0. INTER-AMERICAN DEVELOPMENT BANK
I D B O P E R A T I O N S
W I T H O U T S O V E R E I G N G U A R A N T E E S
Hans Schulz
Private Sector Department
March 2007

1. Inter-American Development Bank (IDB) Private Sector Department
Regional multilateral institution with 47 member countries dedicated to accelerate economic & social development in Latin America and the Caribbean
Private Sector Department
Target Clients
Responsible for non-sovereign guaranteed operations at IDB
Privately controlled entities in all sectors of the economy
Utilities and other infrastructure operators
Banks and other financial market institutions
Corporates with annual sales of US$100 million and above

2. IDB’s Competitive Advantages
Deep Knowledge and Excellent Relations with Latin America and the Caribbean
Oldest and largest multilateral lender to Latin America and the Caribbean : US$ 6-7 billion annually
Cooperative, long-term relationship with member countries
Helps mitigate political risks
Exemption from withholding taxes and de facto preferred creditor status
Solid Financial Position
AAA/Aaa Rating (S&P, Moody’s)
Authorized capital of US$101 billion
Ability to extend tenors at market pricing
IDB Value-Added
“Umbrella effect” helps to attract B-lenders
Catalytic role: IDB financing mobilizes private investment
Internationally recognized environmental, social, labor and health standards provide comfort to governments, communities, lenders and sponsors
Flexible risk sharing arrangements

3. Recent Strategic Changes
2005
2007
Eligible Sectors
Infrastructure, Captial Markets Operations, Trade Finance
ALL ECONOMIC SECTORS, MORE FLEXIBLE USE OF PROCEEDS*
Eligible Clients
Privately Owned Entities
PRIVATELY OR STATE- OWNED CORPORATE ENTITIES AND FINANCIAL INSTITUTIONS**
Currency
All Transactions in US$
FINANCING AND GUARANTEES ALSO IN LOCAL CURRENCIES
Limits
IDB participation limited to US$75 Million / 25% of Project Cost
US$200 MILLION PER PROJECT*** / 50% OF PROJECT COST
Turnover times
Time-consuming internal Approval Processes
MORE EFFICIENT, FASTER PROCESSES, ADAPTED TO MARKET NEEDS
* Exceptions: negative exclusion list
** Without Sovereign Guarantee
*** Up to US$400 Million in Exceptional Cases

4. Lending Products A/B Loans “A” – IDB Loan Tranche
“B” – Participation of Market Players (international banks and Institutional Investors)
IDB is Lender of Record
Project Finance
Warehousing lines
Revolving credit lines
Refinancing
Senior and subordinated Loans
Tenors: up to 30 years (average: years)
Financing in local currencies (depending on market conditions for swaps)

5. Guarantee Products Characteristics:
Partial Credit Guarantees (covering all risks – up to 50%; up to 100% within RTFFP) or Political Risk Guarantees
Guarantee amount determined to optimize impact on rating (typically 30%-50% guarantee for improvement in rating of 3 to 4 notches - local scale)
Guarantee amount can vary or stay constant over the tenor (up to 30 years), also amortizing securities
Guarantee capped in US$ - Guarantee payment and reimbursement claim can be in local currency of underlying security
IDB-reimbursement rights can be subordinated to other investors
IDB-Gurantee is unconditional
Transaction types:
Bond Issues
Project Finance
Asset-Backed Securities (ABS), i.e. Mortgage-Backed Securities
Securities backed by Future Flows (i.e. Diversified Payment Rights)
Structured Trade Transactions (Investment funds, Corporate finance)

6. Financial Markets: Products and Services
Capital Markets
Trade Finance
Financial Institutions
(new mandate)
Structured Finance (e.g. securitizations)
Bond issues
Investment funds
Regional Trade Finance Facilitation Program (TFFP)
Trade finance facilities (TFFs)
Structured trade finance
General Purpose: Lending facilities
Subordinated debt (Tier II)
Partial Credit Guarantees

7. Trade Finance: Trade Finance Facilitation Program
Program Characteristics
Issuing Banks: Private or state-owned banks incorporated in IDB Borrowing Member Countries, track record in trade finance, satisfactory credit worthiness, compliance with IDB standards
Confirming Banks: Any international/regional bank with recognized track record in international trade financing
Participants
No joining costs
Usually, guarantee fees equivalent to 75% of confirmation fee / spread on the TFFP-guaranteed amount
Costs
Letters of Credit
Export and import financing funded by Confirming Banks
International Guarantees (Bid, Performance, Advance Payment Bonds) and Stand-by Letters of Credit
Eligible Transactions
Up to 100% per individual transaction
Coverage Level
Up to 3 years
Tenor
(i) Max. Total Program exposure at any time: US$400 million
(ii) Up to US$40 million credit line per Issuing Bank;
(iii) Up to US$120 million exposure per IDB Borrowing Member Country
Applicable Exposure Limits
Credit Guarantee (“CG”) in favor of Confirming Banks to cover the risk they take on eligible trade financing instruments issued by LAC Issuing Banks
Nature

8. Operational Guidelines
Project Costs
Defined as securities issuance, funding program or total capital investments over relevant period
Security Requirement
Similar to commercial lenders
IDB Participation
Up to 50% of project costs with a cap of US$200mn
Currency
USD, Euro, Yen, local currency subject to market conditions
Maturity
Up to 30 years
Pricing
Market-based
Fees
Applied as appropriate to each project
Expenses
Due diligence

9. Portfolio – Approved Projects (in US$ million)

10. Portfolio – Projects by Sectors (as of March 2007)
A-Loans
B-Loans
Guarantees
US$ 3,219.5m
US$ 3,699.2m
US$ 1,810.3m

11. Financial Markets - Transactions
Brazil
Brazilian Infrastructure Investment Fund (BIIF)
Brazilian Infrastructure Securities Warehousing Facility
Chile
Securitizadora Security: revolving Mortgage-Backed Loan Facility
Costanera Norte Highway System Infrastructure Bond
Santiago-Valparaiso-Vina Toll Road
Colombia
Colpatria Mortgage Bond
Mexico
Su Casita MBS Guarantee Facility
Metrofinanciera Mortgage Warehouse and MBS Guarantee Facility
Peru
BBVA Banco Continental: Senior A/B-, and Subordinated loan
BBVA Banco Continental: MBS Guarantee Facility
Graña y Montero Asset-Backed Bond
Regional
Central American Mezzanine Infrastructure Fund
Crecera Trade Finance Facility
Darby Fund
IIG Trade Finance Facility

12. Infrastructure: Award-winning Deals
Energy
ATE II Km Power Transmission Line in Brazil
Campos Novos MW hydro-power plant in Brazil
Novatrans - 1,278 kilometer power transmission line in Brazil
TermoPernambuco MW thermal power plant in Brazil
Termobahia MW thermal power in Brazil
Bajio Energy MW combined cycle plant in Mexico
Light Energy Services - CAPEX program for a power distribution company in Brazil
Termoelectrica del Golfo MW thermal power plant in Mexico
Aguaytia MW integrated power project in Peru
Transportation
Quito Airport - Upgrade of International Airport in Ecuador
Camisea - Natural gas and liquids pipeline in Peru
Costanera Norte Highway - Urban highway system in Chile
Rutas del Paciíico kilometer toll road in Chile
Yucatán Gas Pipeline Km. Gas pipeline in Mexico
Water & Sanitation
Antofagasta - Seawater desalination plant in Chile
Rio Bogotá - Water treatment facility in Colombia

13. Contact Information
Hans Schulz
Head of Financial Markets
Private Sector Department
Inter-American Development Bank
1300 New York Avenue, N.W.
Washington, DC – USA
Tel: (1)
Fax: (1)