FRONTIER CLEARING CORPORATION B.V.
Status: Approved investmentWhy disclosure?
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Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our customer
Frontclear is an Amsterdam-based financial markets development company that facilitates access for financial institutions in developing countries to local and global interbank markets through the provision of credit guarantees to cover the counterparty credit risk. Frontclear is part of Cardano Development – a group focusing on developing innovative financial risk management solutions and also involved in, among others, the TCX and GuarantCo funds. Frontclear‘s investors include a number of European development finance institutions, including the European Bank for Reconstruction and Development (EBRD), Proparco, The Currency Exchange Fund (TCX), the UK Department for International Development (DFID, through the Financial Sector Deepening Africa) and German Federal Ministry for Economic Cooperation and Development (BMZ).
What is our funding objective?
The Funding objective is to strengthen Frontclear's capital structure. They are in principle unfunded, only to become funded subsequent to a trigger event. As such the callable notes are primarily meant as a leveraging instrument, allowing Frontclear to issue more guarantees, increase transaction and concentration limits and grow its portfolio. Furthermore, the callable notes tranche will contribute to obtaining the targeted single-A minimum external rating.
Why do we fund this investment?
The investment allows Frontclear to enhance its capital structure, enabling the company to be more efficient and to continue supporting the development of more inclusive and more liquid interbank markets in emerging and frontier economies. Frontclear is a niche-player with a unique proposition that has proven to be scalable. In the six years of operations, Frontclear has extended its reach to multiple countries across Africa. Frontclear’s product offering is also complementary to FMO since it is highly beneficial to many of our financial institutions clients: whereas DFIs provide long-term financing, Frontclear offers short-term money market solutions. Finally, the Dutch interest is clearly represented in this transaction.
What is the Environmental and Social categorization rationale?
Environmental and social categorization is C (Low risk) in accordance with FMO’s Sustainability Policy. Frontclear's guarantee activities of money market instruments are deemed to have limited adverse environmental and social risks and/or impacts. Frontclear has an E&S policy in place applying to its relationships with beneficiary banks.
More investments
| Date | Total FMO financing |
|---|---|
| 12/2/2019 | USD 30.00 MLN |
| 12/20/2019 | USD 30.00 MLN |
- Country
- Global
- Sector
- Financial Institutions
- Publication date
- 7/14/2022
- Effective date
- 12/12/2022
- Total FMO financing
- USD 50.00 MLN
- Funding
- FMO NV
-
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - C