Investing for Impact 1

Transcription

1 Investing for Impact 1

2 Investing for Impact Contents Overview of IFC Financial Strength Funding Program Contacts 2 2

3 Overview of IFC 3

4 5

5 Overview of IFC IFC: A Member of the World Bank Group The World Bank Group is made up of five entities: Bond issuers: Non-issuers: IFC is a legally distinct part of the World Bank Group with its own articles of agreement, balance sheet and staff IFC is the largest global development institution focused on the private sector The only global multilateral source of debt and equity financing for private enterprise in developing countries Headquartered in Washington DC with over 102 offices worldwide in 92 countries 6 6

6 Overview of IFC Strong Shareholder Support 184 shareholders: governments of member countries Approximately 65% of capital is held by AAA/AA sovereigns 51% of capital held by G7 countries IFC does not pay dividends or taxes The strong support that the IFC receives from its government owners provides comfort to investors. Moody s 12 November 2012 Pakistan Austria Nigeria China Sweden Venezuela Mexico Indonesia Saudi Arabia Spain Argentina Brazil Switzerland Australia 7 7 Belgium Netherlands 159 other countries Russia Italy India Canada United States United Kingdom France Japan Germany

7 Overview of IFC IFC s History: Six Decades of Creating Opportunity IFC was founded 12 years after the Bretton Woods Conference created the World Bank to finance post- WWII reconstruction and development by lending to governments IFC's first investment: a $2 million loan to help the Siemens affiliate in Brazil manufacture electrical equipment IFC first syndication mobilizes $600,000 for Brazilian pulp and paper company Champion Cellulose. The project also launches IFC's syndications program IFC creates a Capital Markets Department to strengthen local banks, stock markets, and other intermediaries IFC becomes financially independent from the rest of the World Bank Group, gaining approval to issue its own bonds in international capital markets AAA Credit Rating: IFC receives the highest possible endorsement of financial health from private rating agencies IFC launches its first Global Dollar Bond IFC Asset Management Company is launched as a third business line. IFC Asset Management Company invests thirdparty capital in a private equity fund format 8 8

8 Overview of IFC IFC s Vision and Purpose IFC s vision: People should have the opportunity to escape poverty and improve their lives. IFC s purpose is to create opportunity for people to escape poverty and improve their lives by: Mobilizing Promoting Supporting Helping Mobilizing other sources of finance for private enterprise development Promoting open and competitive markets in developing countries Supporting companies and other private sector partners where there is a funding gap Helping generate productive jobs and deliver essential services to the poor and the vulnerable 9 9

9 Overview of IFC IFC s Three Businesses Investment Services Advisory Services Asset Management Company Loans Equity products Syndicated loans Trade finance Structured finance and securitized products Risk management products Local currency financing Access to finance Environmental and social sustainability Investment climate Public - private partnerships Infrastructure advice Wholly-owned subsidiary of IFC founded in 2009 Invests third-party capital in a private equity format Allows outside equity investors to benefit from IFC s expertise in achieving strong equity returns as well as development impact $15.5 billion invested in 2012, $45.3 billion committed portfolio $200 million in fee income annually $4.5 billion under management Figures for fiscal year ended 30 June

10 Overview of IFC Overview of IFC Sustainability: Key to IFC s Mission IFC is a pioneer of socially and environmentally responsible investments in emerging markets All projects financed must adhere to IFC s stringent environmental and social requirements which cover transparency and accountability, stipulating specific performance standards IFC s Equator Principles is an established benchmark for the financial industry to assess and manage social and environmental risk in project financing currently adopted by 77 leading financial institutions, accounting for 95% of project finance transactions worldwide IFC co-sponsors Sustainable Banking Awards with the Financial Times 11 11

11 Overview of IFC IFC is Active in Global and Domestic Capital Markets Gulf Cooperation Council (GCC) Hilal Sukuk (2009) USD 100 million due 2014 Russia Volga Bond (2012) RUB 13 billion due 2017 Dominican Republic Taino Bond (2012) DOP 390 million due 2017 Colombia El Dorado Bond (2002) COP 225 billion due 2007 Peru Inca Bond (2004) PEN 50 million due 2007 Brazil Amazonian Bond (2007) BRL 200 million due 2011 IFR 2007 Awards, Best Latin America Domestic Currency Bond Morocco Atlas Bond (2005) MAD 1 billion due 2012 Nigeria Naija Bond (2013) NGR 12 billion due 2018 CFA Franc - Kola II Bond (2009) XAF 22 billion due 2014 CFA Franc - Kola Bond (2006) XOF 22 billion due 2011 Emerging Markets 2007 Awards, Deal of the Year Africa China Panda Bond (2005) CNY 1.3 billion due 2015 Malaysia Wawasan-Islamic Bond (2004) MYR 500 million due 2007 IFR 2005 Awards, Malaysia Bond of the Year Asia Money 2005 Awards, Best Local Currency Bond China Panda Bond (2006) CNY 870 million due 2013 China Dim Sum bond (2011) CNH 150 million due 2016 China Dim Sum bond (2012) CNH 500 million due 2014

12 Overview of IFC IFC s Impact: Local Currency Issue Case Study IFC offers Taino Bond Pension fund investors purchase bonds IFC receives bond proceeds Proceeds disbursed to local projects in the Dominican Republic Microfinance Agriculture SMEs Women s enterprises Low income housing IFC s five-year DOP 390 million (US$10 million) 10.5% Taino bond, issued in December 2012, was the first domestic placement by an international triple-a rated issuer in the Dominican Republic The bonds were purchased by domestic investors, and IFC lent the proceeds directly to local private sector companies Proceeds from the bond went to expand access to finance for micro, small, and medium enterprises and loans for lowincome housing in the Dominican Republic 13 13

13 Overview of IFC IFC: A Growing Business 50 5, ,500 Total commitments (US$ billions) ,000 3,500 3,000 2,500 2,000 1,500 Staff numbers 10 1, FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 0 Total commitments at fiscal year-end Staff based in Washington DC Staff based in country offices IFC s fiscal year-end is 30 June 14 14

14 Financial Strength 15

15 17

16 Financial Strength Conservative Balance Sheet Assets Liquid Assets (gross) $ 37 Loans and Equity Investments 31 (net of $1.38 in reserves) Net Loans 19 Equity Investments 10 Debt Securities 2 Receivables and other Assets 7 Total Assets $ 76 Liabilities and Capital Borrowings $ 44 Payables and other Liabilities 11 Net Worth 21 Paid in Capital 2 Retained Earnings 18 Total Liabilities and Capital $ 76 In USD billions as of 30 June

17 Financial Strength Consistent Asset Growth IFC s disbursed portfolio and liquid assets as of 30 June of each year US$ billions % 69% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Loans and other debt Equity Liquid assets IFC s fiscal year-end is 30 June 19 19

18 Financial Strength Organic Growth from Retained Earnings US$ billions FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Total net worth IFC s fiscal year-end is 30 June 20 20

19 Financial Strength High Liquidity $30 billion of net liquid assets (equivalent to 39% of total assets) High quality investments, with mainly: Sovereign and supra bonds Non-government triple-a fixed income securities Financial institution deposits IFC has consistently maintained a high level of liquidity, among the best of MDFIs. Standard & Poor s 4 April 2012 Performance is measured against market benchmarks within risk parameters Proactive investment approach focused on capital preservation, reasonable returns and diversification 21 21

20 Financial Strength Track Record of Strong Profitability IFC has recorded operating profit in every year since its founding in 1956 Operating Income 3 Asian & Russian Crisis Brazil Crisis Argentina Crisis & Turkey Crisis EM growth Global Financial Crisis EM growth 2.5 US$ billions FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Figures as of 30 June

21 Financial Strength Strong Fundamentals Only supranational with fully paid-in capital (held exclusively in US dollars) IFC has one of the lowest ratios of debt to net worth of any supranational IFC s growth is financed by retained earnings Duration of funding matches maturity of IFC s loan portfolio IFC s equity investments are funded by IFC s net worth, not borrowings Leverage Risk-adjusted capital Liquidity ratio Debt to net worth, times x max 2.7x actual USD billions $20 $15 $10 $5 $0 $15.5 min $19.2 actual 100% 75% 50% 25% 0% 45% min 77% actual (percentage of estimated net cash requirements for the next 3 years) Actual level figures as of 30 June 2012 Minimum and maximum thresholds based on triple-a rating methodology guidelines determined by rating agencies 23 23

22 Financial Strength Consistent Triple A Rating Major Ratings Considerations Member of World Bank Group Sovereign sponsorship with fully paid-in capital Strong financial profile with substantial capital and high liquidity Conservative statutory and management policies As a multilateral development bank, IFC has a 0% risk weighting under the Basel framework Aaa Long-term rating (November 2012) Outlook: Stable AAA Long-term rating (December 2012) Outlook: Stable Moody s Aaa rating of the International Finance Corporation (IFC) is based on its adequate level of capitalization in relation to its risk profile, sound financial management, membership within the World Bank Group, and strong shareholder support. Moody s 12 November

23 Financial Strength Portfolio Risk Management Market based loan pricing Limits based on economic capital on equity and quasi-equity investments maximum 100% of net worth Loans match-funded to manage currency, interest rate and maturity risks The risk management culture in the Corporation is very strong, owing to a clear and distinct risk management function as well as a risk management mindset throughout all departments, including the Treasury s handing of liquid assets. Moody s 12 November 2012 We expect IFC's capital position and liquidity to be strong enough to withstand severe financial distress in its countries of operation. Standard & Poor s 27 December 2012 Strict portfolio diversification guidelines as a percentage of Net Worth + General Reserves on Loans: By company Investment in a single obligor may not exceed 4% By risk sector* Total exposure to a single risk sector limited to 12% By country Exposure limit to a single country is capped at 20% * Business sectors that are heavily influenced by a single, identifiable, world price index

24 Financial Strength Highly Diversified Global Portfolio IFC has debt and equity exposure in 145 countries and over 1,800 companies Equity investments comprise 24% of IFC s investment portfolio Middle East and North Africa 9% Regional portfolio diversification Sub-Saharan Africa 10% World 3% Asia 22% We view IFC, a global institution with DRE in 125 member countries and many economic sectors, as well diversified. Standard & Poor s 4 April 2012 Latin America and the Caribbean 30% Europe and Central Asia 26% DRE: development-related exposure 26 26

25 Financial Strength High Diversification of Portfolio by Country Five largest country exposures account for 30% of total committed portfolio Top ten exposures comprise less than 43% of total committed portfolio, Largest 20 exposures comprise 60% of IFC s total committed portfolio Country portfolio diversification India 8.8% Brazil 5.7% China 5.4% Others 40.0% Turkey 5.1% Russia 5.0% Mexico 2.6% Egypt 2.5% Figures as of 30 June 2012 South Africa 1.4% Jordan 1.4% Serbia 1.5% Ghana 1.7% Peru 1.7% Ukraine 1.8% Indonesia 2.0% Pakistan 2.1% Nigeria 2.4% Philippines 2.3% Vietnam 2.3% Argentina 2.2% Colombia 2.1%

26 Financial Strength High Diversification of Portfolio by Industry IFC s portfolio is highly diversified across a wide range of industries and sectors Collective Investment 5% Industrial and consumer products 4% Industry portfolio diversification Other 10% Commercial banking- General 20% Agriculture and forestry 3% Information 4% Chemicals 3% Nonmetallic mineral product manufacturing 3% Food and beverages 3% Transportation and warehousing 5% Oil, Gas and Mining 6% Utilities 12% Microfinance SME Finance 6% Other Finance 4% Housing Finance 3% Trade Finance 9% 28 28

27 Financial Strength Quality Loan Portfolio Low NPLs Loans 60 days past due classified as non-accruing Entire portfolio reviewed on a quarterly basis Total reserves against losses equaled 6.6% ($1.38 billion) of the total disbursed loan portfolio as of 30 June 2012 % of disbursed loan portfolio FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 non-accruing loans Reserves IFC s fiscal year-end is 30 June 29 29

28 Financial Strength IFC: Providing Value to Investors Only supranational institution with fully paid in capital Well capitalized: capital and retained earnings represent about 1/3 of its total balance sheet Receives strong support from its 184 member countries Consistently rated AAA/Aaa by S&P and Moody s 0% risk weighting under Basel program Has consistently recorded operating profits every year since its founding in 1956 Annual funding program of US$10 billion for the current fiscal year ending 30 June Moody s views the IFC as being in a strong position to effectively manage the increased risks they face while maintaining the Aaa rating. Moody s 12 November 2012 We believe IFC benefits from strong access to capital markets, bolstered by frequent issuance in many markets and currencies. IFC has no callable capital, unlike most MLIs, so our ICRs reflect our AAA Stand Alone Credit Profile. Standard & Poor s 27 December 2012 MLIs: multilateral institutions ICRs: internal credit ratings

29 31 Funding Program

30 33

31 Funding Program IFC s Funding Strategy Targeting investor needs through a wide range of products to meet IFC s funding needs at favorable cost and maturity IFC executes its funding strategy through a three point approach: 1. Establishing a regular presence in its core markets such as USD and AUD 2. Ensuring access to a wide range of markets to benefit from opportunistic and competitively priced transactions 3. Promoting development of emerging capital markets by issuing bonds in local currencies, often in domestic markets 34

32 Funding Program Growth of IFC s Funding Program The expansion in IFC s business over the last few years has led to growth in IFC s funding program IFC s approved borrowing program $ funding programs of IFC and peers $10.0 $ $ $4.0 $2.0 $ FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY EIB IBRD ADB IADB IFC EBRD AfDB NIB Figures in US$ billions 35 35

33 Funding Program Funding in Various Markets and Currencies IFC complements its core public issuance by accessing a variety of different markets such as green bonds, uridashi, non-core public markets, private placements and discount notes IFC borrowed in 11 currencies in FY12 First non-domestic issuer in China, Peru, Costa Rica, Dominican Republic, Nigeria As a US dollar-based institution, all borrowings are swapped into variablerate US dollars 74% of all IFC disbursed loans are denominated in USD Borrowings by currency in FY12 ZAR 0.9% USD 68.1% TRY 2.9% AUD 18.2% JPY 3.3% NOK 2.5% NZD 2.3% BRL 0.3% CHF 1.0% CRC 0.4% KRW 0.1%

34 Funding Program Core Public Markets: USD IFC has issued an annual US dollar benchmark issue in global format since 2000 Focus on timing, lead manager selection, price discovery and continued secondary performance Top tier global credit and consistent secondary market performance Currently eight USD global transactions outstanding, $16 billion in volume Global pricing FY12: IFC 0.625% December 2017, USD1bn, launched at m/s 4, T+10.8 IFC 1% April 2017, USD 2bn, launched at m/s 12, T+16.3 IFC 1.125% November 2016, USD 3bn, launched at m/s 9, T The Corporation s access to market funding has remained strong, even during the European sovereign debt crisis. Moody s 12 November

35 Funding Program USD Global Issuance: Secondary Performance Strong performance in secondary markets Spreads of IFC and peers 5-year benchmark issues vs. US Treasuries Basis points Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 IFC IBRD ADB AfDB IADB EIB Sources: Barclays, Bloomberg

36 Funding Program USD Global Issuance: Secondary Performance Spreads of IFC and peers 5-year benchmark issues vs. mid-swaps Basis points Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 IFC IBRD ADB AfDB IADB EIB Sources: Barclays, Bloomberg 39 39

37 Funding Program USD Global Distribution 5 year, issued November year, issued April year, issued November 2012 EMEA 34% Americas 29% EMEA 33% Americas 33% EMEA 34% Americas 29% Asia 37% Asia 34% Asia 37% Banks/ corporates 18% Fund managers 6% Central banks 76% Banks/ corporates 8% Fund managers 6% Central banks 86% Fund managers 6% Banks/ corporates 18% Central banks 76% 40 40

38 Funding Program Core Public Markets: AUD AUD is a strategically important market for IFC Attractive term funding to a growing international investor base IFC s commitment to AUD market reflected in: Establishment of a stand-alone AUD Domestic Debt Issuance Program in 2007 Kangaroo bonds outstanding: AUD 8.5 billion IFC bonds offer an attractive yield pickup versus Australian government bonds IFC s AUD domestic issues are repo-eligible with the RBA under the General Collateral clasification 41 41

39 Funding Program IFC Kangaroo Distribution 10 year, issued July year, issued August year, issued July 2012 US 3% EMEA 5% Asia 14% EMEA 4% US 3% Asia 43% Asia 46% Australia 78% Australia 50% Australia 44% US 3% EMEA 7% AMs 23% Central banks 9% AMs 23% Central banks 27% AMs 30% Central banks 37% Commercial banks 68% Commercial banks 50% Commercial banks 33% 42 42

40 Funding Program Non-Core Public Markets Currency Distribution IFC is focused on broadening its presence in smaller public markets though new issues and taps out to 10 years Established track record of accessing non-core public markets having issued in larger markets such as NZD, CAD and GBP over the years, as well as tapping into smaller markets such as BRL, TRY and NOK In first half of FY13, IFC raised a total of $1 billion in non-core public markets Currency distribution H1 FY13 RUB 3% NZD 24% CNH 8% TRY 5% BRL 60% 43 43

41 Funding Program Uridashi IFC aims to expand its name recognition among retail investors IFC has recently introduced two new structures: deep discount and dual currency Issued 12 individual Uridashi transactions in FY12, $1 billion equivalent In first half of FY13, IFC raised $900 million equivalent through 19 transactions IFC has an active Uridashi buyback program with a minimum buyback size of JPY100 million equivalent USD 11% FY12 structures Vanilla 6% Dual Currency 57% Deep Discount 22% FY12 currencies ZAR 13% TRY 16% BRL 4% AUD 9% Green Bond 15% JPY 47% 44 44

42 Funding Program Private Placements and Structured Notes IFC aims to maintain its position as an active and flexible issuer of plain vanilla and structured notes IFC currently allows: Interest rate linked, FX linked, Index linked, FRNs, emerging market currencies/linkers, Bermudan and European callables Minimum size $3 million equivalent, maturities ranging from 1 to 30 years Total private placement volumes in FY12 were $3 billion, for first half of FY13 volumes reached $1.8 billion IFC has an active buyback program, serving as a liquidity back-stop for IFC s issuance in many markets Other 2% FRN 4% FY12 structure distribution Zero callable 13% Callable Fixed 48% Deep Discount 10% Dual Currency 19% Fixed 4%

43 Funding Program Green Bonds IFC has played a pioneering role in creating investment opportunities which support climate change-related projects Since its inaugural issue in 2010, IFC has raised $2.2 billion through its Green Bond Program, including a landmark $1 billion 3-year public issue in February 2013, the largest ever Green bond issuance IFC s Green Bond proceeds are ring-fenced for investing exclusively in renewable energy, energy efficient, and other climate-friendly projects 46 46

44 Funding Program Discount Note Program Launched in June 2009 to complement IFC s Global MTN Program Provides a high-credit-quality short-term investment option for investors USD denomination with maturities from overnight to 360 days Proceeds to be used for providing shortterm liquidity to IFC s clients $3 billion authorized issuance limit In February 2013, IFC issued a 3 month CNH 300 million note, increasing shortterm offshore funding in renmimbi Denominated in US dollars Maturities range from overnight to 360 days Minimum order of $100,000 Offering through 8 dealers Issuance only in uncertified bookentry form IFC s Fiscal Agent: Federal Reserve Bank of New York Settlement via Fedwire Bloomberg Ticker: ADN

45 IFC IBRD IADB ADB EBRD AfDB NIB Name International Finance Corporation International Bank for Reconstruction and Development Inter-American Development Bank Asian Development Bank European Bank for Reconstruction and Development African Development Bank Nordic Investment Bank Rating Business AAA (st)/aaa (st) Specializes in lending to private enterprises in developing countries AAA (st)/aaa (st)/aaa(st) Provides loans to developing countries AAA (st)/aaa (st)/aaa(st) Development bank for Latin American and Caribbean economies AAA (st)/aaa (st)/aaa(st) Fosters economic development and cooperation in the Asia Pacific region AAA (st)/aaa (st)/aaa(st) Development bank which lends to Eastern and Central European economies AAA (st)/aaa (st)/aaa(st) Invests and lends to development projects in Africa AAA (st)/aaa (st) Long term project financing in/outside the Nordic region Ownership 184 member countries 188 member countries 48 member countries, consisting of Latin America and OECD countries 67 member countries, of which 23 are OECD countries holding 64.6% of total 63 member countries, >80% of capital is provided by AAA/AA countries 53 African member countries and 25 non-african member countries 95.8%-owned by 5 Nordic countries, 4.2% -owned by 3 Baltic countries Total Capital (USD millions) % Paid-in Capital Paid-in capital / Total subscribed capital Leverage Gross Debt / Shareholders equity (excluding callable capital) Liquidity Liquid assets / Total Assets $68,940 $313,871 $87,217 $100,170 $56,654 $29,482 $33, % 6% 4% 3% 22% 4% 7% 217% 342% 308% 335% 192% 252% 938% 46% 11% 19% 19% 35% 41% 32% Operating Income (USD millions, FY end 2010) $2,024 $1,023 $1,252 $548 $1,918 $326 $280 Source: S&P s Supranationals Special Edition 2011, October

46 49 Contacts

47 51

48 Contacts IFC Treasury IFC 2121 Pennsylvania Avenue NW Washington DC USA website: ifc.org/investors Bloomberg: IFC<GO> Management Funding Investor relations Jingdong Hua Vice President and Treasurer Ben Powell Senior Financial Officer, Funding Matthew Morrison Head of Investor Relations Wolfgang Meyer Director, Treasury Market Operations Evelyn Hartwick Financial Officer, Funding Esohe Denise Odaro Financial Officer, Investor Relations Marcin Bill Financial Officer, Funding

49 March 2013 This document has been prepared for informational purposes only, and the information herein may be condensed or incomplete. This document does not constitute a prospectus and is not intended to provide the sole basis for the evaluation of any securities issued by IFC. For additional information concerning IFC, please refer to IFC s current Information Statement, financial statements and other relevant information available at

50 54