The Hong Kong Monetary Authority (HKMA) has invested US$1bn to a lending syndication programme with the International Finance Corporation (IFC).

The funds will go towards the IFC’s Managed Co-Lending Portfolio Programme (MCPP), which is disbursed in loans in emerging markets. To date, the programme has lent to more than 100 countries across infrastructure, telecoms, manufacturing, agribusiness and service sectors.

GTR understands that the returns HKMA can expect are consistent with commercial returns expected on emerging market sector loans, and that the projects will be consistent with those usually financed under the IFC’s remit.

The HKMA joins the People’s Bank of China (PBOC) in committing. The PBOC, China’s central banking authority, has committed US$3bn to the programme to date.

The MCPP works as follows: investors provide capital on a portfolio basis. The IFC can deploy this in individual debt packages around the world. Investor approval is sought pre-mandate, while each commitment is managed by the IFC on the investor’s behalf.

It gives the IFC a blanket level agreement to invest the capital, whereas other co-financing products in its portfolio enable institutions to partner on a deal by deal basis. It marks a continuation of the World Bank Group member’s forays into syndication, having entered into a number of large distribution agreements with commercial banks over the past year or two.

It also marks another way into the trade and infrastructure finance markets for institutional investors such as the HKMA and PBOC. “Noting the attractiveness of steady long-term return in infrastructure investments, the HKMA has been active in expanding this new asset class,” says HKMA chief executive Norman Chan.

The IFC’s vice-president and treasurer, Jingdong Hua, says: “This signing with one of the world’s most respected institutional investors demonstrates again that MCPP as a mobilisation platform has widespread appeal. We have received keen interest from the market, and doubled the amount of financing available under MCPP to US$6bn. With these resources now available, the IFC can finance vital projects that will also help the poor. We look forward to working together.”