[China Co-Financing Fund] IDB administers 50 million USD loan from CHC to BDMG for Municipal Infrastructure and Services Financing Partnership

[China Co-Financing Fund] IDB administers 50 million USD loan from CHC to BDMG for Municipal Infrastructure and Services Financing Partnership On 13 June 2014, the Inter-American Development Bank (IDB) signed a loan contract with Banco de Desenvolvimento de Minas Gerais (BDMG) for a Municipal Infrastructure and Services Financing Partnership, through which IDB would provide three tranches of financing from its ordinary capital and the China Co-Financing Fund (CHC), which is a trust fund fully financed by a contribution from the People's Bank of China.

The three loan tranches from IDB's ordinary capital total 100 million USD (Loan 3184A/OC-BR-1, Loan 3184A/OC-BR-2, Loan 3184A/OC-BR-3), and the three loan tranches from CHC total 50 million USD (Loan 3184/CH-BR-1, Loan 3184/CH-BR-2, Loan 3184/CH-BR-3).

The IDB approval date for this loan financing was 4 June 2014, and it refers to this project as "BR-L1403 : BDMG Municipal Infrastructure and Services Financing Partnership".

According to BDMG's financial statements, each tranche would have an interest rate of 2.25% plus a 6-Month LIBOR, which would be determined on a semi-annual basis depending on when the disbursement of each tranche was requested. This composition was also subject to change based on contracts signed for the disbursement of each tranche.

The first 50 million USD tranche was disbursed on 4 August 2014 with a 7-year maturity.

For the purposes of this project, the average 6-Month LIBOR in June 2014 (the date the agreement was signed) was 0.324%, so the interest rate has been coded as 2.574%.

The loan proceeds will be used by BDGM, the largest municipal lender (in terms of number of clients) in the state of Minas Gerais as of 2014, to increase its lending to projects that improve infrastructure in various municipalities in Minas Gerias.

These include financing to municipal infrastructure projects themselves, such as construction of public buildings and paving and drainage projects.

They also include financing the acquisition of essential equipment and machinery for projects such as (1) road maintenance and construction and (2) garbage collection and sanitation. According to the IDB the project has been completed. However, the date of completion is unspecified.

The China Co-Financing Fund was established on 14 January 2013 with a contribution of 2 billion USD by the People's Bank of China, and it is administered by the IDB. For more information, see umbrella Record ID#86526.