or corporate finance basis
Targets up to 10% of IDB’s total loans
Catalytic role: each $1 of IDB financing mobilizes over $5 of overall investment
IDB – Private Sector Mandate
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Inter-American Development Bank
June 4, 2004June 4, 2004
Broader mandate to support development of local capital markets through use of partial guarantees to:
Extend maturities Bring new players to market Devise new financing instruments
Local Capital Markets
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Inter-American Development Bank
June 4, 2004June 4, 2004
Investment Eligibility
EnergyEnergy
TelecommunicationsTelecommunications
TransportationTransportation
Water & SanitationWater & Sanitation
Financial InstitutionsFinancial Institutions
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Inter-American Development Bank
June 4, 2004June 4, 2004
What it means:
IDB enjoys certain privileges in its member countries: De jure: exemption from withholding taxes De facto: preferred creditor status
Preferred access to foreign exchange in the event of country foreign exchange shortage
IDB Loans have never been included in a general country debt rescheduling as part of the London Club
IDB has never been subjected to mandatory new money obligations under a general debt rescheduling
There have been no write-offs of any IDB loans during its entire 40-year operating history due to political risk events
Bank regulators provide exemption from automatic country risk provisioning, when applicable
IDB’s preferred creditor status is an important element in IDB’s AAA credit rating
IDB’s Preferred Creditor Status
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Inter-American Development Bank
June 4, 2004June 4, 2004
A-Loans (IDB´s account): up to US$75 million or 25% of total project costs
• up to 20 years (typically in 10-15 year range) market based pricing
B-Loans (market participation): maximize market-based leverage of A-Loan co-financing with banks & institutional investors through sale of
participations IDB is Lead Lender and Lender of Record typically work with Arranger/Placement Agent
Financial Instruments: A-B Loans
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Inter-American Development Bank
June 4, 2004June 4, 2004
Political Risk Guarantees:
convertibility & transfer as stand-alone product
streamlined approval process (3-4 months) selected non-commercial risks
sovereign breach of contract limited to 50% of project cost or US$150 million
Financial Instruments: Political Risk Guarantees
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Inter-American Development Bank
June 4, 2004June 4, 2004
For use in local capital markets development Extend maturities Develop new instruments
Examples:
Local currency bond issues
Asset securitizations (mortgage loans, receivables)
Up to 25% of total project cost (or total bond issuance) to a maximum of US$75 million
Financial Instruments: Partial Credit Guarantees
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Inter-American Development Bank
June 4, 2004June 4, 2004
Started with the International Trade Finance Reactivation Program, a two-year program to address liquidity shortfalls in the Region
Efficient means to channel funds to local banking system for trade operations or on-lending for infrastructure projects
PRI can use full range of existing products to mitigate country risk in trade finance
Financial Institutions
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Inter-American Development Bank
June 4, 2004June 4, 2004
Water and sanitation projects, privatizations, B.O.T.s
Transaction examples: Aguas Argentinas, in Argentina Aguas del Illimani, in Bolivia Rio Bogotá, in Colombia
Water and Sanitation Experience
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Inter-American Development Bank
June 4, 2004June 4, 2004
Greenfield B.O.T. projects, rehabilitation and expansion projects
Transaction examples: Port of Mejillones, Chile Port of M’Bopicua, Uruguay Anhangüera - Bandeirantes Highway System, Brazil
Transportation Experience
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Inter-American Development Bank
June 4, 2004June 4, 2004
Energy generation, transmission & distribution, and gas transportation projects
Transaction examples: Bandeirante Energia, power distribution company in Brazil Redesur, electricity transmission in Peru Yucatan Pipeline, gas transportation in Mexico Termopernambuco, power generation plant in Brazil
Energy Experience
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Inter-American Development Bank
June 4, 2004June 4, 2004
Transaction examples: Colpatria mortgage backed security, Colombia Santiago-Valparaíso-Viña del Mar infrastructure bonds, Chile Graña & Montero securitization of receivables, Peru Costanera Norte infrastructure bonds, Chile
Capital Markets Development Experience
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Inter-American Development Bank
June 4, 2004June 4, 2004
Bradesco Trade Finance Facility US$120 mm 2 year loan Joint deal with IFC
Unibanco Infrastructure Facility US$150 mm A/B Loan for on lending to infrastructure projects
Financial Institutions Experience
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Inter-American Development Bank
June 4, 2004June 4, 2004
Operations Summary 1995- December 2003
Projects # A - Loan B - Loan Guarantee
Approved 61 $2,166.3 $3,262.1 $696.5
Closed 58 $1,792.1 $2,736.2 $465.5
Participants in B-Loans:
81 Financial Institutions from 15 countries
In US$ millions
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Inter-American Development Bank
June 4, 2004June 4, 2004
Participants – B LoansInstitutions Origin Institutions OriginBanco Santander Central Hispano Spain HSH Nordbanken GermanyCredit Agricole Indosuez France Marubeni General Leasing JapanDresdner Germany Bank of Tokyo-Mitsubishi JapanBBVA Spain La Caixa SpainInstituto de Credito Oficial Spain Banc of America U.S.A.Banesto Spain Comerica U.S.A.Caja Madrid Spain Banca di Roma ItalySociete Generale France Travelers Insurance U.S.A.Provident Life U.S.A. TransAmerica Insurance U.S.A.HVB Group Germany Banco Comercial Portugues PortugalCitibank U.S.A. CIC FranceFortis Belgium AIG U.S.A.GE Capital Corp. U.S.A. Erste Bank Der Oesterreichischen AustriaBNL Italy Standard Bank Group South AfricaMutual of Omaha U.S.A. Rabobank NetherlandsANZ Australia CDC (Caisse des Depots et Consignations) FranceAegon U.S.A. CIFI OtherING Investment Management U.S.A. Banco do Brasil BrazilABN AMRO Netherlands Bank of Nova Scotia CanadaMediocredito Centrale Italy Mitsui Trust Banking JapanIFPT Canada PB Capital Corp. U.S.A.Mizuho Japan Banco Sabadell SpainNatexis Banques Populaires France Banca Opi ItalySanPaolo IMI Italy National Life of Vermont U.S.A.Caixa Geral de Depositos Portugal Bancaja SpainCredit Lyonnais France Caixa Nova SpainBNP Paribas France Bank of Montreal CanadaIntesaBCI/Sudameris Italy Standard Chartered U.K.ING Bank Netherlands UFJ JapanWestLB Germany Shinsei Bank (LTCB) JapanDexia/Credit Local de France France Pacific Life U.S.A.KBC Belgium FleetBoston U.S.A.John Hancock U.S.A. Banco de Valencia SpainBayerische Landesbank Germany Banco Espirito Santo PortugalSumitomo Mitsui Banking Corp. Japan Wachovia U.S.A.Lehman Brothers U.S.A. Toronto Dominion CanadaDeutsche Bank Germany Bank Leumi IsraelLincoln National U.S.A. CoBank U.S.A.Principal U.S.A. State Bank of India IndiaCIGNA U.S.A. Banif PortugalNord LB Germany Royal Bank of Canada CanadaJP Morgan Chase U.S.A. $2.792.67Billion
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Inter-American Development Bank
June 4, 2004June 4, 2004
Operations Summary – Closed Transactions
0
1000
2000
3000
4000
5000
6000
(in $MM)
1995 1996 1997 1998 1999 2000 2001 2002 2003
CLOSED TRANSACTIONSCUMULATIVE PER YEAR
A Loan Guarantee B Loan
1
4540
34
25
1210
5
51
# of projects
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Inter-American Development Bank
June 4, 2004June 4, 2004
Transactions Closed – A/B Loans (1995-2003)
Brazil28%
Mexico12%
Peru7%
Costa Rica2%Panama
2%Uruguay
3%Bolivia
5%
Colombia5%
Chile7% Regional
5% Dominican Republic5%
Nicaragua2%
Honduras3%
Guatemala2%
Argentina12%
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Inter-American Development Bank
June 4, 2004June 4, 2004
Private Sector Department
1300 New Yok Avenue N.W.
Washington, DC 20577
USA
www.iadb.org/pri
Teléfono: (1) 202 623 1000
Fax: (1) 202 623 3639