WASHINGTON, D.C., May 30 -- The International Finance Corporation (IFC) signed its first risk management facility in Pakistan with DG Khan Cement Company Limited. The facility, which was approved for an exposure totalling US$10 million, will provide DG Khan with access to a variety of risk management hedging instruments, including the ability to hedge currency and interest rate risks up to eight years. DG Khan, which is buying equipment from a Danish supplier, will use the facility to hedge foreign currency risk related to Danish Kroner exposure back into U.S. dollars. The facility will also be used to transform a US$40 million floating rate loan that DG Khan recently syndicated into fixed rate payments by means of an interest rate swap. "DG Khan's risk management transactions are the first such derivatives hedging transactions undertaken by a private sector entity in Pakistan and IFC is pleased to have been involved in structuring this facility," said Mr. André Hovaguimian, Director of IFC's Central Asia, Mi
ddle East, and North Africa Department. Mr. Robert Graffam, Director of IFC's Treasury, Syndications and Financial Policy Department added: "As capital markets activities in developing countries grow more sophisticated, IFC is playing a key role in providing local companies with the flexibility to use the appropriate global hedging instruments." DG Khan is majority-owned by the Nishat Group, one of Pakistan's largest industrial houses. Other shareholders include foreign mutual funds and IFC. IFC is the private sector arm of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
