Tegucigalpa, Honduras, October 18, 2010—IFC,
a member of the World Bank Group, announced its first subnational financing
in Honduras to support urgently needed road repairs, upgrades, and an early
flood warning system in the Central District Municipality, the country’s
key administrative and commercial area.
The municipality encompasses Tegucigalpa and Comayaguela and has a population
of 1.2 million people, generating nearly half the country’s gross domestic
product. IFC will provide three local banks—Banco Ficohsa, Banco Atlantida,
and Banco de Occidente—a partial risk-sharing facility for 36 percent
of their eight-year, $44 million syndicated local-currency loan to the
municipality. The investment is expected to improve the municipality’s
main road network, optimize its road investments, and support private sector
development by reducing vehicle operating costs.
“IFC’s support will help us meet our infrastructure needs, but more importantly
these projects will generate much needed jobs in our city,” said Mayor
Ricardo Alvarez. “Unemployment rates are very high; whatever local governments
can do to improve the quality of life and generate jobs in partnership
with the banking sector and international organizations like IFC is a positive
contribution to our city.”
Banco Financiera Comercial Hondureña S.A. (Ficohsa), a key IFC partner
in Honduras, was the loan’s structuring agent and lead arranger. The Central
District Municipality and Ficohsa requested IFC’s participation to draw
on its global expertise in road infrastructure and structuring subnational
IFC provides subnational financing without sovereign guarantees to local
governments and public enterprises for essential infrastructure investments.
IFC’s risk-sharing product met the needs of local banks reaching single-borrower
exposure limits, while allowing for financing that matches the long-term
nature of the investments and the municipality’s local-currency revenues.
IFC’s facility is the first from a multilateral organization to a municipality
in Honduras without a sovereign guarantee.
Javier Atala, Ficohsa’s General Manager and Executive Vice-President said,
“IFC’s support to local banks will help the municipality move beyond
its current reliance on central government grants and short-term loans
to finance its capital investment program, diversify its funding sources,
and transition to long-term commercial financing.”
Roberto Albisetti, IFC Senior Manager for Mexico and Central America, said:
“IFC is delighted to support our commercial bank partners in delivering
our first long-term infrastructure financing for a municipality in Honduras.
With this investment we will help provide road repairs and upgrades that
are essential to the municipality’s continued economic growth. We will
also help reduce the risk from flooding in the municipality, which is often
exposed to natural disasters.”
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in developing countries. We create
opportunity for people to escape poverty and improve their lives. We do
so by providing financing to help businesses employ more people and supply
essential services, by mobilizing capital from others, and by delivering
advisory services to ensure sustainable development. In a time of global
economic uncertainty, our new investments climbed to a record $18 billion
in fiscal 2010. For more information, visit www.ifc.org.