IDB Completes First Credit-Risk-Insurance Transaction with the Private Sector

The Inter-American Development Bank (IDB) has completed a risk-transfer transaction using credit-insurance protection with private insurance companies to help diversify its portfolio and free up capital for additional lending to Latin America and the Caribbean. 

Previously, the IDB pioneered credit-substitution transactions and guarantees with other multilateral development banks (MDBs) and governments. This is the bank's first such transaction with the private sector. 

The credit insurance protects $300 million of exposure on the IDB balance sheet, releasing capital that can be leveraged by three to four times to increase development financing and continue improving lives in borrowing member countries. The transaction is distributed across 14 insurance companies in the United States, Asia and Europe. 

This credit-risk-insurance transaction is an example of the strategies for capital efficiency and innovative solutions in capital markets that the IDB is using to maximize lending capacity and implement the recommendations of the G20-sponsored Independent Review of MDBs’ Capital Adequacy Frameworks.