MIGA Expands Non-Honoring of Financial Obligations Coverage for State-Owned Enterprises
WASHINGTON, June 26, 2013 — The Board of Directors of the Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, approved the Agency’s request to extend its non-honoring of financial obligations coverage to include state-owned enterprises (SOEs). This will help SOEs attract private-sector funding for investments that are critical to developing countries.
In the current risk-averse environment, host countries often face difficulties attracting financing for priority public-sector projects. MIGA has seen demand for a credit-enhancement product from commercial and investment banks, which are seeking to fund projects carried out by financially sound SOEs without a government guarantee. Often, these SOEs undertake projects that provide important public functions—in addition to boosting economic growth and employment.
From the perspective of a host country, MIGA’s non-honoring coverage to SOEs will help diversify available sources of financing and improve terms—in particular extending maturities and lowering borrowing costs. This cover may also be used to support SOEs in accessing capital markets in order to finance development projects.
“Countries build infrastructure and provide services in many different ways, and one of these is through SOEs,” said MIGA’s Executive Vice President Izumi Kobayashi. “Our new cover for credit-worthy SOEs gives lenders comfort while often improving borrowing terms without a government guarantee—a win-win situation that can deliver more electricity, cleaner and more efficient transportation, and wider access to the basic building blocks of prosperity in general.”
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MULTILATERAL INVESTMENT GUARANTEE AGENCY
A Member of the World Bank Group
1818 H Street, NW, Washington, DC 20433
MIGA Contact:
Mallory Saleson, MIGA
Tel: +1 202 473-0844
E-mail: msaleson@worldbank.org
Rebecca Post, MIGA
Tel: +1 202-473-1964
E-mail: rpost@worldbank.org
Cara Santos Pianesi
Tel: +1.202.458.2097
E-mail: csantospianesi@worldbank.org