The Inter-American Development Bank closed on July 24th the first transaction in Central America under the Trade Finance Facilitation Program (TFFP), with Nicaraguan bank Banco de Credito Centroamericano (Bancentro). Under this transaction, the IDB has extended its guarantee to cover a promissory note used to finance the import of gas from Ecuador to El Salvador by a local gas company.
The IDB issued this guarantee in favor of Wachovia Bank, thus sharing the risk assumed on the transaction with Bancentro.
“By joining the TFFP, we are expanding our relationship with 60 major correspondent banks in 20 countries around the world and gaining access to funding terms that enable Bancentro to offer longer-term trade financing to our customers", said Maritza C. Arellano, International Executive Manager of Bancentro.
The approximately US$2 million deal has a tenor of one year and will help support intra-regional trade in atin America.
TFFP
The Trade Finance Facilitation Program was launched by the IDB in April 2005 and is designed to promote economic reactivation and growth throughout Latin America and the Caribbean by increasing the availability of funding for international trade. Under the program the IDB issues guarantees to confirming banks to mitigate the risk from eligible issuing banks in export and import contracts with tenors of up to three years.
BANCENTRO
BANCENTRO is the second largest bank in Nicaragua and the core entity of Miami-based Central American financial conglomerate Latin American Financial Services Group (Lafise Group). With trade financing activities representing 12 percent of assets and a focus on serving the non-traditional exports sector, the TFFP provides BANCENTRO to broaden its international funding base among existing and new international correspondent banks.