IFC Revives Local Guarantees

The IFC is planning to deploy its guarantee product in the Brazilian local market, which remains restricted to high-grade issuers from only a few sectors. “We’re looking at guarantees, either partial credit guarantees on debentures or loans,” Rogerio Pilotto, the IFC’s Sao Paulo business development officer for structured and sub-national finance, tells LatinFinance. The last time it used the product in Brazil was in 2003 for BBA-Creditanstalt, that time offshore. “We’re having very preliminary discussions,” says Pilotto, adding that a deal could happen this year. Multilateral guarantees are provided to issuers that need credit enhancement to access capital markets, particularly when markets are volatile or risk averse. The IFC product has been tweaked to meet Brazilian regulatory requirements. The IFC is also looking at guaranteeing a microfinance facility. Elsewhere in structured finance, the IFC is looking at doing an SME FDIC locally, as well as offering in the Brazil the same risk sharing facilities that it is deploying in Africa. The latter is constrained by the markets environment. “It’s a not a time to expand credit all that much across the region,” says Pilotto.