Volume 2 - IFC

Debt securities accounted for 7% of IFC’s disbursed investment
portfolio at June 30, 2009, unchanged from June 30, 2008 and 7% of
the carrying value of the investment portfolio at June 30, 2009, also
unchanged from June 30, 2008.
GUARANTEES AND PARTIAL CREDIT GUARANTEES
IFC offers partial credit guarantees to clients covering, on a risk-sharing
basis, client obligations on bonds and/or loans. IFC’s guarantee is available
for debt instruments and trade obligations of clients and covers
commercial as well as noncommercial risks. IFC will provide local currency
guarantees, but when a guarantee is called, the client will generally
be obligated to reimburse IFC in US dollar terms. Guarantee fees are consistent
with IFC’s loan pricing policies. During FY09, IFC signed $2.5 billion
of guarantees, $1.8 billion in FY08.
RESOURCE MOBILIZATION
Resource mobilization is defined as financing from entities other than
IFC that becomes available to clients due to IFC’s direct involvement
in raising resources. lFC finances only a portion, usually not more than
25%, of the cost of any project. All IFC-financed projects, therefore,
require other financial partners. IFC mobilizes such private sector finance
from other entities through loan participations, parallel loans, partial
credit guarantees, securitizations, loan sales, risk sharing facilities, and
equity investments. In FY09, IFC launched a number of new initiatives
with a resource mobilization component, and revised its resource
mobiliza tion definition accordingly. The components of resource mobilization
are as follows:
B-LOANS
The principal direct means by which IFC mobilizes such private sector
finance is through the sale of participations in its loans (B-loans), known
as the B-loan program. Through the B-loan program, IFC has worked
primarily with commercial banks but also with nonbank financial institutions
in financing projects since the early 1960s.
Whenever it participates a loan, IFC will always make a loan for its
own account (an A-loan), thereby sharing the risk alongside its loan
participants. IFC acts as the lender of record and is responsible for the
administration of the entire loan, including the B-loan. IFC charges fees
to the borrower at prevailing market rates to cover the cost of the syndication
of the B-loan.
B-loan commitments were $1,858 million in FY09 ($3,250 million
in FY08).
STRUCTURED FINANCE
Structured finance comprises partial credit guarantees, securitizations
and risk sharing facilities. Structured finance commitments, net, defined
as the amount of financing with a risk position equal to, or senior to, that
of IFC’s risk participation in the transaction, totaled $169 million in FY09
($1,403 million in FY08).
PARALLEL LOANS
Loans from other financial institutions that IFC helped raise for clients
and received a fee, but for which IFC is not the lender of record, arranged
by IFC in FY09 were $374 million ($40 million in FY08).
SALES OF LOANS
Loans originally disbursed and reported on IFC’s balance sheet that were
subsequently sold totaled $0 in FY09 ($59 million in FY08).
NEW INITIATIVES
Amounts committed by entities other than IFC to IFC’s new initiatives
totaled $1,563 million in FY09, comprising: $8 million in respect
of IFC Capitalization Fund; $155 million in respect of the Microfinance
Enhancement Facility; and $1,400 million in respect of GTLP ($0 in FY08).
RESOURCE MOBILIZATION RATIO
The resource mobilization ratio is defined as:
Loan participations + parallel loans +sales of loans+ non-IFC investment
part of structured fi nance + non-IFC part of new initiatives commitments
Commitments (IFC investments + IFC portion of structured fi nance +
IFC part of new initiatives commitments)
For each dollar that IFC committed, IFC mobilized (in the form of
B-loans, parallel loans, sales of loans, the non-IFC portion of structured
finance and the non-IFC portion of new initiatives commitments)
$0.38 in FY09 ($0.42 in FY08).
CLIENT RISK MANAGEMENT PRODUCTS
IFC provides derivative products to its clients to allow them to hedge
their interest rate, currency or commodity price exposures. IFC intermediates
between its developing country clients and derivatives market
makers in order to provide IFC’s clients with full market access to risk
management products.
ADVISORY SERVICES
Advisory services have become a more substantial and important part
of IFC’s business and a critical tool for extending IFC’s reach and expanding
IFC’s impact. Advisory services contribute significantly to IFC’s additionality
by improving the business enabling environment for the private
sector as well as the capabilities of private firms and service providers. IFC
provides such services to promote sustainable private sector investment
in developing countries. Through this work, which is funded in partnership
with governments and other donors, IFC contributes to development
where opportunities for development may be limited.
IFC’s advisory services are organized into five business lines.
■ Investment Climate: to help governments of developing and transitional
countries improve the operating environment for businesses.
■ Access to Finance: to help increase the availability and affordability
of financial services, focusing particularly on micro, small, and
medium enterprises.
■ Corporate Advice: to offer corporate advice to existing and potential
investment clients.
■ Environment and Social Sustainability: to promote the large-scale
adoption of business models that are both profitable and good for
the environment and social development.
■ Infrastructure Advice: to help generate investment opportunities
that result in long-term economic growth and better living standards
for IFC’s client countries.
IFC’s expenditures for advisory services totaled $129 million in FY09
($123 million in FY08 and $96 million in FY07).
The advisory services portfolio at June 30, 2009 included 782 projects
(862 projects at June 30, 2008) with approved funding from IFC and
donors of $941 million ($919 million at June 30, 2008). Of this, 227 new
projects 3 were approved in FY09 (299 projects in FY08), with funding
of $157 million ($306 million in FY08). The median planned duration of
advisory service projects now typically exceeds 30 months. The average
size of new projects typically exceeds $0.5 million.
During FY09, expenses were incurred in 928 projects (954 projects in
FY08) (both IFC and donor funds).
3 Excluding 15 on-going projects, which were added to the portfolio in FY08.
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