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Innovative Financial Solutions for Development: Managing Risk and Volatility

Join industry leaders at the AFD, WB, and Gates Foundation conference in Paris on March 4-5, to explore innovative financial solutions for development. Led by Luc Rigouzzo, CEO of PROPARCO, the event will examine emerging market risk perceptions, lending practices, and volatility management. Topics include the interplay between long-term loans and short-term benchmarks, recent examples from PROPARCO, and strategies to mitigate stock market and commodity price volatility. Discover instruments such as municipal bond guarantees and the TCX mutualization approach, aimed at enhancing financial resilience.

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Innovative Financial Solutions for Development: Managing Risk and Volatility

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  1. Innovative Financial Solutions for Development AFD, WB and Gates Foundation Paris, March 4-5 BEYOND LENDING:Managing Risk and Volatility Luc RigouzzoCEO PROPARCO

  2. Taux Courbe pays émergents PROPARCO Courbe OCDE maturité 30 3 5 15 The first market failure: risk perception and spreads/CDS volatility

  3. The example of the last 3 yearsLending LT with ST benchmarks? Indice CDX.EM Marges à l’octroi 310 245 240 Coût de la ressource pour Proparco Basis swap

  4. There is a full set of instruments that already exists. Recents Proparco examples • Stock Market Volatility: • Tunisia SPV with a guaranteed yield • Exchange risk volatility: • Direct bon issuances or Bank Loan gaurantees • Guaranty of Municipal Bond issuances • TCX –mutualisation (basket) • Traditional Equity • Spreads/ Interest rate volatility : • Loans with spreads linked to the CDS (Turkey,..) • Commodity price volatility (ex Sodecoton)

  5. Covering partially the Commodity and Exchange riskL.T. loans with payments linked to the cash-flow Hypothesis Results Reimbursement duration reduced to 8 years thanks to anticipated reimbursements during 4 years

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