WASHINGTON, D.C., August 2 -- The International Finance Corporation (IFC) announced today a $18 million currency hedging facility for Turbana Corporation, the US marketing arm of a Colombian banana trading company.
The ten-year hedging facility was designed in conjunction with Emcor Risk Management Consulting, an Irvington, New York-based financial consulting firm. The facility will allow Turbana to hedge its foreign currency transportation costs (primarily Belgian francs) through the use of derivative products such as currency swaps, currency forwards and currency collars. IFC will execute these transactions directly with Turbana and will hedge itself by entering into mirror transactions with eligible market counterparties.
Earlier this month, Turbana Corporation initiated this hedging facility with a series of Belgian franc/U.S. dollar currency forwards and the purchase of two currency collars.
"Access to sophisticated financial hedging instruments is vital to the international competitiveness of companies in the developing world," said Richard Frank, IFC Vice President, Finance and Planning. "IFC has an important role to play in helping enterprises in the developing world become fully aware of the range of risk management techniques and overcome country risk barriers that often deny access."
IFC began to intermediate currency and interest rate swaps for clients in developing countries in 1990. It offers firms in the developing countries risk management services including advice on developing hedging strategies and instruments, intermediating the purchase of hedging instruments, mobilizing the participation of international banks in such transactions on a risk/sharing basis, promoting the development of local capital markets by bringing these techniques to local financial institutions, and transferring technical know-how.
IFC, a member of the World Bank Group, promotes private investment in developing countries. It does this by financing private sector projects, without government guarantees, by mobilizing funds in the international capital markets for developing country businesses, and by advising businesses and governments on investment-related matters. Since IFC was founded in 1956 it has provided over $11 billion in financing for nearly 1,000 companies in 100 developing countries.
