Instruments

Loans, Quasi-Equity, and Equity

IIC loans and investments are denominated in United States dollars and may be up to 33 percent of the cost of a new project or up to 50 percent of the cost of an expansion project of an existing company. Based on cash flow assessment, repayment periods may range from five to twelve years, including a grace period of up to two years. The loans, which are priced in keeping with international market conditions, are variable in rate, based on LIBOR.

Depending on the company's financing needs and in addition to its loan, the Corporation may also provide a convertible or subordinated loan.

The IIC also makes equity investments of up to 33 percent of an investee company's capital. The IIC will exit its shareholding through either:
sale on the local stock market if the company is listed;
private placement with interested third parties;
sale to the project sponsors under a prenegotiated put option agreement; or
redemption by the investee company.
Investment Funds

The IIC makes equity investments in national, regional, and sectoral private equity funds that invest in Latin American and Caribbean companies that have no other appropriate source of such capital. These funds, which are managed by professional fund managers, are selected by the IIC after careful consideration of their purpose, developmental impact, management quality, ability to mobilize resources for the region, and compliance with environmental protection and labor standards, among others.

Cofinancing

When a project requires funding in excess of the IIC's direct lending commitment, the additional sum may be arranged through a participation loan. The IIC funds one portion of the total loan, and participating financial institutions fund the other portion. The IIC's status as a multilateral organization gives it certain advantages that are deemed attractive by participating international financial institutions.

The IIC is the lender of record and acts as the administrator of the loan. As a general rule, the IIC's loan portion is pari passu and is not subordinate to the other participating lenders' portions. In some cases, longer maturities may be assumed by the IIC.

The structure of IIC's participation loans has become a model for combining commercial lending with multilateral financing to support private enterprises in developing countries.