‘International Investor Perspective on Local Currency Solutions’seminar tomorrow

In an effort to expand the horizons of local banks, NBFIs and micro finance institutions, a specialised and distinct seminar entitled ‘International Investor Perspective on Local Currency Solutions’ is to be held on Tuesday 5 July at the Cinnamon Grand Hotel’s Oak Room.

The seminar is jointly organised by Netherlands based The Currency Exchange Fund (TCX), GuarantCo, FMO – the Dutch Development Bank, and Frontclear together with locally-based investment bank First Capital Holdings PLC.The focus of these seminar is to raising awareness about Foreign Currency Funding optionsand facilitating local participants to access funding from Development Financial Institutes (DFIs) and foreign Investors. 

The speakers for the seminar include: Matthijs Pinxteren – Director Treasury, FMO, The Netherlands, Jerome Pirouz – Senior Vice President, TCX, The Netherlands, Lasitha Perera – Chief Investment Officer, Guarantco, United Kingdom, Andrei Shinkevich – Senior Vice President, Frontclear, The Netherlands, Joost Zuidberg – CEO, Cardano Development, The Netherlands and Arno De Vette – Executive VP, SBI Ven Capital, Singapore.

TCX is providing to offshore lenders long-term instruments such as forward or cross currency swaps up to 15 years to hedge their Fx exposure when they originate debt in LKR. The Fund offers hedging solutions to local borrowers as well when local currency financing could not be made available. End of 2013, TCX completed a four-year transaction with Softlogic Finance PLC to cover the interest rate and foreign exchange exposure of a credit line the company contracted in USD. The hedge helped Softlogic to match rupeeassets coming from leasing and hire purchase contracts with a USD credit line. TCX has offered hedging instruments to support 16 loans in local currency for a total of $ 66 million.

GuarantCo seeks to enable long-term debt financing of infrastructure-related projects in either local or hard currency in Sri Lanka. Often projects may struggle to obtain debt finance in sufficient quantum or of a sufficient tenor, whether due to certain specific risks or market constraints. This can be overcome through the use of an appropriately structured guarantee. Such guarantees can be used to enable direct lending from banks/financial institutions or capital market issuances. 

GuarantCo is part of the Private Infrastructure Development Group and sponsored by five G12 governments. In August 2014, Softlogic Finance PLC issued an ‘AAA’ rated listed debenture (Rs. 1.4 billion) with the guarantee obtained by GuarantCo.  

FMO is the Dutch development bank. FMO has invested in the private sector in developing countries and emerging markets for more than 46 years. FMO invest in sectors that have the highest long-term impact which include financial institutions, energy, agribusiness, infrastructure, manufacturing and services sectors. FMO’s investment portfolio exceeds EUR 9.2 b spanning over 85 countries, makingit one of the larger bilateral private sector development banks globally. FMO’s Exposure in Sri Lanka is about $ 170 million, mainly to the financial sector.

Frontclear is a development finance company facilitating access by local financial institutions to interbank markets through providing credit guarantees to cover a transacting institution’s counterparty credit risk. Frontclear’s Basel III compliant guarantees and are in turn counter-guaranteed by KfW, an AAA-development financial institution. Frontclear is funded by European governments and development finance institutions including DFID, EBRD, Proparco, KfW and TCX. 

In a recent transaction in 2016, Frontclear guaranteed a $ 25 m cross-currency repo transaction between Commercial Bank of Africa (CBA) and Standard Bank of Southern Africa (SBSA). In this transaction, CBA receives $ 25 million in one-year funding from SBSA and provides Government of Kenya Bonds as collateral. The deal is a first of its kind transaction as it provides for the cross border transfer of legal ownership of the local collateral instruments, and paves the way to a more robust, stable and inclusive interbank market in Kenya.