World Bank Group member IFC has launched a US$3bn short-term debt-issuance programme. This will increase its options for funding an array of development activities while also strengthening its cash-management capacity and providing investors with a safe new vehicle for short-term investment.
Under the new discount note programme, IFC will issue debt with terms ranging from overnight to one year. The notes will give IFC additional means of financing short-term lending to clients – including those that borrow under the global trade liquidity programme.
"The discount note programme is another important financial solution that IFC has devised in response to the changed conditions in financial markets as a result of the global financial crisis," says IFC executive vice-president and CEO Lars Thunell. "This innovation will enable IFC to expand its development activities in emerging markets, especially the poorest countries and regions."
Nina Shapiro, IFC vice-president, finance, and treasurer, comments: “The discount note programme is an excellent complement to our successful global medium term note programme. It increases IFC’s financial-management flexibility and allows investors the opportunity to hold IFC’s dollar notes in shorter tenors.”
IFC leverages its triple-A credit rating to raise funds for investment and lending to promote the private sector in developing countries. Amid the financial crisis, investor demand for high-grade short-dated instruments such as discount notes has grown significantly.
Discount notes do not make coupon interest payments but instead are issued at a discount to par and are redeemed at par. IFC will offer its discount notes through a group of dealers on a continuous basis in the Eurodollar and the US domestic market. The notes will be denominated in US dollars.
IFC has appointed Barclays Capital, Credit Suisse Securities, HSBC Securities, JP Morgan Securities, and UBS Securities as authorised dealers for the programme, which has an authorised limit of US$3bn. The Federal Reserve Bank of New York is the fiscal agent. The notes will be settled via Fedwire.
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