The Inter-American Development Bank (IADB) has approved a US$75mn revolving, five-year credit facility to support a US$150mn fund to promote trade financing to meet the needs of companies based in IADB member countries in Latin America and the Caribbean.
The IADB financing will be matched by US$75mn in equity contributed by the IIG Trade Opportunities Fund (TOF), a fund dedicated to global trade finance managed by The International Investment Group LLC (IIG).
Headquartered in New York, IIG has been managing TOF since August 1998, providing trade finance facilities to companies based in 13 Latin American countries. As of October 2005 TOF had a net asset value in excess of US$270mn with no leverage.
IIG manages portfolios invested in global trade finance with net asset values exceeding US$350mn.
The facility resources will increase the availability of trade finance to exporters and importers in Latin America and the Caribbean, including the smaller and more vulnerable economies of the region.
With this new facility, a greater number of trade-oriented second tier and medium-sized enterprises will be empowered to not just survive but to grow through greater access to credit. This facility will attract additional trade finance investments in Latin America and the Caribbean through the establishment of a new financial vehicle that will diversify financing, reducing the dependence of companies on the local banking sector and stimulating economic growth.
The financing is the third operation of the IADB designed to carry out its new policy of greater support for international trade mandated by the bank’s board of governors in 2003.
A US$400mn Regional Trade Finance Facilitation Program was launched in April 2004 with 16 international founding partner banks and in December 2004 the IADB completed a US$15mn loan facility for Latin America Export Finance Fund.