Washington, D.C., March 23, 2003—The
International Finance Corporation, the private sector arm of the World
Bank Group, and Deutsche Bank (DB) today signed a financing agreement for
the US$250 million East Asia Local Currency Swap Facility. It will provide
local corporations and financial institutions with better access to the
swap markets and help to better manage their foreign exchange risk.
This first-of-its-kind transaction will enable DB to undertake larger
and longer dated swaps and expand its client base to a wider range of local
institutions. IFC will guarantee a portion of any losses on eligible transactions
borne by DB under this facility. Longer-dated transactions with at least
one local currency component will be eligible, providing DB clients with
hedging tools. Corporations and financial institutions incorporated in
Indonesia, the Philippines and Thailand will be targeted by this facility
at its outset.
“This risk sharing facility helps increase market capacity for longer
term local currency hedging products,” said Nina Shapiro, IFC vice president
of finance and IFC treasurer. Karl Voltaire, IFC director for global
financial markets, added, “By encouraging DB to extend credit limits and
tenors and making these products accessible to a wide range of borrowers,
this facility provides local companies with risk management tools they
need to better manage their balance sheets. This facility also will
add liquidity and depth to the regional swap markets and provide a stimulus
to local capital markets.”
Extending the duration of products and liquidity in local derivatives markets
is a priority for DB. "In the post-Asian crisis era, DB has recognized
an increased responsibility to remain at the forefront of financial
market development in Asia’s local markets,” said Bryan Yap, managing
director and co-head for fixed income derivatives trading in Asia. DB is
a leading provider of credit derivative and risk management products in
major Asian markets. It provides a range of corporate and investment
banking, private client and asset management products and services. DB
is one of the largest group of financial and banking institutions worldwide,
with total assets of €758 billion on Dec. 31, 2002.
Mr. Yap noted that DB has worked closely with domestic regulators and finance
ministries and participated in numerous market forums to promote market
development. This commitment has translated into a primary dealer role
for DB in domestic government bond markets and a strong ranking in the
derivative industry from peers and clients.
IFC has also put a priority on developing local capital markets to ensure
better access to capital by local companies and to help them develop the
capacity to better manage foreign currency risk. Mr. Yap added, “In this
context, we are extremely pleased to further this effort with IFC. Our
missions complement one another.”
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. Since its founding
in 1956 through FY02, IFC has committed more than $34 billion of its own
funds and arranged $21 billion in syndications for 2,825 companies in 140
developing countries. IFC's worldwide committed portfolio as of FY02 was
$15.1 billion for its own account and $6.5 billion held for participants
in loan syndications.
|