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IFC Invests $30 Million in Global Debt Fund


In Washington D.C.:
Georg Schmidt

Tel: + (202) 458 2934
Email:
Gschmidt@ifc.org

Azam Khan

Tel.: + (202) 473-1663

Email:
Akhan@ifc.org


Washington, D.C., August 30, 2004—The International Finance Corporation, the private sector arm of the World Bank Group, has agreed to make a $30 million investment in the $300 million GEM VII Targeted Value and Income Fund. Structured as a collateral debt obligation (CDO), GEM VII is the first global emerging market debt fund with the ability to invest in the whole universe of emerging markets fixed income opportunities ranging from distressed, performing and synthetic to local currency instruments.

The fund will target a globally diversified pool of dollar denominated private sector debt issues, both performing and nonperforming. Dollar debt will be complemented by emerging markets local currency debt as the fund aims to focus investments on about 33 emerging market countries. The fund is managed by TCW Asset Management Company. Morgan Stanley was the sole structuring and lead distribution agent of the debt and equity to a globally and institutionally diverse consortium of investors.


Teresa Barger, IFC director for Private Equity and Investment Funds, said, "IFC can play an important role by encouraging fixed income fund managers to create new products that modify the risk/return profile of emerging markets assets. This can attract investors who are limited to investment grade securities. Emerging markets corporate debt is still plagued by a lack of transparency, poor recovery mechanisms, and scant structuring knowledge. Participation by top-notch fund managers in this asset class will improve transparency, add buy-side perspective to new issuance, and deepen the investor market."


Nathan Sandler, Managing Director of TCW Asset Management, added, "With TCW GEM VII Targeted Value, TCW's ninth emerging market CDO, we have really broken new ground.  The fund's unique structure gives us the tools to exploit the full range of investment opportunities in the emerging markets and to manage risk more effectively.  IFC’s investment has been instrumental in developing this fund.  Our cooperation broadens the strategic investor base, mobilizes institutional capital for the private sector, and builds innovative investment products to meet specific risk preferences and return targets."


Morgen Stanley’s spokesperson said, “GEM VII is the first CDO to take advantage of relative value opportunities in the distressed and local currency sectors of the emerging markets. This innovative structure provides the manager with optimal flexibility in asset selection and allocation. The senior notes of the transaction are wrapped to Aaa/AAA and priced at a historically low level, possibly the tightest level ever for an emerging market CDO"


TCW Asset Management Company is a wholly owned subsidiary of the TCW Group, which is an indirect subsidiary of Société Générale.  TCW has approximately $100 billion assets under management, including over $2.25 billion in emerging market debt.


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 2003, 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 2003 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.