Financial Instruments

The Private Sector Facility mainly offers funding in US Dollars or Euros. However, local currencies may be considered on a case-by-case basis. In general, the borrower or project’s requirements and projected cash flows determine the funding structure. Pricing takes account of the nature of the transaction and the country situation and is non-concessional. Current products include:

 The Facility can directly finance larger projects, including:

  • privately owned companies in a variety of economic sectors
  • commercially managed stateowned enterprises (on certain conditions).

The Facility offers equity capital, either directly to eligible clients or indirectly through investment funds. In general, OFID is a minority investor and does not participate in management.

To assist eligible clients in obtaining additional funding (especially from local sources) at reasonable terms for worthy private sector projects, OFID will consider issuing guarantees in favor of other lenders.

A choice between floating and fixed interest rate is offered for OFID loans. Maturity, including grace period for principal repayment, takes account of project nature and projected cash flow.

  • Interest is charged either fixed or at a spread over LIBOR, reflecting the perceived project risks and market environment
  • A front-end fee is generally payable following signature
  • A commitment fee is payable on the undisbursed portion of the loan.

The Facility provides medium- and long-term lines of credit to:

  • commercial banks and nonbank financial institutions to strengthen and expand their credit portfolio especially for SME financing
  • national and regional development banks and micro-finance institutions for on-lending.

To respond to specific project funding needs and to provide flexibility in financial structuring, OFID may offer subordinated loans, convertible loans or other forms of quasi-equity investments.

OFID offers short and long-term financial products which comply with Islamic law.

 

Loans will be secured in accordance with normal industry practice and by taking into consideration the nature of the project and the local circumstances.

 

 


 

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