Investing

CapitalMarkets:
for
Foundations for Long-Term Growth
Impact
Presentation to New York University
September 30, 2014
Jingdong Hua
Vice President and Treasurer, IFC

Todays Presentation
Overview
of IFC

Financial
Strength

IFC in the
Capital
Markets

Contacts

Overview
Overview
of IFC
IFC

Overview
Overview
of IFC
IFC

Overview of IFC

IFC: A Member of the World Bank Group

The World Bank Group is made
up of several distinct legal entities:

The World Bank Groups mandate is to

end extreme poverty within a
generation and boost shared
prosperity

Bond issuers:

IFC is a legally distinct part of the World

Bank Group with its own articles of
agreement, balance sheet and staff
IFC is the largest global development
institution focused on the private
sector, and the only global multilateral
source of debt and equity financing for
private enterprise

Non-issuers:

Headquartered in Washington DC with

over 108 offices worldwide in 98
countries

Overview of IFC

Strong Shareholder Support

184 shareholders: governments
of member countries
159 other countries

Approximately 65% of capital is

held by AAA/AA sovereigns
51% of capital held by G7
countries
IFC does not pay dividends or
taxes
We believe it is highly unlikely that the Corporation
would require shareholder assistance given the very
strong management of the resources it has on hand.
However, given the shareholder support that the IFC
enjoys, along with its relatively modest size, it is likely
that shareholder governments would provide
additional capital well before any disruption in the
organizations ability to maintain operations would
occur.
Moodys | 19 November 2013

United States

Pakistan
Nigeria
Sweden
Venezuela
Mexico
South Korea
Saudi Arabia
Indonesia

Japan

Spain
Argentina
Brazil

Germany

Switzerland
Australia

France

Belgium

United
Kingdom

Netherlands
China

Russia
Italy
Canada

India

Overview of IFC

IFCs History: Six Decades of Creating

Opportunity
1956

1957

1965

1971

1984

1989

2000

2009

IFC was
founded 12
years after the
Bretton Woods
Conference
created the
World Bank to
finance postWWII
reconstruction
and
development
by lending to
governments

IFC's first
investment: a
$2 million loan
to help the
Siemens
affiliate in Brazil
manufacture
electrical
equipment

IFC first
syndication
mobilizes
$600,000 for
Brazilian pulp
and paper
company
Champion
Cellulose. The
project also
launches IFC's
syndications
program

IFC creates a
Capital Markets
Department to
strengthen
local banks,
stock markets,
and other
intermediaries

IFC becomes
financially
independent
from the rest of
the World Bank
Group, gaining
approval to
issue its own
bonds in
international
capital markets

AAA Credit
Rating: IFC
receives the
highest
possible
endorsement of
financial health
from private
rating agencies

IFC launches
its first Global
Dollar Bond

IFC Asset
Management
Company is
launched as a
third business
line. IFC Asset
Management
Company
invests thirdparty capital in
a private equity
fund format

Overview of IFC

IFC: Creating Opportunity

IFCs vision is that people should have the opportunity to escape poverty
and improve their lives.
IFC creates opportunity by:
Mobilizing

Promoting

Supporting

Mobilizing other
sources of finance for
private enterprise
development

Promoting open and

competitive markets in
developing countries

Supporting companies
and other private
sector partners where
there is a funding gap

10

10

Helping
Helping generate
productive jobs and
deliver essential
services to the poor
and the vulnerable

Overview of IFC

IFCs Three Businesses

Investment Services
Loans
Equity products
Syndicated loans
Trade finance
Structured finance and
securitized products
Risk management products

Advisory Services
Access to finance
Environmental and social
sustainability
Investment climate
Public - private partnerships
Infrastructure advice

Local currency financing

$17.3 billion invested in 2014,

$51.7 billion committed portfolio

Figures for fiscal year ended 30 June 2014

over $200 million

in fee income annually

11

11

Asset Management
Company
Wholly-owned subsidiary
of IFC founded in 2009
Invests third-party capital
in a private equity format
Allows outside equity
investors to benefit from
IFCs expertise in achieving
strong equity returns as
well as development
impact
$6.4 billion
under management

Overview of IFC

IFC: A Growing Business

50

5,000

45
40

4,000

35
30

3,000

25
20

2,000

15
10

1,000

5
0

0
FY05

FY06

FY07

FY08

FY09

FY10

Staff based in Washington DC

Staff based in country offices
Total Loans and Equity Investments committed as of fiscal year-end

IFCs fiscal year-end is 30 June

12

12

FY11

FY12

FY13

FY14

Number of employees

Total loans and equity investments (US$ billions)

55

Overview of IFC

Overview of IFC

Sustainability: Key to IFCs Mission

IFC is a pioneer of socially and environmentally responsible
investments in emerging markets
All projects financed must adhere to IFCs stringent environmental and
social requirements which cover transparency and accountability, stipulating
specific performance standards
IFCs Equator Principles is an established benchmark for the financial
industry to assess and manage social and environmental risk in project
financing
currently adopted by 80 leading financial institutions,
accounting for 95% of project finance transactions
worldwide
IFC co-sponsors Sustainable Banking Awards
with the Financial Times
13

13

Financial
Strength

14

Financial Strength

Conservative Balance Sheet

Assets
Liquid Assets (gross)
Loans and Equity Investments
(net of $1.6 in reserves)
Net Loans
Equity Investments
Debt Securities
Other Assets
Total Assets

Liabilities and Capital

$ 40.4

Borrowings

38.2
22.6
13.0
2.6

$ 49.5

Other Liabilities

10.6

Net Worth

24.0

Paid in Capital
2.5
Retained Earnings and other

5.5

21.5

$ 84.1

Total Liabilities and Capital

$
84.1

In USD billions as of 30 June 2014

15

15

Financial Strength

Consistent Asset Growth

IFCs total disbursed loans and equity, and net liquid assets at fiscal year-end
45
40
35

34%

USD billions

30
25
20
15

66%

10
5
0
FY05

FY06

Equity Investments

IFCs fiscal year-end is 30 June

FY07

FY08

Loans and Other Debt

FY09

FY10
Liquid Assets

16

16

FY11

FY12

FY13

FY14

Financial Strength

Organic Growth from Retained Earnings

We expect IFC to be able to finance a large part of its
growth through internal capital generation, given its
profitable record.
Standard & Poors | 30 April 2013

IFCs total net worth as of 30 June of each year

30

25

USD billions

20

15

10

0
FY05

FY06

Retained Earnings

IFCs fiscal year-end is 30 June

FY07

FY08

FY09

FY10

Paid-in Capital

17

17

FY11

FY12

FY13

FY14

Financial Strength

High Liquidity
Our funding and liquidity ratios for IFC indicate that it
would be able to fulfill its mandate for at least one year,
even under extremely stressed market conditions,
without access to the capital markets.

$33.8 billion of net liquid assets

(equivalent to 40% of total assets)

Standard & Poors | 30 April 2013

High quality investments, with mainly:

Sovereign and supra bonds
Non-government triple-A fixed income securities
Financial institution deposits
Performance is measured against market benchmarks within risk
parameters
Proactive investment approach focused on capital preservation,
reasonable returns and diversification

18

18

Financial Strength

Track Record of Profitability

IFC has recorded operating profit in every year since its founding in 1956
Asian Crisis,
Russian Crisis

Brazil
Crisis

Argentina Crisis,
Turkey Crisis

Global Financial
Crisis

EM growth

EM growth

Deleveraging

US$ billions

2.5

1.5

0.5

0
FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

Operating Income

IFCs fiscal year-end is 30 June

19

19

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

Financial Strength

Strong Fundamentals
Only supranational with fully paid-in capital (held exclusively in US dollars)
IFC has one of the lowest ratios of debt to net worth of any supranational
IFCs growth is financed by retained earnings
Equity investments are funded by IFCs net worth, not borrowings
Conservative balance sheet:
Risk-adjusted capital

Leverage
4.0x
max

$20

3
2
1
0

2.7x
actual

USD billions

Debt to net worth, times

2.6x
actual

$15

$18.0
min

$21.6
actual

Liquidity ratio
100%
75%

78%
actual

50%

$10
$5

25%

$0

0%

45%
min

(percentage of estimated net cash

requirements for the next 3 years)

Actual level figures as of 30 June 2014

Minimum and maximum thresholds based on triple-A rating methodology guidelines as determined by rating agencies

20

20

Financial Strength

Consistent Triple-A Rating

Major Ratings Considerations
Member of World Bank Group
Sovereign sponsorship with fully paid-in capital
Strong financial profile with substantial capital
and high liquidity
Conservative statutory and management policies
As a multilateral development bank, IFC has a
0% risk weighting under the Basel framework
The International Finance Corporations (IFC) Aaa rating with a stable outlook is
based on its robust capital adequacy and liquidity, preferred creditor status, and
strong shareholder support.
Moodys | 13 November 2013

21

21

Aaa

AAA

Long-term rating

Long-term rating

(November 2013)

(April 2013)

Outlook: Stable

Outlook: Stable

Financial Strength

Portfolio Risk Management

The Corporation manages its capital adequacy using a
risk-based economic capital framework which
establishes a level of resources required to protect from
risks stemming from all of its asset classes.

Market based loan pricing

Strong capital position, backed by
economic capital framework and
leverage limits

Moodys | 13 November 2013

We expect IFC's capital position and liquidity to be

strong enough to withstand severe financial distress
in its countries of operation.

Loans match-funded to manage

currency, interest rate and
maturity risks

Standard & Poors | 30 April 2013

Strict loan and equity portfolio diversification guidelines to reduce concentration risks:

By company
Risk-based limits for clients
and groups of connected
clients

By risk sector
Limits on global sector
exposure, and on key sector
exposure within countries

22

22

By country
Economic capital-based
limits on country exposure

Financial Strength

Highly Diversified Global

Portfolio
IFC has debt and equity exposure
in 126 countries and over 2,000
companies

Regional portfolio diversification

Global 2%

Equity investments comprise 34%

of IFCs investment portfolio

South Asia
11%

Latin America
and Caribbean
22%

Middle East and

North Africa
11%

East Asia
and the
Pacific
16%

Europe and
Central Asia
21%
Sub-Saharan
Africa
17%

Figures as of 30 June 2014

23

23

Financial Strength

High Diversification of Portfolio by Country

Five largest country exposures
account for 31% of total committed
portfolio

Country portfolio diversification

India
9.1%

Top ten exposures comprise 43%

of total committed portfolio

Turkey
6.2%

Largest 25 exposures comprise

64% of IFCs total committed
portfolio
As a global institution, IFC's geographic exposure is
well diversified, both within countries and aggregating
exposures at the country level.
Standard & Poors | 30 April 2013

Figures as of 30 June 2014

101 other countries

36.1%

China
6.0%
Brazil
5.4%
Russia
4.0%

Mexico 3.0%
Nigeria 3.0%
Bangladesh 1.1%
Ukraine 2.0%
Panama 1.1%
Romania 1.2%
Indonesia 2.0%
Serbia 1.2%
Ghana 1.4%
Egypt 1.9%
Jordan 1.4%
Colombia
1.8%
Argentina 1.4%
South Africa 1.7%
Philippines 1.4%
Chile 1.5% Kenya 1.6% Peru 1.6%
Vietnam 1.5% Pakistan 1.6%

24

24

Financial Strength

High Diversification of Portfolio by Industry

IFCs portfolio is highly
diversified across a wide range
of industries and sectors
Agribusiness
and Forestry
8%

Consumer
and Social
Services
8%
Financial
Markets
29%

Manufacturing
12%

Funds
8%

Telecommunications and
Information Technology
4%
Oil, Gas and
Mining
5%

Figures as of 30 June 2014

25

25

Infrastructur
e
20%

Trade
Finance
6%

Financial Strength

Quality Loan Portfolio

Low NPLs Loans 60 days past due classified as non-accruing
Entire portfolio reviewed on a quarterly basis
Total reserves against losses equaled 6.9% ($1.69 billion) of the total
disbursed loan portfolio as of 30 June 2014
% of disbursed loan portfolio
25%
20%
15%
10%
5%
0%
FY00

FY01

FY02

non-accruing loans
IFCs fiscal year-end is 30 June

FY03

FY04

FY05

FY06

FY07

reserves

26

26

FY08

FY09

FY10

FY11

FY12

FY13

FY14

Financial Strength

IFC: Providing Value to Investors

Only supranational institution with
fully paid in capital
Well capitalized: capital and retained
earnings represent almost 1/3 of its total
balance sheet

We believe IFC benefits from strong access to capital

markets, bolstered by frequent issuance in many
markets and currencies. IFC has no callable capital,
unlike most MLIs, so our ICRs reflect our aaa Stand
Alone Credit Profile.
Standard & Poors | 30 April 2013
MLIs: multilateral institutions

ICRs: internal credit ratings

Receives strong support from its 184 member countries

Consistently rated AAA/Aaa by S&P and Moodys
0% risk weighting under Basel program
Has consistently recorded operating profits every year since its founding
in 1956
Annual funding program of US$18 billion for the current fiscal year
ending 30 June 2015
27

27

IFC in the
Capital
Markets

28

IFC in the Capital Markets

IFCs Funding Strategy

IFC accesses a wide range of products to raise funding at favorable cost
and targeted maturity
IFC executes its funding strategy in three key ways:
1. Establishing a regular presence in its core markets
2. Ensuring access to a wide range of markets to benefit from opportunistic and
competitively priced transactions
3. Promoting development of emerging capital markets by issuing bonds in local
currencies, often in domestic markets

29
29

IFC in the Capital Markets

Growth of IFCs Funding Program

The expansion of IFCs balance sheet in recent years has led to growth in the
funding program
Current funding programs of IFC and peers

IFCs annual funding volume

$20
18.0
$15

16.0
12.8

$10

10.0

40.0

11.3

6.0

$5

$0
FY06

11.0

13.7

1.7
FY07

18.0 17.5

2.8
FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

IBRD

Figures in USD billions unless otherwise noted

30

30

IFC

IADB

13.0
ADB

8.0
EBRD

4.7
AfDB

IFC in the Capital Markets

Funding in Various Markets and Currencies

IFC has issued global benchmarks in
each year since 2000
IFC complements its public issuance by
accessing a variety of different markets
such as green bonds, uridashi, private
placements and discount notes
First non-domestic issuer in China,
Costa Rica, Dominican Republic, Nigeria,
Peru, Zambia and others
As a US dollar-based institution, all
borrowings are swapped into variablerate US dollars

31

31

Borrowings by currency in FY14

ZMW <1%
ZAR 1% RWF <1%
TRY 1% CAD 1% UYU <1%
MXN 1%
AMD <1%
CNY 2%
NZD 4%

EUR 4%
BRL 5%
JPY 5%
GBP 6%

USD 53%

INR 8%

AUD 10%

IFC in the Capital Markets

Green Bonds
IFC has played a pioneering role in
creating investment opportunities which
support climate change-related projects
Since its inaugural issue in 2010, IFC has
raised $3.7 billion through its green bond
program, including the markets first
benchmark-sized green bonds issued in
February and November 2013
IFCs green bond proceeds are held in a
separate account for investing exclusively
in renewable energy, energy efficient,
and other climate-friendly projects
Green bonds are consistently priced in line
with IFCs vanilla curve
32

32

IFC in the Capital Markets

Banking on Women Bonds

IFCs Banking on Women bonds help
fund IFCs Banking on Women program
which supports women-owned small
and medium enterprises in emerging
markets
Women entrepreneurs in developing
countries are a powerful source of
economic growth and opportunity
Roughly one-third of all SMEs in emerging markets are owned by women but
often lack access to credit the credit gap for women-owned SMEs is
estimated at close to $300 billion
The Banking on Women bond program was launched with a 5-year dual
tranche bond denominated in AUD and TRY that raised $165 million
equivalent
33

IFC in the Capital Markets

Capital Markets: Foundations for Long-Term

Growth
Finance growth

Domestic and international investment flows close

financing gaps for infrastructure, housing, SMEs, etc.

Strengthen
stability

JPY
Offset the impact of capital flow
volatility--lessons
5%
from the 1997 Asian financial
crisis
NZD
7%

Intermediate
capital in an
economy

Mobilize resources from investors and channel

savings into productive investments

34

USD
56%

IFC in the Capital Markets

Supporting Capital Markets: A Strategic Priority

for IFC
IFC supports domestic capital market development through
Issuing local currency bonds
Advice to regulators, authorities, and market participants
Helping first-time corporate issuers access capital markets

IFC promotes access to local currency finance through

Loans
Swaps
Customized structured and risk management products

35

IFC in the Capital Markets

IFC Capital Market Solutions Across the Spectrum

36

IFC in the Capital Markets

IFC Pioneer Issuances in Capital Markets Globally

Gulf
GulfCooperation
CooperationCouncil
Council
(GCC)
(GCC)Hilal
HilalSukuk
Sukuk(2009)
(2009)
USD
USD100
100million
milliondue
due2014
2014

Russia
RussiaVolga
VolgaBond
Bond(2012)
(2012)
RUB
13
billion
due
2017
RUB 13 billion due 2017
Armenia
ArmeniaSevan
SevanBond
Bond(2013)
(2013)
AMD
AMD22billion
billiondue
due2016
2016
China
ChinaPanda
PandaBond
Bond(2005)
(2005)
CNY
1.3
billion
due
2015
CNY 1.3 billion due 2015

Dominican
DominicanRepublic
RepublicTaino
Taino
Bond
(2012)
Bond (2012)
DOP
DOP390
390million
milliondue
due2017
2017
Colombia
ColombiaEl
ElDorado
DoradoBond
Bond
(2002)
(2002)
COP
COP225
225billion
billiondue
due2007
2007
Peru
PeruInca
IncaBond
Bond(2004)
(2004)
PEN
50
million
due
PEN 50 million due2007
2007
Brazil
BrazilAmazonian
AmazonianBond
Bond(2007)
(2007)
BRL
200
million
due
2011
BRL 200 million due 2011
IFR
IFR2007
2007Awards:
Awards:Best
BestLatin
Latin America
America
Domestic
DomesticCurrency
CurrencyBond
Bond

Morocco
MoroccoAtlas
AtlasBond
Bond(2005)
(2005)
MAD
1
billion
due
2012
MAD 1 billion due 2012

Nigeria
NigeriaNaija
NaijaBond
Bond(2013)
(2013)

NGN
12
billion
NGN 12 billiondue
due2018
2018

India
IndiaGlobal
GlobalIndian
IndianRupee
Rupee
Linked
LinkedBond
Bond(2013,
(2013,2014)
2014)
INR
INR62
62billion
billiondue
due2016,
2016,2019,
2019,
2021
2021

China
ChinaPanda
PandaBond
Bond(2006)
(2006)
CNY
870
million
due
2013
CNY 870 million due 2013

India
IndiaMaharaja
MaharajaBond
Bond(2014)
(2014)
INR
INR66billion
billiondue
due2019,
2019,2024,
2024,
2032,
2032,2034
2034

China
ChinaDim
DimSum
SumBond
Bond(2011)
(2011)
CNH
150
million
due
2016
CNH 150 million due 2016
China
ChinaDim
DimSum
SumBond
Bond(2012)
(2012)
CNH
500
million
due
2014
CNH 500 million due 2014

Rwanda
RwandaUmaganda
UmagandaBond
Bond
(2014)
(2014)

RWF
RWF15
15billion
billiondue
due2019
2019

China
ChinaGreen
GreenDim
DimSum
SumBond
Bond
(2014)
(2014)

CFA
CFAFranc
Franc--Kola
KolaBond
Bond(2006)
(2006)
XOF
22
billion
due
2011
XOF 22 billion due 2011

CNH
CNH500
500million
milliondue
due2017
2017

Emerging
EmergingMarkets
Markets2007
2007Awards:
Awards:
Deal
Dealofofthe
theYear
YearAfrica
Africa

CFA
CFAFranc
Franc--Kola
KolaIIIIBond
Bond(2009)
(2009)
XAF
22
billion
due
2014
XAF 22 billion due 2014
Zambia
ZambiaZambezi
ZambeziBond
Bond(2013)
(2013)
37 due 2017
ZMW
150
million
ZMW 150 million due 2017

37

Asia
AsiaMoney
Money2005
2005Awards:
Awards:
Best
BestLocal
LocalCurrency
CurrencyBond
Bond

Malaysia
MalaysiaWawasan-Islamic
Wawasan-Islamic
Bond
Bond(2004)
(2004)
MYR
MYR500
500million
milliondue
due2007
2007
IFR
IFR2005
2005Awards:
Awards:
Malaysia
MalaysiaBond
Bondofofthe
theYear
Year

China
ChinaDim
DimSum
SumBond
Bond(2014)
(2014)
CNH
3.75
billion
due
2017,
CNH 3.75 billion due 2017,
2019
2019

IFC in the Capital Markets

Local Currency Case Study

IFC offers
Taino Bond

Pension fund
investors
purchase bonds

Proceeds used to
finance local projects
in the Dominican
Republic

Microfinance
Agriculture
SMEs
Womens enterprises
Low income housing

IFCs five-year DOP 390 million

(US$10 million) 10.5% Taino bond,
issued in December 2012, was the
first domestic placement by an
international triple-A rated issuer
in the Dominican Republic
The bonds were purchased by
domestic investors, and IFC lent
the proceeds directly to local
private sector companies
Proceeds from the bond went to
expand access to finance for
micro, small, and medium
enterprises and loans for lowincome housing in the Dominican
Republic

IFC receives
bond proceeds

38

38

Contacts

39

Contacts

IFC Treasury
IFC 2121 Pennsylvania Avenue NW Washington DC 20433 USA +1 202 473 8392
website: ifc.org/investors email: investors@ifc.org Bloomberg: IFC<GO>
Management
Jingdong Hua
Vice President and Treasurer
+1 202 473 1650
jhua@ifc.org

@ifc_investors

Media
Elena Panomarenko
Advisor
+1 202 473 0862
epanomarenko@ifc.org

Monish Mahurkar
Director
Treasury Market Operations
+1 202 473 1634
mmahurkar@ifc.org

Keshav Gaur
Global Head
Treasury Client Solutions
+1 202 473 1634
kgaur@ifc.org

40

40

Alexandra Klpfer
Communications Officer
+1 202 473 4645
aklopfer@ifc.org

September 2014

41

41

Disclaimer
This document has been prepared for informational purposes only, and the information herein may be condensed or
incomplete. IFC specifically does not make any warranties or representations as to the accuracy or completeness of these
materials. IFC is under no obligation to update these materials.
This document is not a prospectus and is not intended to provide the basis for the evaluation of any securities issued by IFC.
This information does not constitute an invitation or offer to subscribe for or purchase any of the products or services
mentioned. Under no circumstances shall IFC or its affiliates be liable for any loss, damage, liability or expense incurred or
suffered which is claimed to have resulted from use of these materials, including without limitation any direct, indirect,
special or consequential damages, even if IFC has been advised of the possibility of such damages.
For additional information concerning IFC, please refer to IFCs current Information Statement, financial statements and
other relevant information available at www.ifc.org/investors.

42