Four International Finance Institutions Sign Agreement to Facilitate Lending Cooperation
October 5, 2009:
Four international finance institutions today announced that they have agreed to streamline the process for providing loans in developing countries where projects face a financing shortfall because of the global economic crisis. Their efforts will help minimize duplication, reduce the overall costs, and shorten the time it takes to conclude deals.
The Master Cooperation Agreement was signed by France’s Société de Promotion et de Participation pour la Coopération Economique, or Proparco; Germany’s Deutsche Investitions- und Entwicklungsgesellschaft mbH, or DEG; the Netherland’s Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V., or FMO; and IFC, a member of the World Bank Group. It standardizes steps that lenders take when joining IFC to cofinance projects.
“This agreement will allow IFC and its partners to get funding to where it is needed in developing countries more quickly, helping bridge a financing gap brought on by the global finance crisis,’’ said Lars Thunell, IFC Executive Vice President and CEO.
The global economic crisis diminished commercial banks’ appetite for lending to projects in emerging markets. To help meet new financing needs, IFC developed a way to help clients obtain financing from international finance institutions more quickly, through the syndication of parallel loans under the Master Cooperation Agreement.
The agreement will help lenders process deals more efficiently by enabling them to cooperate and use IFC’s existing syndication platform, deal-structuring expertise, and global presence to identify investments, perform due diligence, and negotiate loan documents.
In fiscal year 2009, international finance institutions accounted for 17 percent of the $2.2 billion that IFC mobilized through loan syndications. IFC has raised $219.5 million in commitments through syndicated parallel loans for six projects in emerging markets since starting the new program in June.
The Master Cooperation Agreement was signed at the Private Sector Development Institutions Roundtable event held in Istanbul during the World Bank Group and IMF Annual Meetings 2009.
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