The International Finance Corporation (IFC) and Citi have partnered on an US$800mn risk-sharing deal to support emerging market trade and commodity flows and finance businesses that are struggling to cope with the devastation caused by Covid-19.

The transaction will see the IFC and Citi share the risk on the portfolio of trade-related assets on a 50-50 basis.

“Supporting the sustainability of the supply chains and stimulating the international trade flows have been a critical priority for us as we deal with the impact of the Covid-19 pandemic,” says Ebru Pakcan, Citi’s global head of trade. “Citi’s partnership with the IFC on this transaction will help enable the recovery of trade flows in the emerging markets while aiding in mitigating the extended disruption to the supply chains of many industries across the globe.”

The signing marks the extension of an existing facility, the IFC’s global trade liquidity programme (GTLP), initially set up in 2009, bringing the size of the facility to US$2bn.

The new transaction also forms part of the IFC’s US$8bn Covid-19 fast-track financing support package, announced in March, which included US$2bn for the GTLP. The IFC announced at the time that the bulk of that package will go to client banking institutions, enabling them to continue to offer trade financing, working capital support and medium-term financing to private companies.

A US$100mn loan, signed with Zenith Bank last month, was the first investment the IFC made in Africa as part of its pandemic support package.

“Across the globe, the Covid-19 pandemic is disrupting supply chains, decreasing demand and causing overall market anxiety. Many businesses – especially SMEs – are being forced to close their doors,” says Paulo de Bolle, global director of the IFC’s financial institutions group. “By rapidly increasing our capacity to deliver trade finance, IFC and Citi can help businesses maintain their operations during the current crisis and speed their recovery when the pandemic eases.”