miga’s operations
TRANSCRIPT
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY
MIGA’s Operations
Multilateral Investment Guarantee Agency July 30th, 2007
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 2
FDI is crucial to development finance…
2
0
100
200
300
400
500
600
1990 1994 1998 2002 2006
Billions
FDI
In 2006, FDI constituted 56% of aggregate net resource flows to developing countries
FDI
Grants
Portfolio Equity
Long-term debt
Net Resource Flows to Developing Countries*
Source: Global Development Finance Database, 2007
*Aggregate Net Resource Flows defined as net FDI inflows plus net flows on long-term debt, plus portfolio equity and grants.
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 3
…is growing rapidly…
3
0
50
100
150
200
250
300
350
1990 1994 1998 2002 2006
Billions
Net FDI Inflows to Developing Countries 1990 - 2006
FDI
Debt
Official Flows
Source: Global Development Finance Database, 2007
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 4
…and is concentrated in a handful of countries.
4
Net FDI Inflows to Developing Countries1990 - 2005
All other countries
Top Ten Recipients
-‐
50.0
100.0
150.0
200.0
250.0
300.0
1990 1995 2000 2005
Bill
ions
Net FDI Inflows to Developing Countries1990 - 2005
Low Income
Lower Middle Income
Upper Middle Income
-‐
50 .0
100 .0
150 .0
200 .0
250 .0
300 .0
1990 1995 2000 2005
Bill
ions
Source: Global Development Finance Database, 2007
Source: Global Development Finance Database, 2007
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 5
Challenges Investors Face
… they need predictability.
“We are never sure of our contracts – we live with constant insecurity.”
“The lack of respect for contracts and renegotiation is a problem throughout the region.”
“We do not want to invest in countries in which the rules are frequently and suddenly changed.”
Judicial/Legal Framework
Regulatory Inconsistency
Political Instability
Currency Instability
Respect for Contracts
Our clients tell us…
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 6
MIGA is active in under-served markets
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 6
Net FDI Inflows to Developing Countries1990 - 2005
High risk
All other counries
0
50
100
150
200
250
300
1990 1995 2000 2005
Bill
ions
% of Net FDI Inflow s to high risk countries
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
0%
20%
40%
60%
80%
100%
% of MIGA issuance to high risk countries
3 year moving average
% of Net FDI Inflow s to countries
outside top ten0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
0%
20%
40%
60%
80%
100%
% of MIGA issuance to countries outiside top
ten
7 1% a v e ra g e o v e r 16 ye a rs
2 7% a v e ra g e o v e r 16 ye a rs
3 year moving averageMIGA encourages FDI flows to less establishedmarkets
MIGA supports projects in “high risk” countries*
*”High risk” countries defined as having an Institutional Investor credit score of 30 or lower.
Net FDI Inflows to Developing Countries1990 - 2005
All other countries
Top Ten Recipients
-‐
50.0
100.0
150.0
200.0
250.0
300.0
1990 1995 2000 2005
Billio
ns
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 7
Portfolio
MIGA's Gross Portfolio FY03-FY07($ billions)
5.08
5.19
5.09
5.365.3
4.8
5
5.2
5.4
FY03 FY04 FY05 FY06 FY07
By Region
By Sector
Africa 18%
LAC 28%
Asia 14%
MENA 5%
ECA 37%
Infrastructure 41%
Agribus, & Manu 12%
Financial 29%
Services 5%
OGM 13%
Numbers may not total to 100% due to rounding.
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 8
Case Study 1: “Autopistas del Nordeste” Toll Road, Dominican Republic
Autopistas del Norte Dominican Republic
Autopistas del Norte Cayman Islands
International Sponsors
Grupo Odinsa, Odinsa Holding,
Grodco, Grodco Panama
Morgan Stanley NY Arranger
Institutional Investors
Sub. debt and equity $15 M
Bond:
$206 M
Local Sponsor
Consorcio Remix
Astris Finance Financial Advisor
$4.5 M Equity and Sub Debt
Dominican Republic
$103 M
MIGA supports an 33-year toll road concession
financed through a capital markets transaction
(“144a” private placement)
ü 40% oversubscribed
ü Absent MIGA coverage, long-term financing was not available
ü Innovative and speedy use of PRI to raise financing
ü Rating increase with only 51% MIGA coverage
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 9
Case Study 2: “Motraco” Transmission lines from SA to Mozambique
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 10
Case Study 2: “Motraco” Transmission lines from SA to Mozambique
South Africa
EIB/ JBIC
Mozambique & Swaziland
Equity US$10.7 M
EIB/ JBIC loan guaranty US$75 M
Non-shareholder loan US$75M
Eskom
Motraco
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 11
Case Study 3: Emergency power - Brazil
Keppel Energy: 190MW Power Barges
§ Installation, operation and maintenance of a barge-mounted emergency power generation facility
§ Severe energy crisis, caused by under-investment in new generation and transmission capacity; made worse by a series of droughts in recent years (heavy dependence on hydro generating facilities)
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 12
Case Study 3: Emergency power - Brazil
Keppel Energy
Private insurers
US$130 M
CUP
Perceived risks:
§ Transfer restriction/ inconvertibility
§ Failure by the host government to honor its payment obligations under the Host Government Guarantee to the Electrical Power Supply Contract
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 13
Case Study 4: Phu My III Gas Fired Power project – Vietnam
Construction, on a BOT basis, of a 716 MW base load combined cycle gas-fired power plant, in Ba Ria, 70 km south-east of Ho Chi Minh City
(Vietnam’s follow-up to its first BOT Phu My 2.2)
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 14
Case Study 4: Phu My III Gas Fired Power project – Vietnam
Total cost: $412 million Debt: $309 million
Sponsors: BP, Sembcorp, Nissho Iwai, Kyushu
EPC: Siemens
Gas supplier: BP operated Block 06.1, approximately 450 km offshore southern Vietnam in the South China Sea
Lead arrangers: BoTM; Crédit Agricole, Crédit
Lyonnais, Fortis, Mizuho Bi/Multilateral
support: ADB, MIGA / JBIC, NEXI
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 15
Case Study 4: Phu My III Gas Fired Power project – Vietnam
BP
Semb Corp
Kyuden/ Nissho Iwai
MOF
MPI
MOI
Other agencies
Phu My III BOT Power Company
Gvt guarantee and undertaking
EVN
Petro Vietnam
EPC Contractor
O&M
PPA
GSA
EPC, O&M
JBIC ADB
Commercial Banks
MIGA, ADB, NEXI
MIGA
Equity: $103 M
Debt: $309 M
Gvt guarantee
$99 M
$40 M
$170 M
$48 M equity coverage
$90 P&I debt coverage, balance ADB and NEXI
BOT contract
WORLD BANK GROUP MULTILATERAL INVESTMENT GUARANTEE AGENCY 16
MIGA’s Value Added
§ PRI is a highly specialized, niche
market § Branding: MIGA is recognized as a
market leader in the industry § Project finance structuring § Mediating disputes / relationship with
government
§ Helping investors access funding § Lowering borrowing costs
§ Increasing tenors
§ Extensive country knowledge
§ Ensuring environmental and social safeguard standards are met
Providing comfort to our clients by improving their
projects’ risk profiles