Press Releases

IFC Launches INCA Bond Market in Peru

In Washington, D.C.:
Adriana Gomez

Phone:  (202) 458-5204

Fax:  (202) 974-4384


Washington, D.C., June 25, 2004—The International Finance Corporation (IFC), the private sector arm of the World Bank Group, today launched a domestic Peruvian soles (S/.) "INCA" bond issue for the amount of S/. 50 million (approximately $15 million equivalent).  The transaction was issued under IFC’s new S/. debt issuance program of S/. 500 million.  IFC is the first international institution to issue domestic Peruvian soles bonds.  This transaction will thus provide a benchmark for future high-grade issuers and serve to help deepen the Peruvian capital markets.  This transaction also represents the second Latin American currency in which IFC has issued bonds.

The three-year domestic bonds carry a 7.33% coupon and were priced around 50 basis points through the government yield curve.  The transaction was broadly distributed with 43% placed with pension funds, 42% with public institutions and 15% with financial institutions.  The arranger of the program and the transaction is BCP, the placement agent is Credibolsa and JP Morgan acted as IFC’s financial advisor.  The proceeds of the issue were swapped into floating rate US dollar funds.  The end-benificiary of the swap is a Peruvian entity, which was able to hedge its foreign currency liabilities.

In the last two years, IFC has been working closely with the Peruvian authorities to prepare for this transaction.  "We are very pleased to be able to further increase the liquidity of the local bond market.  Given the recent volatility in interest rates globally, IFC agreed with the government to issue a series of smaller bond transactions.  This first issue was for S/. 50 million, and was more than twice oversubscribed." said John Groesbeek, Senior Financial Officer at IFC.

By launching this bond issue, IFC is showing its continued support to Peru.  Nina Shapiro, IFC's Vice President Finance and Treasurer, said: "This "INCA" issue represents IFC's commitment to help client countries develop their domestic markets and expand access to longer dated and local currency fixed rate funding and ease the risky reliance on foreign currency funding.  We have confidence in the capacity of Peru's financial institutions and investors to support the further development of the market and we expect other local and international borrowers to follow our initiative.  IFC intends to continue its loan and equity investments in Peru, and will also follow up with innovative structured finance transactions for IFC’s clients in the local bond market, allowing them to raise funds with longer maturities and for larger amounts."

"A sound financial market will support Peru's efforts to attain its economic goals" said Bernard Pasquier, IFC's director of the Latin America and Caribbean department.  Mr. Pasquier added: "IFC supports the development of strong capital markets in Latin America to bring benefits for economic growth, expand sources for financing, and to help reduce the vulnerability of the region's financial systems to external shocks."

IFC funds its lending activities by issuing bonds in the international capital markets.  The Corporation's securities, which are rated Aaa by Moody's and AAA by S&P, have been issued in 30 different currencies.  IFC's funding program for fiscal year 2004 is around $3.5 billion.  IFC has been the first, or among the first, nonresidents to issue in many currencies including Colombian pesos, Spanish pesetas, Portuguese escudos, Greek drachmae, Hong Kong dollars and Singapore dollars in the domestic markets, and in Czech koruna, Polish zloty and Israeli shekel in the eurobond markets.

The mission of IFC ( is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.