Project Example of Agency’s Work with Islamic Finance Deal Structures
WASHINGTON, DC, June 16, 2011—The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, announced today that it has provided $450 million in investment guarantees to support the expansion of telecommunications services in Indonesia. MIGA’s guarantees are backing a $450 million Murabaha financing facility underwritten by Deutsche Bank and Saudi British Bank (SABB). (source)
The MIGA-backed Islamic finance facility is part of a larger $1.2 billion financing package for the expansion of Indonesian telecom company PT Natrindo Telepon Seluler (NTS), known by the brand "Axis." Axis is a GSM and 3G cellular service provider offering wireless communication services in more than 400 cities across Indonesia. The new financing will help the company increase network quality, expand coverage, and build more network capacity. In particular, it will allow Axis to reach lower-income segments of the market as well as remote islands of the archipelago, where telecommunications is a particular challenge.
"Improving telecoms penetration is a key development priority for Indonesia, which is focused on improving living standards and the quality of its business climate," noted Izumi Kobayashi, MIGA’s Executive Vice President. "This important investment will help underpin Indonesia’s continued economic growth, and MIGA is very pleased to support it."
This is the second time MIGA has supported a large Islamic finance structure. "We recognize the growing role of Islamic financial markets in supporting developmentally important investments, and we are committed to working with investors in providing political risk insurance for these transactions," said Kobayashi. "Our role as the lead insurer in Islamic finance transactions like this one helps bring in the private market capacity needed for investments of this size and scope."
MIGA’s guarantees are protecting the lenders against the risks of transfer restriction, expropriation, and war and civil disturbance for a period of up to seven and a half years. The political risk insurance placement was brokered by Marsh, USA Inc.
Source : http://www.miga.org/news/index_sv.cfm?aid=3112 - June 16, 2011
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