MIGA - How Political Risk Insurance by Keiko Honda at GIB Summit

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Presented at the 4th Global Infrastructure Basel Summit 21 & 22 May 2014. Read more at www.gib-foundation.org.
Next Summit: 27 & 28 May 2015 in Switzerland

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MIGA - How Political Risk Insurance by Keiko Honda at GIB Summit

  1. 1. How Political Risk Insurance Can Help Further Investment in Sustainable Infrastructure May 21, 2014 Global Infrastructure Basel
  2. 2. 1MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP Sub-Saharan Africa Infrastructure Needs (2008) Government Funding 65% ODA 14% Private Sector Funding 21% Current Sources of Financing Not only can we focus on mobilizing funding but also on tackling the efficiency gap $17 billion $ 31 billion Efficiency Gap Funding Gap $45 billion $93 million in funding needs
  3. 3. 2MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP Risks Covered Political Risk Insurance (PRI) Credit Risk Transfer restriction & currency inconvertibility Expropriation War & civil disturbance Breach of contract Sovereign Sub-sovereign State-owned enterprise +
  4. 4. 3MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP MIGA’s Growth (New Guarantees Issued, $ billion, FY) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 NHSFO Issued by FY PRI Issued by FY Onset of global financial crisis - MIGA’s IFI Initiative launched Agency established in 1988 NHSFO introduced in 2009 NH for SOE obligors introduced Decoupling of debt and equity, introduced in 2009 Growth Rate (CAGR, %, FY03-13) Total:7.3% PRI: 3.6%
  5. 5. 4MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP  Expansion of underground metro system on Asian side of Istanbul  MIGA cover: NHSFO on a loan provided to MMI by a consortium of banks, with WestLB acting as facility agent  Tenor: 9.5 years  Amount: €280M, including principal, interest & premium Istanbul Metro Project Turkey
  6. 6. 5MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP FDI Growth: Mostly in Investment-grade Countries 136 156 139 111 11 12 +7% p.a. 6 221822 09 10 11 12 214 226 171 136 +16% p.a. 09 10 11 12 5149 34 40 +8% p.a. 67 60 5349 +11% p.a. 09 10 11 12 15141718 -6% p.a. 09 10 11 12 5122 09 10 11 12 FDI Inflows, USD bn A BBB BB B CCC <CC NR BB/B/CCC/ <CC and not rated Growth rate: 3.2% 09 10 11 1209 10 71%
  7. 7. 6MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP MIGA Activities in Political Risk Insurance – Strong in Riskier Markets New cover provided in calendar year 2012 * S&P rating used, MIGA non- honoring risk rating when S&P not available 41.2 16.710.7 7.9 7.6 2.4 A BBB BB B CCC <CCRating* 0.6% 0% 6.3% 5.0% 2.3% 28.7%MIGA’s share (%) Market size ($ billions) Below investment grade countries Investment grade countries
  8. 8. 7MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP  Construction and operation of power generation project using methane gas from Lake Kivu  MIGA cover: expropriation, transfer restriction, war & civil disturbance, breach of contract provided to investor ContourGlobal  Tenor: up to 20 years  Amount: $66.8M Kivuwatt Power Project Rwanda
  9. 9. miga.org miga-twitter miga-linkedin I N S U R I N G I N V E S T M E N T S  E N S U R I N G O P P O R T U N I T I E S

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