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Major Terms and Conditions of IDB Loans
 The Inter-American Development Bank (IDB) currently offers two
sovereign-guaranteed
lending products for new loan commitments: the Single
Currency Facility (SCF) and the Dollar Window (DW). Both products
offer two different pricing modalities as follows:
Single
Currency Facility (SCF):
• Pool-based adjustable (ADJ SCF)
• LIBOR-based (LIBOR SCF)
Dollar
Window (DW):
• Fixed-at-Disbursement (F@D DW)
• LIBOR-based (LIBOR DW)
These
product offerings are intended to provide borrowers flexibility to select
terms that are consistent with their debt management strategy and
suited for their debt servicing capability.
The
main features and differences between the two products are highlighted
below. The principal terms and conditions of these products are illustrated
in the accompanying table.
Single
Currency Facility (SCF)
Currencies:
SCF loans are available in Euros, US dollars, Japanese yen, and Swiss
francs.
Lending
Rates:
Pool-based Adjustable (ADJ SCF):
The lending rate for the ADJ SCF is tied to the average cost
of a pool of medium to long term borrowings in each loan currency
plus the IDB’s standard lending spread approved by the Board
of Executive Directors for that semester. It is reset semiannually
on January 1st and July 1st.
LIBOR
(LIBOR SCF): The lending rate is based on three-month
LIBOR in each loan currency, plus a cost margin, plus IDB’s
standard lending spread. It is reset quarterly on January 1st, April
1st, July 1st, and October 1st.
Repayment
Terms: Repayment terms are specified at commitment. Loan
maturities vary from 15 to 25 years depending on the loan type and
sector.
Currency:
DW loans are only available in US dollars.
Lending
Rates:
Fixed-at-Disbursement: The lending
rate for each disbursement under this modality is fixed at the time
of disbursement, and remains fixed until the final maturity of the
loan. It includes IDB’s standard spread prevailing at the time
of disbursement.
LIBOR:
The lending rate is tied to six-month US LIBOR and includes IDB’s
weighted average cost margin relative to the six-month LIBOR for funding
allocated to these loans, plus IDB’s standard spread. It is
reset semiannually either on Feb 15th and Aug 15th, or May 15th and
Nov 15th.
Repayment
Terms
Fixed-at-Disbursement: Up to 12 years, 15 years by exception only.
LIBOR:
Up to 20 years.
SCF
and DW loans: A comparison
The
most important difference between SCF and DW is their intended lending
purpose:
•
The SCF is available for all sovereign-guaranteed OC lending;
• The DW is only available for sovereign-guaranteed multi-sector
global credit operations, for on-lending to private sector sub-borrowers.
• The
maximum annual amount of DW loan approvals is set at US$500 million.
Furthermore, loan disbursements for DW can only take place on Feb.
15th, May 15th, Aug. 15th, and Nov. 15th, whereas loan disbursements
for SCF can take place any time during the year.
ADJ SCF and LIBOR SCF: A comparison
The
main differences between the adjustable (ADJ) and LIBOR-based SCF
are:
•
The ADJ SCF has a base rate which is computed as the weighted average
cost during the previous semester of all the medium and longer
term
borrowings allocated to the pool funding these loans. Due to the
pooling mechanism, the cost basis of the ADJ SCF fluctuates
mainly to the extent
as borrowings are added to or expire from the pool. As a result,
the ADJ SCF tends to be relatively stable reflecting IDB’s
average medium-to-longer term funding costs.
• The LIBOR SCF has 3-month LIBOR as its base rate, which resets
every three months. LIBOR tends to be a volatile rate. As a result,
future payment obligations related to LIBOR SCF are difficult to
predict and may vary significantly from year to year.
Fixed-at-Disbursement and LIBOR DW: A comparison
•
The fixed-at-disbursement DW has a fixed rate for each disbursement
determined at the time of disbursement, which remains fixed until
the final maturity of the loan. Once fully disbursed, the loan carries
a fixed lending rate computed as the weighted average of the lending
rates associated with each disbursement. Payment obligations for this
loan type are fully predictable once disbursements have taken place.
• The LIBOR DW has a variable interest rate with 6-month LIBOR
as the base rate. As mentioned above under LIBOR SCF, the 6-month
LIBOR rate resets every 6 months and tends to be volatile. As a result,
future payment obligations are difficult to predict and may vary significantly
from year to year.
INTER-AMERICAN
DEVELOPMENT BANK
ORDINARY CAPITAL (OC) RESOURCES (*)
Major
Terms and Conditions of IDB Loans
|
Single
Currency Facility (SCF)
Adjustable
|
Single
Currency Facility (SCF)
3-Month LIBOR
|
Dollar
Window (DW)
Fixed @ Disbursement
|
Dollar
Window (DW)
6-Month LIBOR
|
| Eligibility |
Available
to all Project Investment and Policy-based loans. |
Available
to multi-sector Global Credit loans only. |
| Lending
Rate |
• The
lending rate consists of an adjustable base rate plus the Ordinary
Capital lending spread. The lending rate is reset semiannually,
on Jan 1st and Jul 1st of each year, and applies to the daily outstanding
loan balances during the respective interest periods.
• BASE
RATE: Represents IDB’s effective average cost during the
previous six months of the Single Currency Facility pool of medium-to
long-term borrowings allocated to the adjustable SCF.
|
• The
lending rate consists of a variable base rate, the Ordinary Capital
lending spread, and a margin. The lending rate is reset quarterly,
on Jan 1st, Apr 1st, Jul 1st, and Oct 1st of each year, and applies
to the daily outstanding loan balances during the respective interest
periods.
• BASE
RATE: The 3-month London Interbank Offered Rate (LIBOR) for value
at the 15th of each of the above reset months.
• MARGIN:
Consists of IDB’s weighted average cost margin relative
to three-month LIBOR for funding allocated to LIBOR SCF.
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• The
lending rate of each disbursement under this modality consists of
a fixed base rate plus the Ordinary Capital lending spread determined
at the time of disbursement, which will remain fixed until the loan’s
final maturity.
• BASE
RATE: IDB’s average market fixed rate cost for the borrowings
allocated to fund all DW fixed rate disbursements at each preset
disbursement date.
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• The
lending rate consists of a variable base rate, the Ordinary Capital
lending spread, and a margin. The lending rate is reset semiannually
on either Feb 15th and Aug 15th, or May 15th and Nov 15th of each
year and applies to the daily outstanding loan balances during the
respective interest periods.
• BASE
RATE: The 6-month London Interbank Offered Rate (LIBOR) for value
at the start of the above interest periods.
• MARGIN:
Consists of IDB’s weighted average cost margin relative
to six-month LIBOR for funding allocated to DW LIBOR.
|
| |
•
SPREAD: IDB’s standard lending spread set at 0.30%. |
• SPREAD:
IDB’s standard lending spread set at 0.30%. |
• SPREAD:
IDB’s standard lending spread set at 0.30%. |
| Credit Fee
(CC) |
•
0.25% annual rate charged on the daily undisbursed loan balance,
beginning 60 days after the loan contract’s signature date. |
| Inspection
& Supervision Fee (FIV) |
•
No Inspection & Supervision Fee. |
| Currencies |
•
Loans are offered in US dollars, Japanese yen, Euros and Swiss francs.
Borrowers may contract loans in one or more currencies. |
• US
dollar only. |
• US
dollar only. |
| Repayment
Terms |
•
Grace and maturity periods are established at loan approval. |
| •
GRACE PERIOD: For Project Investment loans,
original disbursement period. For Policy-based loans,
five years. |
•
5 years. |
• 5
years. |
| •
MATURITY: 15 to 25 years. |
•
12 years. |
• 20
years. |
(*) The IDB also offers sovereign Emergency Lending and Guarantee Disbursement Loans; and Private Sector Loans and Guarantees without sovereign guarantee, which are not addressed here. Furthermore, Currency Pooling System (CPS) loans were withdrawn from new commitments on September 17, 2003.
For further information, please contact:
Inter-American Development Bank
Loan and Technical Cooperation Management Section
1300 New York Avenue
Washington, DC 20577
Tel: (202) 623-2487
Fax: (202) 623-3154
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