WASHINGTON, D.C., Sept. 23 -- The International Finance Corporation (IFC) has established a medium-term note program that will enable it to borrow in Hungarian forint and make local currency loans to its Hungarian clients. The Hungarian program is the first to be established under a new pilot mechanism through which IFC will use the proceeds of local borrowings for on-lending to clients who request local currency loans. The pilot program is to be launched in up to three developing member countries. This initiative is designed to help increase the availability of medium-term local currency credit and improve the foreign currency exposure profiles of Hungarian companies that do not earn foreign exchange. Not only are international lenders often reluctant to serve these companies, but local credit markets are usually not developed enough to meet their needs, especially for long-term debt. The initial medium-term note program has a size of 5 billion forint (about US$46 million equivalent). IFC will issue notes to
be marketed on a private placement basis to institutional investors, primarily in the Hungarian market. IFC has already received several enquiries from potential clients wishing to borrow in Hungarian forint. "In many developing countries, the development of bond markets has not kept pace with the impressive progress of the equity markets," according to George Handjinicolaou, Senior Manager, Treasury Operations, in IFC's Treasury and Financial Policy Department. "By participating directly as an issuer in the Hungarian market, IFC expects to have a positive impact on local bond market development and to help create more efficient ways to mobilize domestic savings for long-term investment." IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
