Turkey - Washington - APFT
1
working relations
Some of the most dynamic areas of opportunity and growth are located in the
world's emerging markets. These same markets, generally characterized by
heightened levels of risk, fall under the purview of multilateral development
finance organizations (or supranationals), many of which are based in
Washington, D.C. Among these are the IMF, Inter-American Development Bank,
the Overseas Private Investment Corporation and, perhaps most importantly for
Rabobank International, the various World Bank affiliates.
- Leveraging knowledge
Washington advances
What's NewS Issue 1 January/February 2000
Two recently concluded transactions
signal an important shift in the evolu-
tion of our relations with the supranation
als. They illustrate how we are moving up
the value chain in the financial solutions
we are designing, in tandem with these
partners, on behalf of clients in the
world's emerging economies.
In the December issue of What's NewS,
we already noted the
successful conclusion
of our groundbreaking
deal in Indonesia. In
this high potential
economy, considera-
tions like country and
corporate credit risk
have made most inter
national banks reluc-
tant to extend even the
shortest term funding.
However, unless a flow
of funds can be rejuve-
nated, Indonesia's ex
port trade will languish and full economie
recovery will be delayed. Therefore, we
joined forces with the World Bank's Inter
national Finance Corporation (IFC) to de
sign an innovative USD 120 million short
term trade finance facility that is helping
export oriented Indonesian firms pay for
required raw materials from abroad.
APFT was instrumental in originating and
developing the Indonesian transaction.
Last ntonth, again working with the IFC,
we jointly Iaunched and closed the first
ever offshore securitization of Turkish on-
shore assets. The cliënt was the Istanbul
based Garanri Leasing. This complex deal
essentially involved issuing USD 4.3 mil
lion worth of rated tradable notes, via a
New Jersey based special purpose com-
pany, backed by income from a portfolio
of Garanti leases and IFC's "country risk
umbrella". As a result, these
notes obtained a better risk rat
ing than Turkey itself. In effect,
it opened a pipeline which
Garanti has used to tap the
world markets for medium and
long term finance and thus fuel
its further growth - something
that hitherto has been virtually
impossible for the
overwhelming majority
of Turkish firms.
Niek Streefkerk
Charles Gundy
Says Charles Gundy of London's
structured finance team, 'these
deals are really important for lis,
not least because they required
advanced structuring capabilities
but also because they pave the
way for a number of sintilar
transactions in the near future.
The market is there for a bank
like ours that can leverage its knowledge
to bypass current roadblocks.'
The process leading to the
Garanti deal should be of in
terest to What's NewS read
ers. Up until now, the bulk of
our work on behalf of the IFC
and other supranationals has
been in the form of simple
lending. With the Indonesian
and Turkish deals, as well as
long dated interest and cur-
rency swaps conducted in RI
capital markets by Chris Free-
man in London and Bill
Mansfield in New York, we
diversified away from this field into fee-
generating and advisory work. This meant
working closely with so far untargeted
parts of the supranationals, an activity
which not only heightens our profile and
expertise, while demanding lirtle of our
capital base.
'For some years, we have used F&A pro
ject finance as a kind of crowbar to get RI
a foothold in emerging market F&A com-
panies,' explains Niek Streefkerk of the
Agri Project Finance Team (APFT) and
RI's senior relationship manager for all
supranationals. Streefkerk is presently lea
ding a bank-wide drive - using bis fav-
oured teamwork approach that involves
colleagues from capita!
markets, treasury mar
kets, corporate finance,
and various risk analysis
departments - to broaden
RI's relationship with the
supranationals. 'Now
that we have opened
doors and we have estab-
lished strong Iines of con
tact in the supranational
arena, we are keen to de-
liver additional sophisti
cated, lower risk products
and services that make
full use of RI's extensive capabilities in
capital markets, treasury, structured fi
nance, and emerging markets F&A and
banking advisory services (RIAS). We
have shown that by using the entire RI
network we can deliver solutions that di-
rectly address the specifie challenges asso-
ciated with doing business in emerging
markets. Both the Indonesian and Turkish
deals demonstrated that we can creatively
circumvent the usual restrictions and miti-
gate a country risk to the benefit of all
parties concerned. We can
leverage on that but now
need to arrange a sufficiënt
and consistent commercial
infrastructure, which has
been lacking to date, such
as MIS, credit approvals
and corresponding coun
try, cliënt, product and sol-
vency limits. Then we can
play balk'
Chris Freeman
The Turkish deal was the
result of intensive teamwork 011 the part
of many Rabobankers, among them Lon
don's Charles Gundy, Jane-Ann Davis,
Continued on page 13
