Presentation by Magnus Cedergren, Head of Unit, Loans & Guarantees, Sida
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Presentation by Magnus Cedergren, Head of Unit, Loans & Guarantees, Sida at SITE Development Day 2017
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Presentation by Magnus Cedergren, Head of Unit, Loans & Guarantees, Sida
- 1. Sida Development Guarantees Magnus Cedergren Head of Loans & Guarantees, Sida
- 2. Sida Development Guarantees Guided by Swedish Government’s Development Strategies • Countries • Sectors Mobilising Additional Capital for Development • Local Financial Institutions • International Institutional Investors
- 3. Sida Development Guarantees Guarantee Frame SEK 12 billion AAA Kingdom of Sweden Current Portfolio SEK 6 billion Mobilised Capital SEK 11 billion Project Pipeline SEK 4 billion
- 4. Mobilising Local Capital How does it work? Sida Development Guarantees
- 5. Local companies Local bank Portfolio Guarantees
- 6. Portfolio Guarantees Local companies Local bank
- 7. Portfolio Guarantees Local companies Local bank 50%
- 8. Portfolio Guarantee Local companies Local bank
- 9. International Institutional Investors Sida Development Guarantees
- 10. IFC – Managed Co-lending Partnership Program $ 500 million Infrastructure Sida/IFC 10% x 3 Funds = $ 1,5 billion ”Investment Grade” BBB ”First Loss” Sida Development Guarantees Insurance Company
- 11. Institutional Investors Private Patient Capital / Sida Guarantee Green Climate Fund (GCF) Universal Green Energy Access Program, UGEAP Debt Fund for Institutional Investors Managed by Deutsche Bank Asset Management Debt/Working Capital for Off-Grid Solar Systems in Sub-Sahara Africa Direct lending and indirect through local Financial Intermediaries 15 Year Fund Target: USD 500 milion Two Tranches: A (senior) and B (junior) B-tranche ~ 25 % of total fund Target Dividend 3-5 % p.a. Sida and GCF act as risk mitigants for attracting institutional capital A B
Editor's Notes
- A portfolio is a grouping of different investments or loans. The guarantor (i.e. Sida) gives the financial institution the permission to attach the guarantee to any investment or loan that fulfils a number of agreed lending criterias. Part of the repayment of the loan is then guaranteed by Sida. Sida, together with the bank, decide on the target group of borrowers, for example micro enterprises within the agriculture sector. The bank opens up a "lending window" for this group and performs the credit assessments of the borrowers. This means that it will be faster to facilitate access to capital for the target groups.
- The local banks are often unwilling to finance these entrepreneurs, who are dependent on additional capital, due to their lack of collateral and experience.
- With the guarantee the bank can extend loans to the local enterprises. A guarantor like Sida can share the risk with, for example, a bank. With the guarantee the bank can extend loans to the local enterprises.
- This not only makes individual projects happen, but also helps build the bank’s experience in lending to these type of enterprises. The individual entrepreneurs can start to build a track record for their credit history. Risker – vilka risker är det garantier kan täcka A guarantee can help reducing some of the risk of a project. Sida’s guarantee instrument can cover various types of risks and events, most commonly political and commercial risk. That wide range of coverage is quite rare on the financial market. Political risk: All risks that are related to actions of a state or a government, over which the investors do not have any influence. Commercial risk: The risk of default due to non-performance by a party under a financial contract. Advanced market risk: A binding contract, typically offered by a government or other financial entity, used to guarantee a viable market for a service or product. Examples could be vaccine or other medicine that need an ensured volume to be developed at a price affordable to the poor. Other risks and events: A number of other possible events can also affect the perception and assessment of risk, which may make banks, lenders, and investors unwilling to provide capital, such as risk of currency fluctuations or natural disasters. Garantiavgifter Sida tar ut en garantiavgift för att dels täcka risken (den förväntade förlusten), dels administrationskostnaden. Avgiften för förväntad förlust betalas in till en riksreserv hos Riksgälden, som I en försäkring, och vi kan I vissa fall subventionera den med sakanslag. Om det uppstår en förlust och garantitagaren åberopar garantin betalas medel ut från riskreserven. Inga medel tas från sakanslaget. Den administrativa avgiften går till Sida för att täcka kostnader (på LÅN) för att ta fram garantin. Är idag inte tillräcklig för att göra det. Statens ekonomiska risk (förväntad förlust) + Statens administrativa kostnader = Premie (garantiavgift) Premien kan subventioneras ”Garanti ska lämnas mot riskavspeglande premier som motsvarar statens ekonomiska risk för åtagandet och administrativa kostnader för garantin. Sida kan subventionera en viss del av denna premie. Denna subvention ska betraktas som gåvodel i transaktionen.” (2009:320)