The FINANCIAL — IFC, a member of the World Bank Group, has teamed up with Swiss Re Corporate Solutions, the commercial insurance entity of the Swiss Re Group, to expand a pioneering platform by $500 million, enabling an increase in investments that will modernize infrastructure in emerging markets across the world.
Swiss Re Corporate Solutions will insure a portion of the credit risk on loans IFC makes under its Managed Co-Lending Portfolio Program (MCPP)—covering as much as $500 million of risk in total. The transaction, which started operations this week, increases the platform’s total capacity to $7 billion, allowing IFC to increase its investments to improve power, water, transport and telecommunications in developing countries, according to IFC.
“Modern infrastructure is essential for economic growth and lasting prosperity,” said IFC Vice President and Treasurer Jingdong Hua. “Yet a huge investment gap exists in this sector—totaling trillions of dollars a year in emerging markets alone. The MCPP platform marks a breakthrough in the search for large-scale financing solutions to the challenges of development. Through this partnership with Swiss Re Corporate Solutions, we have extended MCPP’s reach and created another important building block in the global effort to move from billions to trillions in development finance.”
Andreas Hillebrand, Head Credit & Special Lines at Swiss Re Corporate Solutions, said: “We are pleased to support this IFC initiative, which will help release much-needed capital into emerging markets to support tomorrow’s resilient societies and economies. Furthermore, by strengthening our relationship with the IFC, we will be able to further expand our well-established trade and infrastructure finance platform and increase the diversity of our emerging market portfolio.”
Through this partnership, IFC will originate and manage a portfolio of loans for its own account, while Swiss Re Corporate Solutions will use an unfunded risk-participation product to insure IFC’s risk in the event of a default. By utilizing this approach, IFC will gain additional capacity to finance vital infrastructure in emerging markets. Loans provided will have global coverage and be available in multiple currencies.
IFC created MCPP in 2013, when the People’s Bank of China pledged $3 billion for investment in IFC projects. Since then, the platform has more than doubled in size by including a variety of global institutional investors—including pension funds, sovereign funds, and insurance companies.