miga’s operations

WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY

MIGA’s Operations

Multilateral Investment Guarantee Agency July 30th, 2007

WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 2

FDI is crucial to development finance…

2

0

100

200

300

400

500

600

1990 1994 1998 2002 2006

Billions

FDI

In 2006, FDI constituted 56% of aggregate net resource flows to developing countries

FDI

Grants

Portfolio Equity

Long-term debt

Net Resource Flows to Developing Countries*

Source: Global Development Finance Database, 2007

*Aggregate Net Resource Flows defined as net FDI inflows plus net flows on long-term debt, plus portfolio equity and grants.


…is growing rapidly…

3

0

50

100

150

200

250

300

350

1990 1994 1998 2002 2006

Billions

Net FDI Inflows to Developing Countries 1990 - 2006

FDI

Debt

Official Flows



…and is concentrated in a handful of countries.

4

Net FDI Inflows to Developing Countries1990 - 2005

All other countries

Top Ten Recipients

-‐

50.0

100.0

150.0

200.0

250.0

300.0

1990 1995 2000 2005

Bill

ions


Low Income

Lower Middle Income

Upper Middle Income

-‐

50 .0

100 .0

150 .0

200 .0

250 .0

300 .0

1990 1995 2000 2005

Bill

ions




Challenges Investors Face

… they need predictability.

“We are never sure of our contracts – we live with constant insecurity.”

“The lack of respect for contracts and renegotiation is a problem throughout the region.”

“We do not want to invest in countries in which the rules are frequently and suddenly changed.”

Judicial/Legal Framework

Regulatory Inconsistency

Political Instability

Currency Instability

Respect for Contracts

Our clients tell us…


MIGA is active in under-served markets



High risk

All other counries

0

50

100

150

200

250

300

1990 1995 2000 2005

Bill

ions

% of Net FDI Inflow s to high risk countries

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

0%

20%

40%

60%

80%

100%

% of MIGA issuance to high risk countries

3 year moving average

% of Net FDI Inflow s to countries

outside top ten0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

0%

20%

40%

60%

80%

100%

% of MIGA issuance to countries outiside top

ten

7 1% a v e ra g e o v e r 16 ye a rs

2 7% a v e ra g e o v e r 16 ye a rs

3 year moving averageMIGA encourages FDI flows to less establishedmarkets

MIGA supports projects in “high risk” countries*

*”High risk” countries defined as having an Institutional Investor credit score of 30 or lower.


All other countries

Top Ten Recipients

-‐

50.0

100.0

150.0

200.0

250.0

300.0

1990 1995 2000 2005

Billio

ns


Portfolio

MIGA's Gross Portfolio FY03-FY07($ billions)

5.08

5.19

5.09

5.365.3

4.8

5

5.2

5.4

FY03 FY04 FY05 FY06 FY07

By Region

By Sector

Africa 18%

LAC 28%

Asia 14%

MENA 5%

ECA 37%

Infrastructure 41%

Agribus, & Manu 12%

Financial 29%

Services 5%

OGM 13%

Numbers may not total to 100% due to rounding.


Case Study 1: “Autopistas del Nordeste” Toll Road, Dominican Republic

Autopistas del Norte Dominican Republic

Autopistas del Norte Cayman Islands

International Sponsors

Grupo Odinsa, Odinsa Holding,

Grodco, Grodco Panama

Morgan Stanley NY Arranger

Institutional Investors

Sub. debt and equity $15 M

Bond:

$206 M

Local Sponsor

Consorcio Remix

Astris Finance Financial Advisor

$4.5 M Equity and Sub Debt

Dominican Republic

$103 M

MIGA supports an 33-year toll road concession

financed through a capital markets transaction

(“144a” private placement)

ü  40% oversubscribed

ü  Absent MIGA coverage, long-term financing was not available

ü  Innovative and speedy use of PRI to raise financing

ü  Rating increase with only 51% MIGA coverage


Case Study 2: “Motraco” Transmission lines from SA to Mozambique


Case Study 2: “Motraco” Transmission lines from SA to Mozambique

South Africa

EIB/ JBIC

Mozambique & Swaziland

Equity US$10.7 M

EIB/ JBIC loan guaranty US$75 M

Non-shareholder loan US$75M

Eskom

Motraco


Case Study 3: Emergency power - Brazil

Keppel Energy: 190MW Power Barges

§  Installation, operation and maintenance of a barge-mounted emergency power generation facility

§  Severe energy crisis, caused by under-investment in new generation and transmission capacity; made worse by a series of droughts in recent years (heavy dependence on hydro generating facilities)


Case Study 3: Emergency power - Brazil

Keppel Energy

Private insurers

US$130 M

CUP

Perceived risks:

§  Transfer restriction/ inconvertibility

§  Failure by the host government to honor its payment obligations under the Host Government Guarantee to the Electrical Power Supply Contract


Case Study 4: Phu My III Gas Fired Power project – Vietnam

Construction, on a BOT basis, of a 716 MW base load combined cycle gas-fired power plant, in Ba Ria, 70 km south-east of Ho Chi Minh City

(Vietnam’s follow-up to its first BOT Phu My 2.2)



Total cost: $412 million Debt: $309 million

Sponsors: BP, Sembcorp, Nissho Iwai, Kyushu

EPC: Siemens

Gas supplier: BP operated Block 06.1, approximately 450 km offshore southern Vietnam in the South China Sea

Lead arrangers: BoTM; Crédit Agricole, Crédit

Lyonnais, Fortis, Mizuho Bi/Multilateral

support: ADB, MIGA / JBIC, NEXI



BP

Semb Corp

Kyuden/ Nissho Iwai

MOF

MPI

MOI

Other agencies

Phu My III BOT Power Company

Gvt guarantee and undertaking

EVN

Petro Vietnam

EPC Contractor

O&M

PPA

GSA

EPC, O&M

JBIC ADB

Commercial Banks

MIGA, ADB, NEXI

MIGA

Equity: $103 M

Debt: $309 M

Gvt guarantee

$99 M

$40 M

$170 M

$48 M equity coverage

$90 P&I debt coverage, balance ADB and NEXI

BOT contract


MIGA’s Value Added

§  PRI is a highly specialized, niche

market §  Branding: MIGA is recognized as a

market leader in the industry §  Project finance structuring §  Mediating disputes / relationship with

government

§  Helping investors access funding §  Lowering borrowing costs

§  Increasing tenors

§  Extensive country knowledge

§  Ensuring environmental and social safeguard standards are met

Providing comfort to our clients by improving their

projects’ risk profiles

miga’s operations

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