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

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