Introduction
In response to borrower demand, the IBRD is offering a new range of financial hedging products. They are designed to address the changing needs of borrowers during the life of their IBRD loans. Using standard market techniques, IBRD risk management products can transform the risk characteristics of a borrower's IBRD obligations even though the negotiated terms of particular loan contracts themselves may be fixed. These products allow borrowers improved risk management capability in the context of projects, lending programs, or sovereign asset-liability management. IBRD hedging products include interest rate swaps, interest rate caps and collars, currency swaps and, on a case-by-case basis, commodity swaps.
Hedging Products Brochures
Local Currency Lending
In an effort to meet changing client needs, the World Bank started offering its borrowers banking products denominated in their domestic currencies, subject to the availability of liquid swap markets that would allow the Bank to efficiently intermediate these transactions.
With these products, Bank clients have an option to convert or swap, depending on the loan product, disbursed loan amounts into their domestic currency. The local currency banking products are confined to the local expenditure component of IBRD's financing, and clients' requests are considered on a case-by-case basis. Please read the FAQs.
Guidelines for Using IBRD Hedging Products
The Guidelines for Using IBRD Risk Management Products outlines the procedures on requesting, accepting and executing free-standing hedges between the IBRD and a borrower in connection with an IBRD loan made to the borrower under a loan agreeement, within the framework of a Master Derivatives Agreement (MDA).
Hedge Request Forms
NOTE: Please refer to the Guidelines for Using IBRD Risk Managment Products above for procedures on requesting, accepting and executing free-standing hedges between the IBRD and a borrower in connection with an IBRD loan made to the borrower under a loan agreeement.
After downloading the file(s), complete the form electronically and then print the appropriate PDF form(s) (providing the information in the required fields) and fax to the number provided on the form(s).
Transaction Fees for Hedging Products
(expressed as a percentage per annum on the principal amount being hedged,
unless otherwise indicated)
Transaction Type |
Transaction Fee |
Hedges on Liabilities to IBRD |
| Currency Swaps |
0.02% |
| Interest Rate Swaps |
0.01% |
| Interest Rate Caps/Collars |
.125% |
| Commodity Swaps |
.375% |
Hedges on Liabilities to Others |
| Currency Swaps |
0.10% |
| Interest Rate Swaps |
0.03% |
|
