CLOSING REMARKS 1. Co-financing and Preferred Creditor Status 2. - - PowerPoint PPT Presentation
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CLOSING REMARKS 1. Co-financing and Preferred Creditor Status 2. - - PowerPoint PPT Presentation
Jan 05, 2024 31 likes •141 views
CLOSING REMARKS 1. Co-financing and Preferred Creditor Status 2. African Financing Partnership 3. Working with African Development Bank A/B LOAN STRUCTURE AfDB acts as Lender-of-Record Keeps part of the loan for its own book (the
SLIDE 1
CLOSING REMARKS
1. Co-financing and Preferred Creditor Status
2. African Financing Partnership
3. Working with African Development Bank
SLIDE 2
AfDB acts as Lender-of-Record
Keeps part of the loan for its own book (the A-loan)
Sells participations to commercial investors (the B-loan)
Tried and tested technology (mirrors EBRD / IFC structures)
B-loan participants take exposure to the underlying project credit risk
A and B loans may have different maturities with consistent pricing
Debt servicing is centralized in a facility “agent”
B-lenders can be bank or non-bank
Over the life of the B-loan, the A-loan must always be at least 25% of the total
B-lenders benefit from ADB’s preferred creditor status
A/B LOAN STRUCTURE
SLIDE 3
Preferred Creditor Status – mitigants to political risk: Official
Currency conversion / remittance of interest
Immunity from sovereign rescheduling
Exemption from withholding tax
Unofficial
Deterrent effect: nationalisation, interference
A/B LOANS
SLIDE 4
Benefits to B-lenders: 1. Under Basle II (Standardized approach), B-lenders may rate facilities as local currency obligations; 2. Under Advanced Internal Ratings approach, lenders may reflect country risk mitigation in country risk weighting 3. B-loans may be combined with commercial political risk
insurance. Preferred creditor status is reflected in premium
rates.
A/B LOANS
SLIDE 5
Viable and commercially operated financial institutions – bank
and non-bank
Institutions NOT eligible:
–
Banks incorporated or with head office in the country where the borrower is incorporated or the project is located
–
Export credit agencies
–
Governmental, quasi-governmental, or multilateral agencies
–
Project sponsors and off-takers
Eligible participants require an investment grade rating
–
AfDB may accept lower-rated or unrated participants
B-Loan Participant Eligibility:
A/B LOANS
SLIDE 6
THE AFRICAN FINANCING PARTNERSHIP
African Development Bank
Development Bank of Southern Africa
DEG
European Investment Bank
FMO
Industrial Development Corporation
IFC
Proparco
SLIDE 7
THE AFRICAN FINANCING PARTNERSHIP Origins and Rationale
Formed during the financial crisis
Need for DFIs in Africa to improve operating efficiency and
to reduce the burden on clients
Serves as a means of harmonisation, standardisation and
best practice
SLIDE 8
THE AFRICAN FINANCING PARTNERSHIP
Focus on large scale infrastructure and industries projects, but:
