inter-american development bank june 4, 2004 1 inter-american development bank private sector...

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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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June 4, 2004June 4, 2004

Private Sector Department

Preferred Creditor Status

Financial Instruments

Sector Experience

Operating Results

Contents

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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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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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June 4, 2004June 4, 2004

Investment Eligibility

EnergyEnergy

TelecommunicationsTelecommunications

TransportationTransportation

Water & SanitationWater & Sanitation

Financial InstitutionsFinancial Institutions

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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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

inter-american development bank june 4, 2004 1 inter-american development bank private sector...

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