An overview of MIGA MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP

Transcription

1 An overview of MIGA MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP

2 I N S U R I N G I N V E S T M E N T S E N S U R I N G O P P O R T U N I T I E S

3 MIGA. A member of the World Bank Group 1944 IBRD International Bank for Reconstruction and Development 1960 IDA International Development Agency 1956 IFC International Finance Corporation 1966 ICSID International Center for the Settlement of Investment Disputes 1988 MIGA Multilateral Investment Guarantee Agency MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 3

4 MIGA s mandate MIGA promotes foreign direct investment by providing: Political risk insurance (guarantees) for investors and lenders Research and knowledge on political risk and the political risk insurance industry (World Investment and Political Risk report, pri-center.com) MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 4

5 Risks covered by MIGA Currency Transfer Restriction and Inconvertibility Protects against losses arising from: Inability to convert local currency into foreign exchange within the host country Inability to transfer funds out of the host country - Currency depreciation not covered Expropriation Protects against losses arising from: Nationalization and confiscation Creeping expropriation (i.e. a series of acts that in themselves are not expropriatory, but taken in sum are, e.g., changes in tax regime relating specifically to the foreign investor, gov t representation imposed on Board of project, changing terms of license) Partial expropriation (expropriation of funds) - Non-discriminatory measures not covered, unless such measures have a confiscatory effect MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 5

6 MIGA s political insurance coverage (cont.) War and Civil Disturbance Protects against losses arising from: Damage/disappearance of tangible assets (including revolution, insurrection, coups d'état, sabotage, and terrorism) Business interruption Acts must have a primary intent of achieving a political objective Breach of Contract Protects against losses arising from: Breach or repudiation of a contract between the investor/project company and the host country authorities Non-enforcement of an arbitration/judicial award, or no recourse to judicial/arbitral forum, or decision by forum not rendered in reasonable time May cover sub-sovereign obligations and obligations from SOEs Non-Honoring of Sovereign Obligations For unconditional financial payment obligations No arbitration required MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 6

7 Types of investments covered Equity Shareholder loans Loan guarantees Loans from financial institutions Non-shareholder loans Non-equity direct investment other forms of investment such as technical assistance and management contracts, asset securitizations, capital market bond issues, leasing, services, franchising and licensing agreements, may also be eligible for coverage. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 7

8 MIGA s underwriting process 1 Investor Preliminary Application with MIGA Definitive Application (8 page document) Definitive Application fee up to US$10,000 depending on the size, to be credited towards the first premium payment Available online Free, confidential 2 pages Determines eligibility 2 MIGA (10 12 weeks) Early management decision Underwriting Host Country approval Board concurrence 3 Investor and MIGA Sign contract of guarantee MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 8

9 MIGA s 2010 Highlights Gross exposure ($ billion) Key Figures Issued 980 guarantees for 616 projects for a total of $22.4 billion during Gross exposure: $7.7 billion in FY10 Issued $1.5 billion in FY10 in support of 19 projects $342.6 million for investments in IDAeligible countries (of which $336.9 million was in sub-saharan Africa) Partnerships MIGA/IFC business development agreement MOU s with Japan Bank for International Cooperation, Central American Bank for Economic Integration, Korea s Eximbank Dubai International Financial Centre MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 9

10 MIGA FY10 Issuance by Region and Sector 11% Asia and the Pacific $24M 26% Sub-Saharan Africa $337M 11% Latin America and the Caribbean $18M 52% Europe and Central Asia $1,085M Oil, Gas and Mining $225 M Infrastructure $178 M Agribusiness, manufacturing and Services $124 M Financial $937 M MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 10

11 MIGA s Value Credit enhancement Longer tenors (up to years) World Bank Group umbrella of deterrence Track record in dispute resolutions Mobilization of reinsurance capacity Best practices in environmental and social management Prompt claims payment Access to World Bank Group expertise and resources MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 11

12 How Investors Benefit from MIGA Guarantees NHSO Cover: MIGA s contract developed to Basel II standards irrevocable and unconditional with respect to factors outside of the lender s control Financial Sector Projects: Implied AAA rating provides lenders with zero-risk weighted capital treatment MIGA guarantees can provide capital relief through exemptions from provisioning requirements; MIGA guarantees have lifted the transaction rating above the sovereign rating thereby reducing the cost of funding; Infrastructure and OGM Projects MIGA can assume longer tenors (15-20 years); MIGA can arrange reinsurance capacity with private and public insurers that might not otherwise be available under a single contract of guarantee one stop shopping; MIGA guarantees can improve funding costs through higher ratings for the transaction. MIGA works with the investors to address all environmental and social issues at an early stage to prevent issues from arising later. MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 12

13 Kadikoy-Kartal-Kaynarca Metro Project Credit Agricole Unicredit Société Générale WestLB ING BNP Paribas Facility Agent Project: Expansion of underground metro system on Asian side of Istanbul, Turkey. Previous financing included IFC Loan Agreement: signed in April 2011 Turkey Ulasim Ownership Guarantee Loan Municipality of Istanbul Amount of Guarantee: 280m, including principal, interest and premium Tenor of Guarantee: 9.5 years Operator Ownership Contract Funding Cover: NHSFO on a loan provided to MMI by a consortium of banks, with WestLB acting as Facility Agent Kadikoy-Kartal- Kaynarca Metro Project Construction Astaldi- Gulermak- Makyol JV MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 13

14 Doraleh Container Terminal - Djibouti Project: Development, construction and operation of 2000 meter quay-length Container Terminal w/annual handling capacity of 1.5 million twenty foot container equivalent units (TEUs) Highly strategic location on the vital east-west shipping lanes Huge potential as transshipment hub for COMESA region De-facto Port for Ethiopia, handling some 85% of all in / outbound trade traffic Loan Agreements: Signed December 2007 Amount of Guarantee: $422 million across three contracts Tenor of Guarantee: 10 years Cover: Transfer Restriction, Expropriation, War & Civil Disturbance, Breach of Contract MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 14

15 Doraleh Container Terminal Project Equity guarantee Musharaka guarantee DP World Djibouti FZCO Commercial Banks Direct Agreement Equity (33% ownership) Forward Lease Agreement Financing Swaps Premium $422 M Djibouti PAID (State-owned port company) 67% ownership Doraleh Container Terminal S.A. Contribution Contribution DCT Musharaka Joint Venture Government of Djibouti Concession Doraleh Container Terminal Project MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 15

16 Recent Market Trends The financial crisis of saw a sharp decline in the demand for political risk insurance Projects were either put on hold or cancelled outright At the same time, capacity and pricing remained relatively stable The PRI market has reported few claims as a result of the crisis loss ratios have averaged 10-15% Demand is starting to rebound MIGA has seen a strong increase in the number of applications filed in with a shift into investments in the emerging markets Many of these applications have been for infrastructure, energy and telecom projects There has also been a strong interest in our NHSO coverage The private market has also noted an increase in demand for PRI as enquiries have increased significantly for both new projects and projects which had been put on hold as financing evaporated during the crisis MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 16

17 Claims history From 600 projects that have received MIGA support, there have been more than 80 cases treated as possible claims, but in which no claim has been paid MIGA has successfully facilitated the settlement of disputes in all currency transfer/inconvertibility issues and since inception has paid claims in 5 cases: Indonesia ($15 million for expropriation in FY00) Nepal ($144,600 for war and civil disturbance in FY05) Argentina ($558,311 for expropriation in FY05) Kenya ($491,100 for war and civil disturbance in FY09) Madagascar ($12,824 for war and civil disturbance in FY09) All other cases have been resolved (before or after the claim was filed) or the claim was withdrawn MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 17

18 Mitigation of environmental and social risks Agency applies a comprehensive set of social and environmental performance standards to all projects. The client must meet standards in the following areas throughout the life of an investment supported by a MIGA guarantee: 1. Social and Environmental Assessment and Management System 2. Labor and Working Conditions 3. Pollution Prevention and Abatement 4. Community Health, Safety and Security 5. Land Acquisition and Involuntary Resettlement 6. Biodiversity Conservation and Sustainable Natural Resource Management 7. Indigenous Peoples 8. Cultural Heritage Particularly critical in infrastructure, oil and gas, and mining projects Environmental and Social Fund for Africa MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 18

19 For more information, visit MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 19