IFC 2001 Corporate Slideshow

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Syndication and Resource Mobilization Septembe
r 2004
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Agenda

• IFC and its Syndications Business
• An Improved B Loan Product
• Portfolio Update
• Recent Track Record
• Strategy and Pipeline

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What is IFC?

• Part of the World Bank Group, focusing on the
  private sector
• Worlds largest source of equity loan financing
  for private enterprises in emerging economies
• 9.7 bln in loans, 2.6 bln in equity
  investments, total assets of 32.4 bln
• AAA/Aaa rating

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Our Organization
Vice President Finance and Treasurer Nina Shapiro
Funding Operations
Syndication and Resource Mobilization Jonathan
Hakim
Liquid Asset Mgmt.
Derivative / Hedging Products
Financial Policy Securitization
B Loan Management
Syndication
Structured Finance
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B Loan Mechanics
Investment Agreement
Borrower
A B Loans
Participation Agreements

• Only one loan agreement between borrower and IFC
• IFC is lender of record for entire loan and
  administers entire loan
• IFC fully shares project risks with participants

B Loan
Participants
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Preferred Creditor Status

• Excluded from general country debt reschedulings
• Not subject to mandatory new money obligations
  under general country debt rescheduling
• Bank regulators exempt B Loans from mandatory
  country risk provisioning, where applicable
• Preferred access to foreign exchange in the event
  of country foreign exchange shortage
• Allows rated transactions to pierce sovereign
  ceiling
• Important element of IFCs AAA rating
• Consistent universal recognition (i.e., Pakistan,
  Russia, Argentina)

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Benefits to IFC

• Part of IFCs mandate
• Completes financial plan
• Leverages impact of A Loan
• Introduces market discipline to loan structuring
  pricing
• Increases risk/reward profile
• Reduces use of IFCs own balance sheet
• Generates fee income

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Benefits to Client

• Enables loans with
• Longer tenors
• Better pricing
• No withholding tax
• Completes financial package
• Flexible product
• Simplifies administration documentation
• Introduces new banking relationships

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Benefits to Participants

• Preferred Creditor Status (PCS)
• Recognition of IFCs risk mitigation by
• Regulators
• Rating agencies
• Basle II
• IFCs structuring restructuring skills

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Top 20 Participants
Ranked by Total Commitments as of June 30, 2004
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Agenda

• IFC and its Syndications Business
• An Improved B Loan Product
• Portfolio Update
• Recent Track Record
• Strategy and Pipeline

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Listening to the Market

• What participants told us
• Increased focus on active portfolio management
• Concern about
• Better information flow
• Greater role in managing credit
• Our response changes to IFCs Participation
  Agreement

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1. Stronger Voting Rights

• Market standard
• 100 change money terms
• 100 waive or amend CODs
• 67 mandatory acceleration

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1. Stronger Voting Rights (continued)

• Before
• 67 release security if material/adverse effect
• 67 waive or amend guarantees or support
  agreements if material /adverse effect
• Consult waive or amend covenants if
  material/adverse effect

• Now
• 67 release security (always)
• 67 waive or amend guarantees or support
  agreements (always)
• Consult waive or amend covenants (always), 51
  vote on certain financial covenants

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2. More Information

• Expanded scope of information IFC is required to
  provide
• Not simply regular financial reporting, also key
  credit events

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3. New Policy on Assignments

• More transparent, less subjective participant
  eligibility criteria
• Eligible Financial Institution
• - not an export credit, governmental, or
  multilateral agency
• - investment-grade rated
• - not incorporated or residing in country
• where borrower is incorporated
• No consent required if assignee is an original
  participant in same B Loan

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More Flexibility

• Example Combining B Loans with PRI
• Objective
• Enhanced appeal of B Loans
• Increased ability to mobilize funds in
  challenging markets
• Solution PCS PRI
• Favorable capital treatment
• Contractual cover for specific risks
• PRI providers will enter new countries with more
  favorable terms

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Agenda

• IFC and its Syndications Business
• An Improved B Loan Product
• Portfolio Update
• Recent Track Record
• Strategy and Pipeline

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B Loan Portfolio

• Over 200 B Loans - 5.1 billion outstanding

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B Loan NPLs Have Peaked
NPLs as of Total B Loan Portfolio
Non-Performing Loans 90 days past due
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Write-Offs Average 0.6
Assumes IFC A Loan write-offs applied to B Loans
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Agenda

• IFC and its Syndications Business
• An Improved B Loan Product
• Portfolio Update
• Recent Track Record
• Strategy and Pipeline

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Completed Restructurings

• 41 restructurings closed in last 3 years
• 1.8 billion in B loans
• 279 individual participations
• Noteworthy closings in FY04
• Argentina Banco de Galicia (245
  million)
• Banco Hipotecario (102.5 million)
• India CESC (40.1 million)
• Pakistan Uch Power (44.1 million)
• Philippines Bataan (116.6 million)

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Areas of Focus

• Argentine Utilities
• Lengthy delays due to political sensitivities
• Tariff adjustments unresolved
• Concession renegotiation A new business model?
• Thai Petrochemical Industry (TPI)
• Largest Thai defaulter during Asian crisis
• (2.5 billion debt)
• Creditors difficulties with majority shareholder
  and Thai courts
• High profile, politically sensitive

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Preferred Creditor Status Argentine Experience

• Affirmed by Central Bank in January 2002
• Payments to IFC exempt from foreign exchange
  restrictions
• No past due A or B Loans because of transfer and
  convertibility issues
• IFC exempted from pesification - TGN

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Steady Progress in Argentina
NPLs as of Outstanding Argentine B Loans
Non-performing Loans 90 days past due
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A Strong Response in the Secondary Market
Bank Loan Bid Prices
Source Deutsche Bank Securities
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Agenda

• IFC and its Syndications Business
• An Improved B Loan Product
• Portfolio Update
• Recent Track Record
• Strategy and Pipeline

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IFC Syndications Strategy

• Mobilize long-term project finance
• Help companies access international funding
• Catalyze local currency lending
• Lengthen tenors
• Support exporters in crisis environments

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1 Billion Mobilized in 23 Deals in FY2004

• Significant infrastructure deals in Brazil,
  Mexico, Chile
• Major oil and gas deals in Azerbaijan, Turkey

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2 Billion Mandated for 30 B Loans

• Manufacturing projects in China, Russia, Algeria,
  Brazil,
• Mexico, the DR
• Infrastructure projects in Russia, Chile, Brazil
• Natural resources projects in China, Indonesia,
  Russia,
• Yemen

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Conclusions

• IFC is
• creating new ways to work with you
• responding to your need for flexibility
• collaborating with you on difficult
  restructurings
• offering you a significant pipeline of new
  projects

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Contacts

• Jonathan Hakim, Director
• Syndication and Resource Mobilization Department
• 1-202-458-0693, jhakim_at_ifc.org
• Mary Beth Ward, Manager
• B Loan Management Division
• 1-202-473-6372, mward1_at_ifc.org
• ASIA
• François Grossas Hong Kong, 852-2509-8125,
  fgrossas_at_ifc.org
• EEMEA
• Alma Ourazalinova Washington D.C.,
  1-202-458-5667, aourazalinova_at_ifc.org
• Laily Razavi London, 44-207-222-7711,
  lrazavi_at_ifc.org
• Sadia Sajjad London, 44-207-222-7711,
  ssajjad_at_ifc.org
• LATIN AMERICA
• Stefania Berla Washington D.C., 1-202-473-5341,
  sberla_at_ifc.org
• Jamie Smouse Washington D.C., 1-202-458-4591,
  jsmouse_at_ifc.org

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For more information website www.ifc.org/syndic
ations e-mail syndications_at_ifc.org