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BEYOND LENDING: Managing Risk and Volatility

Innovative Financial Solutions for Development AFD, WB and Gates Foundation Paris, March 4-5. BEYOND LENDING: Managing Risk and Volatility. Luc Rigouzzo CEO PROPARCO. Taux. Courbe pays émergents. PROPARCO. Courbe OCDE. maturité. 30. 3. 5. 15.

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BEYOND LENDING: 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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