Summary of Proposed Investment
Project Number
28749
Company Name
Global Warehouse Finance Program
Date SPI Disclosed
Apr 28, 2010
Country
World Region
Industry
Financial Markets
Projected Board Date
Jun 10, 2010
Status
Active
Sector
Commercial Banking - Short Term Finance
Department
Banking and Capital Markets
Environmental Category
C - No Impact
Previous Events
Approved : Sep 21, 2010
Invested : Apr 30, 2021
Project Description
The proposed Project, Global Warehouse Finance Program (“GWFP” or the “Program”), aims at assisting the IFC’s existing and prospective client banks increase their pre-export financing to the agriculture sector in emerging markets. IFC intends to support pre-shipment financing needs of the agriculture industry by offering a warehouse financing facility to local banks.
Commodities are stored in warehouses before shipment, and in most of the cases, farmers/traders/exporters need to sell the production earlier than they desire to meet their urgent financial needs or are forced to arrange financing through credit lines with local banks with fixed assets as collateral. IFC aims to support the agriculture sector by encouraging banks to introduce the commodity backed lending skills.
In particular, IFC intends to promote such commodity financing skills to local banks in the countries where tradable and negotiable Warehouse Receipts (WHR) exist, since WHR-based financing will encourage the move toward a more transparent agricultural marketing system for export markets. A WHR is an instrument which can be used as a form of portable collateral to request a loan from a bank, and is issued by the warehouse operator, when the commodities are stored. In those countries where WHR system does not exist, the Collateral Management Agreement (CMA) or Stock Monitoring Agreement (SMA) is currently used by banks. CMA or SMA is a trilateral agreement signed between a bank, a commodity owner, and a warehouse operator. Although this is not a transferable/negotiable instrument, for the initial stage, IFC will accept financing requests from those countries that are using other forms of securities, such as CMA or SMA.
The Program takes the local bank risk in developing countries, and will be providing liquidity to those banks for on-lending to commodity owners against WHR or CMA/SMA as collateral or by providing guarantees to other funders to provide funding in local/foreign currency to banks. The Program would focus on pre-export financing but also includes post-import financing and selectively inventory financing for domestic sales.
Commodities are stored in warehouses before shipment, and in most of the cases, farmers/traders/exporters need to sell the production earlier than they desire to meet their urgent financial needs or are forced to arrange financing through credit lines with local banks with fixed assets as collateral. IFC aims to support the agriculture sector by encouraging banks to introduce the commodity backed lending skills.
In particular, IFC intends to promote such commodity financing skills to local banks in the countries where tradable and negotiable Warehouse Receipts (WHR) exist, since WHR-based financing will encourage the move toward a more transparent agricultural marketing system for export markets. A WHR is an instrument which can be used as a form of portable collateral to request a loan from a bank, and is issued by the warehouse operator, when the commodities are stored. In those countries where WHR system does not exist, the Collateral Management Agreement (CMA) or Stock Monitoring Agreement (SMA) is currently used by banks. CMA or SMA is a trilateral agreement signed between a bank, a commodity owner, and a warehouse operator. Although this is not a transferable/negotiable instrument, for the initial stage, IFC will accept financing requests from those countries that are using other forms of securities, such as CMA or SMA.
The Program takes the local bank risk in developing countries, and will be providing liquidity to those banks for on-lending to commodity owners against WHR or CMA/SMA as collateral or by providing guarantees to other funders to provide funding in local/foreign currency to banks. The Program would focus on pre-export financing but also includes post-import financing and selectively inventory financing for domestic sales.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Since this is a global facility, individual borrowers under this facility will be identified only after Board approval. Therefore, the client’s contact details are currently not available.
Makiko Toyoda
Global Financial Markets
IFC
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-458-0142
Makiko Toyoda
Global Financial Markets
IFC
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-458-0142
For Inquiries and Comments About IFC, Contact
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster