Resources for Businesse

Resources for Businesses

Financial Instruments for the Private Sector by IDB Group Window


 

Structured and Corporate Finance Department’s Financial Instruments

Instruments

Target Client

Terms

Other Information

Larger-scale project/structured finance and corporate finance

 

Syndicated loans (A/B Loan Program)

Senior and Subordinated Loan that qualifies as Tier 2 capital for financial institutions

 

Loans to funds and FIs

Trade finance

 

Entities in all sectors of the economy, private utilities and infrastructure operators, banks and financial market institutions, state-owned entities without a sovereign guarantee, and corporations.

Up to $200 million in financing, with typical maturities of between 5 to 15 years. On an exceptional basis, it can increase its financing to up to $400 million and maturities may reach up to 30 years.

US$ dollars and local currency

 

Covers 25% of total project costs, or up to 40% for projects located in certain countries.

 

SCF taps into other external sources for co-financing.

 

SCF acts as lead lender and lender of record for the syndicated loan facility.

 

B lenders can include global commercial banks, regional banks, or institutional investors.

 

Participants in the B loan benefit from IDB’s de facto preferred creditor status.

 

Loan and Interest Rate Charges

Partial credit guarantees – risk sharing facilities

 

Entities in all sectors of the economy, private utilities and infrastructure operators, banks and financial market institutions, state-owned entities without a sovereign guarantee and corporations.

Up to $200 million. On an exceptional basis, it can increase guarantee to up to $400 million.

Political risk guarantees carry fees determined on a case-by-case basis depending on the risk covered and the nature of the guarantees’ structure.

 

Technical assistance

Entities in all sectors of the economy, private utilities and infrastructure operators, banks and financial market institutions, state-owned entities without a sovereign guarantee, and corporations.

From $100,000 to $1.5 million

Counterpart financing required for at least 20% of the total cost of the project.

 

Grants granted as part of a project financed by an SCF loan or as a stand-alone project.

 

Equity

Not available

Not available

 

Top

Inter-American Investment Corporation’s financial instruments

Instruments

Target Client

Terms

Other Information

Equity and quasi-equity

Projects, financial institutions, investment funds as well as small and medium-sized private enterprises that are profitable and with audited financials.

Deal size ranges from $2 million to $10 million, with divestment period of 4 to 10 years.

 

Equity(common or preferred shares)

· 5% to 20% stake

· Typically no board participation

· Defined exit strategy

 

Loans with upside component

· Revenue or earnings participation

· Warrants or conversion rights

 

Subordinated debt

· Grace periods of 2 years or more

 

It can be accompanied with technical assistance.

 

Loan

Small and medium-sized companies; financial intermediaries that on-lend to small and medium-sized companies.

Small business loans(FINPYME Credit):

 

Size: $100,000 to $600,000 (up to20% of annual gross sales)

 

Currency: US dollars

 

Maturity:3 to 7 years

 

Interest Rates: Fixed, determined at the time of approval and held for 90 days.

 

Loans to medium-sized firms:

 

Amount: between $1 million and $20 million. In some markets, this transaction can be complemented with syndicated loans

 

Currency: U.S. dollars and in local currency in certain markets

 

Term: 1 to 15 years

 

Interest Rates: competitive fixed or variable interest rates

 

Financial Intermediaries:

 

Lines of credit to support expansion and development of financing products targeting SMEs.

 

Working capital lines

 

Financial and operating lease lines

 

Trade finance facilities

 

Syndicated A/B loans

 

Agency lines

 

 

 

FINPYME Credit finances investments in working capital as well as fixed assets. The program supports companies or sole proprietorships with at least three years of business operations, and gross annual sales between $500,000 and $6,000,000.

 

Partial credit guarantees

Small and medium-sized companies; financial intermediaries that on-lend to small and medium-sized companies.

This product is designed to enhance the credit rating of public issues.

Typical terms:

 

Size of issue: $15 million - $100 million

 

Enhancement: 10% to 25% or $2 million to $10 million

 

Term of Issue: 4 to 7 years

 

Currency of Issue: US$ or local currency

 

Currency of Guarantee: US dollar or local currency

 

 

Technical assistance

Small and medium-sized companies; financial intermediaries that on-lend to small and medium-sized companies.

FINPYME program: comprehensive package of value-added services for SMEs. The IIC offers technical assistance to IIC potential and current clients through five different categories:

 

1. Feasibility studies

2. Strengthening client’s supply chain

3. Enhancing competitiveness

4. Monitoring IIC projects

5. Environmental and social review:

 

Top

Multilateral Investment Fund’s Financial Instruments

Instruments

Target Client

Terms

Other Information

Equity

Venture capital funds, microfinance funds and financial intermediaries that on-lend micro and small enterprises.

Depending on client needs but typically between $2 and $5 million for venture capital and microfinance funds and between $1 and $3 million for financial intermediaries.

Equity and Loans may be accompanied by grants to finance technical assistance. All grants require counterpart financing.

Loan

Non-profits, companies, financial intermediaries that serve and micro and small enterprises.

Depending on client needs but typically between $2 and $3 million with terms according to market conditions.

Loans accompanied by grants of up to $250,000 to finance technical assistance.

Partial credit guarantees

Not Available

Not Available

 

Grants

Non-profits, companies, financial intermediaries that serve and micro and small enterprises.

Up to $2 million for a project.

Must be accompanied by counterpart financing.

Top

Opportunities for the Majority’s Financial Instruments

Instruments

Target Client

Size

Other Information

Loan

Companies, financial intermediaries of all sizes, non-profits that are willing to engage with the base of the socioeconomic pyramid.

$3 million to $20 million with up to 15-year maturity.

OMJ finances between 25% and 40% of the total project cost.

 

Act as catalyst to leverage third party resources through syndicated loans.

 

Technical Assistance provided to strengthen business models.

 

Interest Rate: Market Rates

 

Loan and Interest Rate Charges

Partial credit guarantees and risk sharing facilities

Companies, financial intermediaries of all sizes, non-profits that are focusing their efforts in engaging with the base of the socioeconomic pyramid.

$3 million to $20 million

Partial Credit Guarantees help clients diversify their funding sources, reduce risks, and obtain financing in their local currency.

 

Risk Sharing Facilities has been developed for the OMJ portfolio, allowing the IDB to divide the risk of a pool of mircroborrowers and microloans with the client. The Risk Sharing Facility covers, on a second-loss basis, part of the potential write-offs of a portfolio, enabling IDB clients to effectively cap their potential losses and reduce risk while they go down market or offer new services/products.

Technical assistance

Companies, financial intermediaries of all sizes, non-profits that are focusing their efforts in engaging with the base of the socioeconomic pyramid.

From $100,000 and $ 500,000.

Non-reimbursable financing is used to finance pilot business models, conduct market research, feasibility studies among other activities.

 

Equity

Not available

Not available