IDB Ups Local Currency Lending Via Hedge Fund

The IDB will make a non-sovereign guaranteed loan of up to $100m to The Currency Exchange (TCX), a hedge fund launched by the Dutch development finance company FMO. The subordinated loan will enable the IDB to use TCX’s services to swap up to $600m into LatAm and Caribbean currencies, expanding its capacity to lend in local currencies. In addition, the IDB will sell a $2.5m portion of the TCX loan to its affiliate, the IIC, to expand local currency lending to small and medium-size enterprises in the region. “The deal with TCX allows us to take a new approach to increasing the availability of flexible lending denominated in our borrowing member countries’ own currencies,” says IDB project team leader Ira Kaylin. “This is particularly important for clients in countries where currency swaps are not yet feasible.” Separately, the IDB has granted Argentina a $600m conditional credit line to promote rural agricultural development. It also approved a $200m 25-year variable-rate loan, as the first transaction under the 10-year credit line. Proceeds will benefit a program through the country’s economy ministry to boost rural economies by improving competitiveness and increasing agricultural exports.