|
Structured and Corporate Finance Department
The IDB created the Private Sector Department in 1994 to mobilize financing
for private infrastructure development. Today the renamed Structured and Corporate Finance Department has primary
operational responsibility for the Bank’s financing of private investment in
various infrastructure sectors and for the development of domestic capital
markets. The Structured and Corporate Finance Department also promotes the development of
international trade and regional integration through a trade finance reactivation
program aimed at supporting private sector companies in the region.
The IDB works in partnership with commercial banks, institutional investors,
co-guarantors and other co-lenders to provide private firms with the financing
needed to meet the region’s growing demand for infrastructure and enhanced
financial markets capacity.
Up to 10 percent of the Bank’s outstanding loans and guarantees (excluding
the small number of “emergency” loans to countries undergoing liquidity
crises) may be made directly to private businesses without government guarantees,
on the basis of market-based pricing. The Structured and Corporate Finance Department
also offers partial credit and political risk guarantees for projects financed
with private debt. Loans or guarantees cannot exceed $200 million, or $400 million when authorized by the Bank's Board of Executive Directors. For projects in the smaller
economies that have limited access to capital markets, the Bank can provide
up to 40 percent of project costs. IDB loans and
guarantees may be complemented by cofinancing and guarantees from other
multilateral organizations, commercial banks and other investors.
Loan and guarantee transactions proposed to the Structured and Corporate Finance Department must meet certain eligibility criteria. The transactions must
Be located in an IDB borrowing member country.
Ensure that individuals and/or companies established in any one of the
Bank’s member countries maintain majority control of project capital.
Have a private sector company as the borrower of the loan or beneficiary
of the guarantee. Private investors must control at least 50 percent of the
borrower’s shares. As a rule, private sector companies should also provide
50 percent of project costs in the form of equity and/or debt.
Target the development of infrastructure and/or capital markets in Latin
America and the Caribbean. The IDB will place a priority on supporting private
sector projects that contribute to the basic infrastructure and/or provide
essential services that may have been performed by the public
sector in the past. IDB private sector programs can also be used for transactions
that promote domestic capital market development and mobilize
private and local currency domestic capital flows to private investments
in borrowing member countries.
Demonstrate financial and technical viability. The IDB selects operations
that are financially, legally, technically and economically sound.
Proposals should demonstrate that the regulatory system supports the
projects’ feasibility, that the projects are commercially viable, and that
they meet the standards of the international financial community in
terms of security structure. A high priority is attached to projects involving
experienced firms with the financial resources and management
capability to ensure the successful completion and long-term operation
of a facility.
Comply with IDB environmental, social and labor requirements.
Meet IDB procurement standards. Although public bidding is not
required for IDB private sector projects, the Bank does apply its basic procurement
policies and principles. Costs must be in line with current market
prices and contract conditions must be fair and reasonable. Wherever
appropriate, the IDB will encourage the use of competitive tendering
methods by its private sector clients, particularly for large contracts.
For more information, please contact:
E-mail:prisector@iadb.org
Tel.:(202) 623-1501
www.iadb.org/pri
|
