The Inter-American Development Bank (IADB) has approved a policy change to enhance its partial credit guarantees for Latin American and Caribbean debt issuers. Under the new guidelines, the bank will be able to denominate reimbursement claims, fees and other charges in local currencies.

Previously, the institution’s policies required that these items should be denominated in US dollars. The new partial credit guarantee feature improves the IADB’s capability to support local currency operations and is available for private sector operations and other projects without sovereign guarantee.

“Fostering financial market development is an important part of the IADB’s support for private sector development in the region,” says Hans Schulz, head of the private sector department’s financial markets team. “We are sharpening our instruments in response to market demand.”

Partial credit guarantees are a key instrument in the IADB’s strategy of promoting the development of local capital markets. “They strengthen the credit rating of securities denominated in local currencies, reducing foreign currency exposure for issuers and creating new investment opportunities in the region’s capital markets. We anticipate significant demand for this product,” Schulz adds.