The Project Finance Bond (PFB) is an individual investment guarantee offered by ETC – Export Trading & Cooperation which allows banks and other financial institutions to mitigate and weight the risk of default by covering medium and long-term loans. The instrument implemented for this is the stand-by letter of credit according to the rules of the International Chamber of Commerce (ICC).
It is difficult when you are a Bank in Africa to finance large investment projects.
Banks and other Financial Institutions, faced with compliance of prudential principles, are obliged to request collateral and/or the support of Guarantors.
As a result, many projects never see the light of day in this situation.
It is in this context that ETC – Export Trading & Cooperation, offers its guarantee instrument, in order to facilitate the financing of investment projects.
Project Finance Bond, abbreviated as “PFB”: the Investment Guarantee, designates an individual guarantee to cover the risk of non-payment of the repayment of a medium/long-term loan for the benefit of an investment in the primary sectors, secondary and tertiary, excluding sectors of activity prohibited by the ETC group’s code of ethics.
Risk sharing enables the credit institution to mitigate and weight counterparty risks, comply with the CET1 (Common Equity Tier 1) ratio, defined, according to the Basel III prudential framework, as ratio between the primary capital of the credit institution (Tier 1) and weighted exposures in the portfolio.
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Formula :APR = (AF/T) + (IF/T) + CF
Caption:
APR = Annual Percentage Rate
AF = Application Fees (Indicative rate 1% flat)
IF = Issuing Fees (Indicative rate 0.5% flat)
T = Tenor (year)
CF = Commitment Fee (Annual rate according to Financial Rating*)
* See table
