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
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 (www.ifc.org)
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.