IBRD Financial Products

Financial Risk Management



  • IBRD's stand-alone hedging products for risk management are available to help clients manage their financial risks. Using standard risk management techniques, these products can transform the risk characteristics of a borrower’s IBRD obligations without changing the terms negotiated in the loan agreements.

    IBRD also offers interest rate and currency swaps in relation to borrowers’ non-IBRD debt. Clients eligible to use these products are sovereigns that have an existing portfolio of IBRD loans, are in good standing with respect to debt service obligations to the Bank, and are eligible for new IBRD loans.

    Interest Rate Conversions & Swaps

    Transform the interest rate basis of a loan obligation from a fixed to floating rate or vice versa. To access built-in conversion options simply request the desired type and terms of the conversion. For IBRD loans without embedded options or debt owed to creditors other than IBRD, access swaps by signing a Master Derivatives Agreement with IBRD.

    Currency Conversions & Swaps

    Alter the currency terms of a loan obligation if risk management requirements have changed since the initial choice of loan currency. To access built-in conversion options simply request the desired type and terms of the conversion. For IBRD loans without embedded options or debt owed to creditors other than IBRD, access swaps by signing a Master Derivatives Agreement with IBRD. Availability of currency hedging products presupposes a sufficiently liquid swap market in the desired currency.

    Commodity Swaps

    Link IBRD debt service payments to the prices of a particular commodity or commodities in order to reduce commodity price risk. One set of cash flows is linked to the market price of a commodity or index. The other is a fixed cash flow or a cash flow based on a variable rate of interest. In this way, a commodity swap is a hybrid, spanning interest rate swap and commodity swap markets. IBRD commodity swaps are individually negotiated transactions provided on a case-by-case basis.

    Interest Rate Caps & Collars

    Limit interest rate variability with a cap or a collar. Caps set an upper limit on the variable interest rate of the loan. Collars set an upper limit (a cap) and a lower limit (a floor) on the interest rate of the loan. Both require payment of an up-front premium to purchase the interest rate protection. For IBRD loans without embedded options or for debt owed to creditors other than IBRD, access caps and collars by signing a Master Derivatives Agreement with IBRD.

  • Guidelines for Using IBRD Hedging Products

    These guidelines outline procedures for requesting, accepting and executing free-standing hedges between 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

    Please refer to the Guidelines for Using IBRD Risk Managment Products for procedures on requesting, accepting and executing free-standing hedges between 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).

    • For each Interest Rate Swap request related to a VSL or FSCL, complete, sign and submit the request form.

    • For each Currency Swap request related to a VSL, FSCL, CPL, or SCP, complete, sign and submit the request form.

    • For each Interest Rate Cap or Collar request related to a VSL or FSL, complete, sign and submit the request form.

    • For each Interest Rate Swap request related to sovereign debt from creditors, other than the IBRD, complete, sign and submit the request form.

    • For each Currency Swap request related to sovereign debt from creditors, other than the IBRD, complete, sign and submit the request form.