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Proparco, the Ministry of Europe and Foreign Affairs of France and Team Europe support TCX to promote local currency lending
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In times of economic instability, Proparco, joins forces with the European Commission and several other European sovereigns in supporting TCX to protect households and businesses in the poorest countries against currency risk and to increase their financial resilience.
Proparco is pleased to announce an investment in the first loss tranche of TCX, fully backed by the Ministry of Europe and Foreign Affairs.
The involvement of France (Proparco) alongside Germany (BMZ and BMU), the European Commission, the Netherlands (DGIS), the United Kingdom (FCDO) and Switzerland (SECO) is a recognition by France of the importance of local currency lending, and brings a mark of confidence to TCX.
“Proparco is proud to join other European partners in supporting TCX through a convertible subordinated loan,” said Françoise Lombard, CEO of Proparco, “In these times of uncertainty, some of the countries in which our clients operate are or might be facing financial and economic difficulties. Enabling our clients to benefit from the local currency solutions that TCX provides is crucial. With this operation, we are happy to make this possible as part of Team Europe”.
TCX is a global development finance initiative which offers long-term currency swaps and forwards for over 100 countries where such products are not available or poorly accessible. The Fund started operations in 2007 and has since then provided hedging instruments with a total volume of well over USD 10 billion, spread over 4000+ transactions. Today the fund has a total gross exposure of USD 5 billion in 60 frontier-market currencies.
By selling this exposure to private investors, the fund creates markets and opens the international capital market to frontier countries. By catalyzing the private sector, the fund can derisk more investments in emerging and frontier markets.
Ruurd Brouwer, CEO of TCX: “We are thrilled to welcome Proparco, backed by The Ministry of Europe and Foreign Affairs, to the investor base of TCX. We believe that in an increasingly volatile world, it is more important than ever not to offload currency risk to those that can bear it the least. Not to households, not to companies and not to governments. Debt fragility in Africa is directly related to the currency risk sovereign borrowers are forced to accept. We embrace Frances’s support for more local currency solutions”.