IDB, FirstCaribbean to establish regional credit guarantee facility

Risk-sharing facility will support long-term lending to private sector borrowers.

The IDB today announced its Board of Executive Directors approved up to $200 million in partial credit guarantees to establish the risk-sharing facility, which will support at least $400 million in FirstCaribbean lending to private sector borrowers.

The partial credit guarantees, which may be denominated in U.S. dollars or local currencies, will help FirstCaribbean reduce its corporate credit risk exposure, allowing it to increase its lending to key clients. Initially the facility will focus on transactions in Jamaica, although it may be expanded to other IDB member countries where FirstCaribbean operates (Bahamas, Barbados, Belize and Trinidad and Tobago).

“Access to long-term financing, particularly in the context of current markets, is key to sustain economic growth and for the efficient development of the private sector in this region,” said Financial Markets Division Chief Daniela Carrera-Marquis of the IDB’s Structured and Corporate Finance Department.

Milton Brady, FirstCaribbean’s managing director for corporate investment banking, noted that the risk-sharing agreement is a clear vote of confidence by the IDB in FirstCaribbean and the region, which is especially welcome at a time when the global financial markets are in turmoil.

“Over the past few years, FirstCaribbean has secured major ground-breaking deals in capital markets and corporate financing throughout the region. Underpinning our bank’s ethos is our commitment to innovation in support of our clients and contributing to regional development. This partnership allows us to leverage our financial strength to help our clients who are themselves focused on growing their businesses," said Brady.

IDB project team members Jacobo De Leon and Jaspreet Birk commented that the risk-sharing facility can improve the effectiveness of IDB lending in the Caribbean by combining development objectives, internal expertise and resources with a top-tier local partner.

FirstCaribbean, which is headquartered in Barbados, was formed in 2002 through a merger of Canadian Imperial Bank of Commerce (CIBC) West Indies Holdings and Barclays’ Caribbean operations. The Toronto-based CIBC is the majority shareholder in FirstCaribbean, which does business in 17 countries in this region.

The IDB is the leading source of long-term financing for economic and social development projects in Latin America and the Caribbean. Its Structured and Corporate Finance Department is responsible for non-sovereign guaranteed operations, which include loans and guarantees for private sector companies and state-owned entities.