Washington D.C., October 28, 2003
— The International Finance Corporation (IFC), the private sector development arm of the World Bank Group, has approved an investment of up to $70 million in a structured trade finance facility arranged by Banco Rio de la Plata S.A. The transaction will make pre-shipment export financing available to Argentine exporters.
The IFC facility will consist of an A Loan of up to $20 million with a tenor of up to 2 years, as well as a syndicated 1-year credit of up to $50 million from international commercial lenders. The maturities of the facility’s A and B Loans represent a significant extension of funding tenors, in comparison with those currently available to the majority of Argentine exporters from other trade finance sources.
The project demonstrates that successful financial restructuring by an Argentine corporate entity can result in renewed access by that borrower to international funding, and re-introduction of its name in the global financial markets.
Declan Duff, IFC’s Director of Global Financial Markets noted: “The project represents the first international syndication undertaken by an Argentine bank, which has successfully restructured its foreign debt obligations since the onset of the Argentine crisis. And Banco Rio has done so with the financial backing of its parent, Grupo Santander.”
Banco Rio was also chosen for the effort because the bank has traditionally had a well-developed business franchise among smaller corporates. This continues to be the case today, making it more likely that trade finance resources provided by the project will be made available to second-tier exporters.
Banco Rio is the second largest private bank in Argentina, and a subsidiary of Grupo Santander. It provides a wide range of commercial banking, investment, and financial services to over 1,000,000 clients, including large, medium and small companies, as well as individuals. The bank has a network of approximately 205 branches as well as 129 points of sale, and employs 3,500 personnel.
IFC has provided support to Argentina since the onset of its crisis in late 2001 by – amongst other things – arranging funding for exporters. The Corporation’s focus on the export sector – both directly, by lending to companies, and now indirectly, by arranging funding for financial intermediaries – is a response to cutbacks in conventional trade finance for Argentine corporates. As a result of these cutbacks, aside from 10-15 top-tier exporters who now have reasonable access to trade finance, most Argentine companies face difficulties in obtaining export credits of any sort, and especially pre-shipment export funding.
Bernard Pasquier, IFC's Director for Latin America and the Caribbean, noted: “This transaction comes at a crucial time to support one of the main drivers of the Argentine economic recovery, the export sector. It underscores IFC's long-term commitment to assist the Argentine corporate and financial sectors at a time when foreign credits are very scarce, and the domestic banking system has not yet recovered from the crisis in late 2001.”
In fiscal year 2003, IFC committed $1.8 billion to 54 projects in 16 countries of the Latin America and Caribbean Region. This was an increase of $706 million from investment commitments made to the Region during fiscal year 2002, and the largest amount committed by IFC to Latin America and the Caribbean in recent years. The total IFC financing amount also included $918 million mobilized from banks participating in IFC syndicated loans. IFC's financing to the region accounted for almost half of IFC's global funding to clients in fiscal year 2003, the latter of which totaled $5.0 billion.
IFC's mission (www.ifc.org) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $37 billion of its own funds and has arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's committed portfolio at the end of FY03 was $16.7 billion with an additional $6.6 billion held for participants in loan syndications.
