Opportunities for the Majority B-Loan syndication

1. B-LOAN PROGRAM
January 2010

2. IDB - WHO WE ARE
The IDB provides solutions to development challenges in 26 countries of
Latin America and the Caribbean, partnering with governments,
companies and civil society organizations
The IDB lends money and provides grants. It also offers research, advice
and technical assistance to improve key areas like education, poverty
reduction and agriculture. Our clients range from central governments to
city authorities and small businesses
The Bank also seeks to take a lead role on cross-border issues like trade,
infrastructure and energy

3. IDB - WHO WE ARE
The IDB is the main source of multilateral financing and expertise for
sustainable economic, social and institutional development in Latin
America and the Caribbean.
26 Borrowing member and 22 non-borrowing member countries
$10 billion in approved lending and grants over the past 12 months
Backed by a AAA/Aaa rating by both Standard & Poors and Moody’s

4. IDB PRIVATE SECTOR
Responsible for leading the Bank’s operations without sovereign
guarantee
Partners with commercial banks, institutional investors, co-guarantors, and
other co-lenders to meet the growing of financial resources
Target clients:
Privately controlled entities in all sectors of the economy
Utilities and other infrastructure operators
Banks and other financial market institutions
State-owned companies without a sovereign guarantee
Corporates

5. STRUCTURED & CORPORATE FINANCE (SCF)
SCF focuses on mid to large-cap transactions
Transaction sizes (IDB funds)
Minimum US$10 million
Typical US$35 million or above
Maximum US$200 million
50% of projects cost (25-40% if greenfield)
Target clients:
Privately controlled entities in all sectors of the economy
Utilities and other infrastructure operators
Banks and other financial market institutions
State-owned companies without a sovereign guarantee
Corporates with annual sales of US$100 million and above

6. STRUCTURED & CORPORATE FINANCE
Focus on development effectiveness
Key service sectors: basic infrastructure and financial markets
Support green projects
Better serve the needs of smaller economies
Seek transactions that promote social inclusion
Products
Loans
Guarantees
Partial Credit Guarantees (covering all risks – up to 50% usually or up to 100%
within Trade Finance Facilitation Program) or Political Risk Guarantees
Guarantee amount determined to optimize impact on rating (typically 30%-50%
guarantee for improvement in rating of 3 to 4 notches - local scale)
IDB-reimbursement rights can be subordinated to other investors

7. OPPORTUNITIES FOR THE MAJORITY (OMJ)
Set up as an incubator within the private sector to drive innovation and
best practices in applying market-based solutions to advance economic
and social development at the base of the socioeconomic pyramid (BOP).
US$ 250 million set aside from the Bank’s Ordinary Capital.
Created to foster collaboration between the public and private sector, and
civil society, to attract new resources to address poverty challenges in the
region.
Target clients:
Private sector organizations, corporations, financial institutions, investment funds, and
state-owned companies, without sovereign guarantees, operating in one or more of the
26 borrowing member countries of the IDB and interesting in engaging with the BOP.
Organizations should be in sound financial health and be able to demonstrate a good
record of corporate governance and environmental and social responsibility.

8. OPPORTUNITIES FOR THE MAJORITY
The Opportunities to the Majority initiative supports project with the
potential to deliver business solutions to the 360 million people in the
region living at the base of the pyramid.
To be eligible for financing the project must be:
Financially and structurally sound.
Innovative and with the capacity to be repeated and brought up to scale once
proven successful.
Structured to engage multiple stakeholders.
Lending highlights
Loans and partial credit guarantees
Market-rates
Long tenors
Technical assistance provided with loans.
Coverage between 25-50% of total project cost.

9. OPPORTUNITIES FOR THE MAJORITY
Operating Principles
Invest in business solutions to achieve a positive impact on the lives of the
majority.
Demonstrate that investing in underserved markets is good business.
Apply innovation and creativity to fulfill unmet human needs and contribute
to economic growth.
Create new solutions through alliances with the public and private sectors
and civil society.
Share risk among several partners.

10. IDB PRIVATE SECTOR FINANCIAL PRODUCTS
A/B Loans
“A Loan” – IDB Loan Tranche
Usually the A Loan has a longer tenor than the B Loan
“B Loan” – Participation of Market Players (private investors like
international banks, institutional investors and funds)
The B Loan is pari passu with the A Loan, sharing the risk of the deal
There is no guarantee on the B Loan from IDB
IDB is Lender of Record

11. MOBILIZATION MANDATE
Excerpt from the 8th Replenishment
“ 2.82 Mobilization of additional funds. As part of its cofinancing
activities, the Bank will step up its efforts to mobilize
additional resources, particularly from private sources, for
priority development initiatives, and especially for
infrastructure and public utility projects carried out by the
private sector.”

12. B-LOAN STRUCTURE
Participation Loan
Agreement Agreement
Participants Borrower
B Loan A+B
Loans
One loan agreement – IDB is lender of record and administers entire
loan
IDB fully shares project risk with participants
Participation structure allows participants to benefit from IDB’s
privileges and immunities

13. PREFERRED CREDITOR STATUS (PCS)
Preferred access to foreign exchange in the event of country foreign
exchange shortage
Excluded from general country debt reschedulings
Not subject to mandatory new money obligations under general country
debt rescheduling
Consistent universal recognition - Pakistan, Russia, Argentina
Bank regulators exempt B Loans from mandatory country risk provisioning
Allows rated transactions to pierce sovereign ceiling
Recognized mitigant of country risk under Basel II

14. PCS: CAPITAL TREATMENT OF B LOANS UNDER BASEL II
Standardized approach:
Banks may apply the local currency rating of the borrower (as opposed to
the foreign currency rating), recognizing the effective mitigation of transfer
and convertibility risk
Advanced Internal Ratings-Based (IRB) approach:
Banks may reflect the country risk mitigation afforded by the B loan
structure through lower country risk weighting

15. B-LOAN ADVANTAGE
Tenor profile in the region
INVESTMENT NON INVESTMENT PROJECT
GRADE GRADE FINANCE
UNCOVERED
Generally
(Without MDB Up to 5 yrs. Up to 3 yrs.
Unavailable *
umbrella)
B-LOAN 5 yrs. or greater 3 – 5 yrs. 10 – 14 yrs.
* Chile and Mexico are the only countries where international
lenders have felt comfortable lending on a project finance
basis without an ECA guarantee or MDB umbrella

16. B-LOANS VS. SYNDICATED LOANS
How do B-Loans differ from regular syndicated loans?
Participations vs. Assignments
Assignments create direct contractual rights with the borrower
Assigner becomes a “lender” with full voting and other rights
Participant’s rights and obligations vis-à-vis the borrower are derivative IDB’s
rights and obligations
Lender of Record vs. Agency Role
IDB is not acting as agent
Agent is appointed by the lenders
Agent acts under instruction of lenders
Neither is a fiduciary

17. BENEFITS TO B-LOAN PARTICIPANTS
Participants share IDB’s Preferred Creditor Status and therefore mitigate
transfer and convertibility risk
Where applicable, participants are exempt from mandatory country risk
provisioning requirement
Environmental and Social leadership
Participants benefit from IDB’s relationship with host country governments
(“halo effect”)
Basel II has recognized the value of B-Loans, which can result in lower
ascribed capital allocation (can use local vs. foreign ratings)

18. BENEFITS TO B-LOAN BORROWER
B-Loans complete the entire financial package
Borrowers can achieve financing with longer tenors than without umbrella
cover
B-Loan syndication can introduce new lending relationships to the
Borrower
Simplified administration with one point of contact
Transaction is exempt from withholding tax

19. BENEFITS OF B-LOANS TO IDB
Helps the Bank meet its catalytic role
Tool to spread the credit risk exposure
Mobilization of funds
Gain additional sector expertise from other market players
Maintain our finger on the pulse of the market

20. PARTICIPANT’S VOTING RIGHTS
100%: Change in money terms
100%: Waive or amend conditions precedent
67%: Acceleration by IDB at request of Participants
67%: Release security or waive negative pledge
67%: Waive or amend guarantees or support arrangements
67%: Change in ownership control provision
51%: Waive or amend financial covenants
Consult: Waive or amend non-financial covenants
(Percentages reflect consent level required, based on
total B Loan amount)

21. INFORMATION SHARING
IDB shares with Participants all information we receive from Borrowers under
the Loan Agreement
This includes:
Regular financial reporting
Knowledge of key credit events

22. PARTICIPANT ELIGIBILITY
Objective participant eligibility criteria
“Eligible Financial Institution”
Not incorporated or residing in the country of the borrower or the project
Not an export credit, governmental, or multilateral agency
International investment grade rating from Fitch, Moody’s or S&P
Non-investment grade and unrated financial institutions may be
considered on a case-by-case basis

23. B-LOANS VS. SYNDICATED LOANS
Participants in B-Loans have limited rights compared to typical syndicated
loans
B-Loan Syndicated Loan
Consent right on “money” terms Full voting rights on all credit and
(unanimous), security (67% majority) administrative matters
and financial covenants (51%
majority), subject to materiality Lender has full legal recourse to
Borrower
Has no contractual relationship with
Borrower Disposals subject to Borrowers
approval, but no limitations under
Disposals are subject to IDB approval default scenario

24. B-LOAN PROGRAM
Historical Results
Historical Results
Number of B-Loans Closed: 58
Number of B-Loans Closed: 58
Amount of B-Loan mobilized: $5.87 billion
Amount of B-Loan mobilized: $5.87 billion
Number of historical participants: 124 institutions
Number of historical participants: 124 institutions

25. PERFORMANCE HISTORY
% write-off / A-loan outstanding (which has B Loan)
8%
7%
6%
5%
4%
3% 2.16%
2%
0.48%
1% 0.47%
0.00%
0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
0% 0.00%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
-1%
% Impaired Loan / A-loan outstanding (which has B Loan)
50%
45%
40%
35%
30%
25% 23%
21%
20% 19% 18%
15% 12%
10% 7%
6%
5%
0% 0% 0% 0% 0% 0% 0%
0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

26. SYNDICATIONS TEAM
Jozef Henriquez
Chief of Syndications Unit
Tel: (1) 202-623-1424
Email: jozefh@iadb.org
Brian Blakely Kristin Dacey Jaspreet Birk
Senior Syndications Officer Syndications Officer Syndications Officer
Tel: (1) 202-623-2991 Tel: (1) 202-623-3349 Tel: (1) 202-623-2345
Email: brianb@iadb.org Email: kristind@iadb.org Email: jaspreetb@iadb.org
Kentaro Aoyama Eliana Duque
Syndications Officer Office Assistant
Tel: (1) 202-623-2811 Tel: (1) 202-623-3731
Email: kentaroa@iadb.org Email: elianad@iadb.org

27. 2009 2009 2009 2008 2008 2008
Crecera Finance Adeco Agropecuaria S.A. BBVA Banco Continental Gerdau Açominas Bicbanco
Company and Pilagá S.R.L.
Noble Argentina
US$70,000,000 US$77,500,000 US$ 49,000,0000 US$ 10,000,0000 US$ 150,000,0000 US$ 90,000,0000
B Loan B Loan B Loan B Loan B Loan B2 Loan
5 years 2 years 5 years 10 years 7 years 3 years
Argentina Regional Argentina Peru Brazil Brazil
2008 2008 2008 2008 2008 2007
Instituto Costarricense de SABESP ATE III Bicbanco
Peru LNG Linha 4 - Amarela
Electricidad
US$ 400,000,0000 US$ 150,000,0000 US$ 240,000,0000 US$ 110,000,0000 US$ 80,000,0000
US$ 210,000,0000
B Loan B Loan B Loan B Loan B1 Loan
B Loan
Construction + 12 years $100 M 12 yr / $50 M 10 yr 12 years 12 years 3 years
10 years
Costa Rica Peru Brazil Brazil Brazil Brazil
2007 2007 2007 2007 2007 2006
Charrua-Temuco Delba Vessel Telefonica Moviles Colombia Celtins Embratel BBVA Banco Continental
Transmission Line
US$ 375,278,689 US$ 475,000,0000 US$ 20,000,0000 US$ 220,000,000 US$ 105,000,000
US$ 35,278,000 B Loan B Loan B Loan B Loan B Loan
B Loan 10 years 5 years 6 years 5 years 5 years
20 years
Brazil Colombia Brazil Brazil Peru
Chile
2006 2006 2006 2006
ATE II Celpa Investment Cemat Investment Program Crecera Finance
Program Company
US$ 11,754,000 US$ 29,500,0000
B Loan US$ 60,000,0000 B Loan US$ 90,000,0000
12 years B Loan 6 years B Loan
6 years 4 years
Brazil Brazil
Brazil Regional