The IDB offers Ordinary Capital (OC) sovereign borrowers flexible financing solutions to further borrower’s risk management capabilities in projects, lending programs and asset-liability management strategies.
Flexible Financing Facility (FFF) Through built-in options in FFF loans, borrowers have the ability to tailor financial terms at approval or during the life of a loan. The FFF platform —LIBOR-based financing with embedded options—enables clients to manage currency and interest rate risks. In addition, to address project changing needs, borrowers can also customize FFF loan repayment terms to better manage liquidity risks.
Local Currency Financing (LCF) As part of currency risk management options offered by the FFF, borrowers can choose to obtain financing in their own currency or in alternative regional currencies at inception or during the life of a loan. In addition, the IDB offers guarantees in local currency (LC).
Management of Legacy Financial Products Borrowers can transform loans under legacy financial products into flexible, market-based financing. This added flexibility enables borrowers to manage their loan portfolio with the IDB to better suit their debt management programs.
FLEXIBLE FINANCING FACILITY (FFF)
A “Menu” Approach to the IDB Financial Offerings
Sovereign borrowers can choose from a menu of embedded options to tailor financial terms and conditions of Ordinary Capital (OC) loans. The FFF also offers stand alone hedges to transform risk characteristics of all IDB obligations. These financial solutions address borrowers’ changing needs during the life of IDB loans. Options are available at any time during the life of a loan, on a partial loan amount, on the full outstanding loan balance, or on a loan portfolio level, subject to market availability.
Options offered under the FFF include:
As of January 1st, 2012, the FFF was fully implemented and became the only platform for approval of all new OC Sovereign Guaranteed (SG) loans. Until January 1st, 2012, loans were approved as Single Currency Facility LIBOR . The options described above, if operationally feasible, will be considered upon borrower’s request.
MANAGEMENT OF LEGACY FINANCIAL PRODUCTS
To broaden the financial solutions offered by the FFF, loans under legacy financial products can also be transformed into market-based products to better manage financial risks. Conversion of loans involves a high degree of customization to meet borrowers’ requirements and promotes valuable dialogue with the IDB.
The 2009–2010 Conversion Offer allowed borrowers to transform to market based rates US$32 billion of outstanding loan balances under two legacy products: Single Currency Facility (SCF) and Currency Pooling System (CPS) with adjustable rates. In addition, close to $10 billion of CPS loans were dollarized.
Contact us to discuss the financial solution that is most suitable to your needs.