Category: Structured Finance

The IDB has approved a $40m loan to the DomRep to enhance its electricity distribution networks. The floating rate loan has an amortization period of 25 years and a grace period of 4 years. The loan will help power companies Edenorte, Edesur and Edeste upgrade priority distribution circuits to reduce losses caused by deficient equipment and materials. The program was designed in coordination with the World Bank and the OPEC Fund for International Development, says the IDB.

The IDB is offering Uruguay up to $380m in financing in three separate facilities. The first is a credit line of $200m with an amortization period of 20 years. Since the credit line is still conditional upon approval, no other terms are available, says an IDB spokesperson. This credit line is for financing social projects aimed for poor children and teenagers. The IDB also approved a $100m floating rate loan to finance road maintenance. It has an amortization period of 12 years, a grace period of 5 years and a disbursement period of 5 years. In addition, an $80m loan to improve mass public transportation in Montevideo was approved. It has an amortization period of 25 years, a grace period of 4 years and a disbursement period of 4 years. The interest rate is also variable.

The IDB has extended a $25m grant to Haiti so the country can improve its roads in the southwestern departments. The program is also receiving support from a C$75m grant from Canada. The grant is part of a four-phase IDB program to provide Haiti with $100m to rehabilitate roads in its southern peninsula. An initial $25m grant, approved last year, is already financing several projects in that region, according to the bank.

China will join the IDB as a donor member, contributing $350m to finance development projects. It will provide $125m to the IDB’s fund for special operations, which provides soft loans to Bolivia, Guyana, Haiti, Honduras, and Nicaragua; and $75m each to the multilateral investment funds focused on microenterprise, the inter-American investment program, as well as to a collection of IDB grant funds aimed at strengthening the institutional capacity. Trade between the region and China has increased 13x since 1995, the IDB says, to $110bn from $8.4bn. It is now the region’s second biggest trading partner after the US, claims the multilateral. China will be the IDB’s third East Asian member after Japan and South Korea. The IDB expects to approve about $10bn in new programs this year and $12bn in 2009.

The IDB has given Guatemala a $55m loan to finance a rural electrification program. This is the first part of a 2-part facility that will add up to $100m. The first part has a maturity of 25 years and a 5 year grace period with a variable interest rate starting at 5%. The second tranche will be approved once satisfactory progress in the first one is shown, the IDB says.

The IDB says it will provide a loan of up to $31m to Argentina’s Adeco and Pilaga, owned by Adecoagro, to expand grain, cattle and milk production. The loan, says IDB, may be supplemented by a syndicated loan of up to $49m from commercial banks. The companies may also refinance debt, which is largely in short-term commercial paper, to extend maturities for more than 5 years. The IDB did not disclose the terms of the loan, citing confidentiality agreements.

Uruguay’s Port of Montevideo will be revamped thanks to a $40m loan from the IDB. The loan is for a 25-year term with a 4-year grace period, at an adjustable interest rate starting at 5% with a .15% spread. Local counterpart funds will total US$13 million. With these funds, the port will expand its cargo handling capacity by building a multipurpose wharf and deepening the access channel to allow larger vessels. The port ranks in fourth place in the region in terms of container traffic.

Investors depart IMF annual meetings having seen fear in the eyes of most LatAm finance ministry officials, but there is some relief in the form of multilateral aid. The IDB, CAF, IFC and FLAR Monday unleashed almost $10bn in fresh credit lines, with the aim of safeguarding growth and employment through crisis. “We are coordinating this lending with other multilateral institutions to assure that we have a rapid and agile response,” says IDB president Luis Alberto Moreno. The IDB will provide a $6bn liquidity program, in addition to accelerating specific loans next year as it aims to provide $12bn in total 2009 loans – $18bn if the new facility is fully utilized – versus $10bn in 2008. The loans will be made on a case-by-case basis, most with a tenor of 5 years. CAF has meanwhile made available a $1.5bn liquidity facility to support countries facing difficulty accessing capital markets. It also raised support for financial institutions to $2.0bn from $1.5bn. And FLAR pledged $1.8bn, with up to $2.7bn more possible in coming months via contingency lines. The IFC and World Bank also weighed in with support, the latter offering $500m for microfinance and SMEs. The IDB set an initial limit of $500m per country, which could be adjusted on a case-by-case basis. Moreno did not comment on rates, but says all countries would pay the same. “Given that the crisis started elsewhere and will come to Latin America, we are preparing ahead of time,” says CAF CFO Hugo Sarmiento says of his bank’s contingency facility, which will disburse medium to long-term loans. He adds that so far no countries have requested funds. Multilaterals have beefed up lending to both public and private borrowers in the past year as credit conditions worsened, and they are needed now more than ever. “In this market there is no competition between multilaterals,” Hans Schultz, IDB head of structured and corporate financing, tells LatinFinance. As demand increases, the bank will have to prioritize getting th