IBRD can provide assistance in building capacity and helping develop a customized strategy that meets the country’s specific risk management needs.
An important first step in the implementation of a commodity risk management strategy is a risk assessment process that can quantify the financial impact of commodity price volatility on the borrower’s finances.
Advisory engagements can cover the following services:
- Risk assessment and design of a customized strategy
- Analysis of existing institutional and legislative framework
- Technical support to design a framework for selecting hedging strategies
- Education for stakeholders and policy-makers
- Technical support to building a robust infrastructure for hedging risk.
In case a client wants to execute a hedging transaction, IBRD can help in two formats:
- Hedging transaction embedded in the loan agreement
- Stand-alone hedging transaction.
- IBRD has extensive experience in capacity building (i.e. Debt Management).
- IBRD has already helped specific countries in commodity risk management issues, such as Uruguay, Morocco and the Dominican Republic.
- IBRD doesn’t take any positions and supports structuring transactions as an honest broker.
- IBRD has a deep knowledge of markets and established relationships with most dealers in the oil space.
- IBRD provides competitive execution, as per its normal execution process.
- IBRD is a AAA entity which helps mitigate the counterparty risk to clients.