Treasury Department

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Treasury Department
August 2008
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IFC Vision and Mission Statement

• Vision
• People should have the opportunity to escape
  poverty and improve their lives.
• Shared Mission Statement
• To fight poverty with passion and
  professionalism for lasting results. To help
  people help themselves and their environment by
  providing resources, sharing knowledge, building
  capacity, and forging partnerships in the public
  and private sectors.

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The International Finance Corporation (IFC)
was founded in 1956 to

• Promote and support economic growth by catalyzing
  private sector investment in developing countries
• Legally distinct part of the World Bank Group
  with a shared Board of Directors and President,
  but separate development mandate, articles of
  agreement, staff, capital base and
  operating/financial policies
• Largest and only global multilateral source of
  debt and equity financing for private enterprise
  in developing countries

IBRD
IDA
MIGA
ICSID
C
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IFC Products and Services
Financial Products
Advisory Services

• Loans for IFC Account
• Syndicated Loans
• Equity and Quasi-Equity Finance
• Equity and Debt Funds
• Structured Finance
• Partial credit guarantees
• Securitization
• Risk-sharing facilities
• Risk Management Products
• Derivatives solutions for hedging purposes
• Local Currency
• Subnational and Trade Finance

• Business-Enabling Environment
• Value Addition to Firms
• Environmental and Social Sustainability
• Infrastructure
• Access to Finance

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Sustainability is central to the IFC mission

• Pioneer of socially and environmentally
  responsible investments
• Strong environmental and social due diligence
• Focus on small and medium industries
• Emphasis shifting from minimum standards to
  ensuring sustainability
• IFCs Equator Principles are becoming widely
  adopted by financial institutions
• A benchmark for the financial industry to assess
  and manage social and environmental risk in
  project financing
• IFC co-sponsors Sustainable Banking Awards with
  the Financial Times
• An award for banking innovators whose business
  practices reflect a commitment to values and
  practices consistent with sustainability

60 leading financial institutions from 22
countries have adopted the Equator Principles as
of February 2008, accounting for nearly 95
percent of project finance transactions worldwide.
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Consistently rated Triple-A Risk Rating of
Zero Percent

Moodys Aaa rating of the IFC is based on its
strong capitalization and sound financial
management, its membership within the World Bank
Group and its strong shareholder support.
Long Term Aaa (October 2007) AAA (December
2007) Outlook Stable
The strong support that the IFC receives from
its owners affords a large measure of comfort to
investors - Moodys Investors
Service, October 2007

• As a multilateral development bank, IFC has a 0
  risk weight under Basel II

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Strong Shareholder Support
IFC Member Countries (179)

• Capital increases - doubled in the early 1990s
• 51 of the capital is held by the G7 countries
• No dividend paid / no taxes paid

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IFCs Preferred Creditor Status

• Recognized by governments, rating agencies,
  investors and banks
• IFC loans have never been included in a sovereign
  debt rescheduling, nor have payments to the
  IFC ever been permanently interrupted by a
  general debt-servicing moratorium
• Favorable provisioning treatment for IFC
  syndicated loans

In Moodys view, the IFC faces very little
transfer risk in its portfolio because of the
preferred creditor status it has historically
been accorded by the member countries in which it
lends. - Moodys Investors Service, October
2007
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Risks are Proactively Managed

• Market-based loan pricing
• Limit on equity and quasi-equity investments
  maximum 100 of net worth
• Loans match-funded to manage currency, interest
  rate and maturity risks

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Financial Strength (As of June 30, 2007)

• Only Supranational with fully paid-in capital,
  exclusively in USD
• Low leverage (1.3x)
• Maximum Allowed 4x
• Strong capital adequacy (57)
• Minimum Required 30
• High liquidity (85 of next three years estimated
  net cash requirements)
• Minimum required 45

IFC comfortably exceeds all requirements
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Balance Sheet Overview (As of June 30, 2008)
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Substantial Liquid Assets (As of June 30, 2008)

• USD 14.62 billion net (equivalent to 30 of total
  assets)
• High quality investment with mainly
• Sovereign and supra bond
• Corporate bonds and ABS (Aaa/AAA)
• Financial institution deposits (Aa3/AA- or
  better)
• Performance measured against market benchmark

Historically, IFC has mantained liquidity far in
excess of its minimum required amounts. By
Standard Poors measures, IFC continues to be
among the most liquid of multilateral
development finance institutions
(MDFIs). - Standard Poors, December 2007
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IFC Disbursed Portfolio (As of June 30, 2008)
Breakdown of IFC Total Investment (gross of
reserves)
Portfolio Holdings (US billions)
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Disbursed Portfolio Distribution (As of June
30, 2008)

• IFC has diversified exposure to different
  companies worldwide

IFC had the second-most geographically
diversified development-related exposure (DRE)
among MDFIs as of their latest fiscal year
ends - Standard Poors, December
2007
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Conservative Write-off Provisioning Policy

• Detailed portfolio review on a quarterly basis
  any loan 60 days past due classified as
  non-accruing
• Reserves equal 5.6 (US848 million) of the total
  disbursed loan portfolio

Loan Portfolio Performance Key Indicators
of Disbursed Loan Portfolio
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Net Income (As of June 30, 2008)

• Consistently profitable since inception
• Portfolio diversification, prudent portfolio
  management, and a strong balance sheet have
  allowed IFC to consistently produce net income
  even during economic crises

Net Income (US billions)
Net Worth (US billions)
Asian Russian Crisis
Argentina Recovery EM Growth
Brazil Crisis
Argentina Crisis Turkey Crisis
FY08 1.55 bn
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Funding Objectives

• Ensure cost-efficient and secure funding sources
• Strategy
• Provide liquid US1.0 billion global benchmark
  bonds annually
• Access broad array of public and private bond
  markets across mutiple currencies (private
  placements, structured bonds, Medium Term Notes,
  Kauri, Kangaroo, Maple, Sterling, Uridashi)
• Promote development of emerging capital markets
  by borrowing in local currencies
• Brazil (Amazonian Bond) BRL 200 mn due 2011
• IFR 2007 Awards, Best Latin America Domestic
  Currency Bond
• CFA Franc (Kola Bond ) XOF 22 bn due 2011
• Emerging Markets 2007 Awards, Deal of the Year
  Africa
• China (Panda Bond I) RMB 1.3 bn due 2015
• Asia Money 2005 Awards, Best Local Currency
  Bond
• Malaysia (Wawasan-Islamic Bond) MYR 500 mn due
  2007
• IFR 2005 Awards, Malaysia Bond of the Year

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FY08 Funding Program (As of June 30, 2008)
IFC Board Approved Borrowing Program (US
Billions)
US5 billion Currency Position

• IFC is a US dollar-based institution, all
  borrowings are swapped into variable-rate US
  dollar

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Consistent Issuance Strategy

• Annual US1.0 billion benchmark issue in global
  format since 2000
• Provide a benchmark for IFC versus its peer group
• Rarity value and performance

IFC US Secondary Trading Levels
Sub Libor Levels (bps)
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Consistent US1.0 Billion Benchmark Execution
Strategy

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2008 US 1 Billion Dollar Global Issue
Transaction summary
Transaction highlights

• This transaction marked the IFCs 9th annual
  Global appearance since 2000 (no re-openings)
• Total book was oversubscribed with very high
  quality accounts.
• Books were closed early to avoid allocation
  problems (book building process and consensus
  pricing).
• Order book saw almost 60 accounts balanced across
  the four major regions. The largest individual
  order was for US 100 million and the smallest
  was US 1.0 million. Average ticket size was US
  30 million. No jumbo orders were accepted.

Investor demand by region (over 60 orders)
Investor demand by type (over 60 orders)
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Treasury Department Contact Detail
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For further Information

• This document has been prepared for informational
  purposes only, and the information herein may be
  condensed or incomplete. This document does not
  constitute a prospectus and is not intended to
  provide the sole basis for the evaluation of any
  securities issued by IFC.
• For additional information concerning IFC, please
  refer to IFCs current Information Statement,
  financial statements and other relevant
  information available at
• www.ifc.org/investors