Beijing, China, February 9, 2017—IFC,
a member of the World Bank Group, and the Asian Infrastructure Investment
Bank (AIIB) have signed an International Swaps and Derivatives Association
(ISDA) Master Agreement to enhance their capacity to make investments in
emerging-markets projects, especially in Asia’s infrastructure sector.
It is the first financial collaboration agreement between the two development
finance institutions, demonstrating innovative ways to scale up development
finance through capital market solutions.
Under the Agreement, AIIB and IFC will be
able to hedge with each other the interest rate and currency risks associated
with its investments, expanding their overall lending capacity. IFC has
already entered in such agreements with the African Development Bank, the
Asian Development Bank and the European Bank for Reconstruction and Development.
Andrew Cross, IFC Deputy Treasurer for Asia
said: “Modern infrastructure is essential for lasting growth and prosperity.
Yet the financing gap in this sector is huge, totaling trillions of dollars
a year in emerging markets alone. Our partnership with AIIB will enable
us to offer more efficient infrastructure financing through the broader
use of capital markets tools.”
Earlier this year, IFC launched an innovative
program, known as MCPP Infrastructure, which will raise $5 billion from
global institutional investors such as insurance companies to modernize
infrastructure in emerging markets over the next five years.
“This agreement facilitates AIIB’s ability
to support our clients’ projects and help promote local currency bond
issuance,” said S°ren Elbech, Treasurer, AIIB. “Multilateral financial
institutions, like AIIB and IFC, have a much larger risk bearing capacity,
compared with private sector companies in the countries where we lend.
It therefore makes a lot of sense for us to create financing solutions
that significantly reduce our clients’ risk of losses from such currency
Since opening its doors on Jan. 16, 2016,
AIIB has approved loans of $1.73 billion to support nine infrastructure
projects in seven countries. In 2017, the bank is focused on improving
connectivity throughout Asia by supporting member countries to meet their
environmental and development goals, prioritizing cross-border infrastructure
projects, and devising innovative solutions to catalyze private capital
In many developing countries, basic infrastructure
is failing, insufficient or non-existent. More than 1 billion people lack
access to electricity. About 650 million people lack access to a clean
source of drinking water, and more than 2 billion live without sewage infrastructure.
Some 80% of wastewater globally is discharged without any treatment, threatening
ecosystems and human health. IFC invested more than $4 billion in power,
transport and municipal infrastructure projects in FY16, including funds
mobilized from third parties.
IFC, a member of the World Bank Group, is
the largest global development institution focused on the private sector
in emerging markets. Working with 2,000 businesses worldwide, we use our
six decades of experience to create opportunity where it’s needed most.
In FY16, our long-term investments in developing countries rose to nearly
$19 billion, leveraging our capital, expertise and influence to help the
private sector end extreme poverty and boost shared prosperity. For more
information, visit www.ifc.org
Asian Infrastructure Investment Bank (AIIB)
is a multilateral development bank that seeks to invest in high quality
projects that offer infrastructure solutions to improve the social and
economic development of its member countries. Based in Beijing,
the bank works in cooperation with sovereign governments, private financiers
and other multilateral development banks to address the growing need for
transportation networks, urban development, clean water supplies and low-carbon
power within the region. For more information, visit www.aiib.org