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Citigroup announces the launch of a $70 million structured facility to support Trade Bank of Iraq
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AME Info - [10/4/2006]
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Citigroup, in cooperation with US Overseas Private Investment Corporation ('OPIC'), today announced the launching of a $70 million structured credit facility for the benefit of the Trade Bank of Iraq (TBI), allowing it to issue Letters of Credit which would be confirmed by leading financial institutions.
The $70 million structured facility was arranged, structured and coordinated by Citigroup's Export and Agency Finance group.
By supporting the bank's reimbursement obligations to confirming banks via a special trust, the trust will facilitate the provision of goods and services vital to Iraq's reconstruction after decades of international isolation. Specifically, the trust will only guaranty reimbursement obligations on TBI letters of credit that are not, or not entirely, supported by export credit agency cover.
This unique facility represents the first time commercial lenders such as Citigroup and others are able to extend letters of credit in Iraq that are not fully cash collateralized. Consequently, the project is designed to increase the availability of financing for Iraqi trade transactions and to enable Iraq to increase its funding capacity and allow it to re-enter the global financial community.
'Provision of trade finance for companies seeking to contribute to Iraq's reintegration into the global economy will be key to Iraq's reconstruction. By supporting the new Trade Bank of Iraq, which was created for precisely that purpose, OPIC's financing will accelerate Iraq's reconstruction and involve an increasing number of international companies in the process,' said OPIC President and CEO Ross Connelly.
Mohammed Al-Shroogi, Corporate and Investment Banking Head for the Middle East at Citigroup, said: 'We are determined to be part of reconstruction efforts in Iraq and we are delighted to contribute toward promoting trade under the leadership of TBI. OPIC has been our strategic partner in arranging this and other vital facilities for Iraq.'
The Trade Bank of Iraq is an independent Iraqi government entity created to facilitate the reconstruction of Iraq by providing trade finance services that Iraqi financial institutions are currently unable to offer.
The new facility comes at the heels of several other landmark transactions that Citigroup has lead in Iraq including the recent commercial debt restructuring on behalf of the Republic of Iraq, the launch of a $130 million OPIC partial guaranteed loan to support small and medium term enterprises in the Iraqi private sector, and the Prepaid L/C facility for TBI.
'This project is designed to increase the availability of financing for Iraqi trade transactions and to enable Iraq to increase its funding capacity,' said Eli Hassine, global head of Export & Agency Finance at Citigroup. 'Agency supported deal-structures are a crucial first step for Iraq to re-enter the global financial community.'
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