The Inter-American Development Bank (IDB) closed the first transaction involving the trade of biofuel under its Trade Finance Facilitation Program (TFFP) with Banco Indusval S.A., Brazil. Under this transaction on November 1, 2007, the IDB has extended its guarantee to cover a promissory note used to finance the export of alcohol for use as biofuel from Brazil to England. The IDB issued this guarantee in favor of American Express Bank Ltd., thus taking the risk assumed on the transaction with Banco Indusval.
The US$ 1 million and one year tenor deal contributes to the production and supply of biofuel as an alternative and more sustainable energy source. Biofuels can provide a number of environmental advantages over conventional fossil fuels, most notably a reduction in greenhouse gas emissions.
TFFP
Launched in 2005, the TFFP constitutes an effective tool for the IDB to support economic growth through the expansion of international trade financing available to Latin American and Caribbean companies. The TFFP currently comprises a network of more than 116 Confirming Banks from 54 different international banking groups, and 29 Issuing Banks in 14 Latin American and Caribbean countries, with US$527 million in approved credit lines. To date, the IDB has issued guarantees for over US$182 million in support of 230 individual trade transactions totaling US$245 million.
Banco Indusval
Banco Indusval is a medium-sized Brazilian bank with US$788 million in assets as of June 2007. Its head office is located in Sao Paulo-SP and the bank has branches strategically located in important cities of the Southern, Southeastern and Center regions of the country.
Indusval’s clients have a growing need for trade finance services and products. IDB’s TFFP plays an important role in helping Banco Indusval to broaden and increase its access to new and existing sources of trade financing by helping them access the program’s network of Confirming Banks.