IFC and Zurich Emerging Markets Solutions Establish Risk Sharing Facility

The International Finance Corporation, the private sector arm of the World Bank Group, and Zurich Emerging Markets Solutions, the political risk and credit insurance unit of Zurich North America, announced that they are establishing a risk sharing facility that will help stimulate medium-term trade credit opportunities for financial institutions in emerging markets. “The project is intended to increase the availability of capital goods for importers in developing countries,” said the bulletin.

It described the new facility as encouraging “the deferred payment sale of capital goods and services to emerging markets importers by offering a trade credit product that covers financial institutions’ risks. The credit insurance policies covered under the facility will include payment terms up to five years for trade transactions where local emerging markets banks are involved.”

“The facility represents an innovative approach by IFC to help a leading credit insurance provider expand its medium-term credit offering for trade finance transactions. This facility will promote the import of capital goods to emerging markets,” commented Javed Hamid, IFC’s director of East Asia and Pacific.

“By combining the strength of Zurich, particularly our expertise in underwriting, and IFC’s experience with and knowledge of local financial institutions, this facility will help importers acquire much-needed capital goods and services, while protecting against risks often associated with developing economies,” noted Daniel Riordan, executive vice president and managing director of Zurich Emerging Markets Solutions.

“The IFC regularly provides commercial financing globally and has extensive experience in evaluating and extending credit to financial institutions in emerging markets,” said the bulletin. “The mission of IFC 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.” Founded in 1956, the organization has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries through fiscal year 2002. Its “worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.”

Zurich Emerging Markets Solutions is a global political risk and credit insurance group based in Washington, D.C., with offices in London, Barcelona, Hong Kong, Singapore and Tokyo. It conducts business in over 90 emerging markets and provides political and credit risk