TCX

Did you know that TCX provides a solution to currency risk not only for frontier countries, but also for emerging countries? In fact, we cover over 110 countries that are on the OECD-DAC list in (Central) Asia, Europe, Africa, Eastern Europe, Latin America and Oceania!   TCX offers hedging services when it complements (rather than competes with) the commercial market offering. We operate based on the principle of additionality and exist to address unserved demand for FX risk solutions.   In practice, this means that TCX is active in countries where derivatives markets are (relatively) shallow or absent, and where it can extend the tenors currently provided by commercial hedging providers.    #fxhedging #developmentfinance #emergingmarkets

A recent report by Debt Relief International finds that developing countries across the world are struggling to service their external debts, impacting investments in health, education, social protection and climate.   The analysis points out that African countries' annual public debt repayments amount to more than 3x spending on health and 6x spending on education.   Debt dynamics are complex and heavily influenced by currency volatility. Protection against currency fluctuations would be an important step towards improving borrowers' #debtsustainability and to free up space in fiscal budgets to finance the SDGs.   See the link in the article below for the full report.

🌍 Managing Foreign Exchange Risk in Sovereign Debt Portfolios: A Key Challenge for Emerging Market and Low-Income Countries EMDEs and LICs face significant foreign exchange risk, particularly within their sovereign debt portfolios. Effective management of this risk is crucial but often challenged by institutional, operational, and analytical hurdles. 📊 Recent surveys reveal that less than half of Debt Management Offices (DMOs) in these countries are actively assessing or hedging their foreign currency risks. This highlights an urgent need for capacity development in areas such as data acquisition, analysis, and institutional frameworks. 🛠️ As DMOs enhance their capabilities, they can begin to leverage advanced tools like foreign exchange derivatives to optimize debt portfolios and reduce borrowing costs. However, in order use more complex financial instruments many DMOs in Emerging Market and Development Economies need to build internal capacity and strengthen their risk management frameworks. It’s only with the right knowledge and tools that DMOs can confidently manage the foreign exchange risk of their sovereign debt portfolios and avoid negative financial surprises. 💼 💡 Read more in our latest IMF Working Paper: Managing Foreign Exchange Rate Risk: Capacity Development for Public Debt Managers in Emerging Market and Low-Income Countries. https://lnkd.in/er9EqinS A special thanks to my co-authors Michael Papaioannou, Sheheryar Malik and Kay Chung for their invaluable contributions to this important work that highlights the debt management capacity development gaps. Many thanks for Harald Hirschhofer and his colleagues at TCX for excellent collaboration and support of this important work to highlight what capabilities DMOs need in order to develop and fortify their risk management machinery🙏 #DebtManagement #ForeignExchange #EmergingMarkets #FinancialStability #IMF #PublicFinance #CapacityDevelopment IMF Capacity Development

TCX and the International Monetary Fund cooperated on a survey among Debt Management Offices of developing countries to learn about their #currency risk management practices. The results show the need for dedicated #technicalsassistance and capacity building to properly quantify currency risk and learn about tools that exist to manage it. Check out the new IMF paper 👉https://lnkd.in/e6k_quQS which devises steps to guide such efforts. Thordur Jonasson Harald Hirschhofer Sophie Peeters

We recently issued the first-ever offshore synthetic bond in Jordanian dinar, together with our partner TCX. Issuing local currency notes reflects our strategy of supporting the development of capital markets in the countries we're active in. The USD 5 mln bond will allow investors to benefit from diversification and a more attractive yield, and will allow us to use the proceeds to n-lend to projects aligned with our strategy. Fatoumata Bouare, our Chief Finance and Operations Officer, said: "We are pleased to have issued the first-ever Jordanian dinar bond with the support of TCX and Citi, reflecting FMO’s strategy to create impact and to support the development of local capital markets. We look forward to further supporting the development of the JOD denominated market with future issuances." Read the full announcement here: https://lnkd.in/etpQeFuE

Congratulations Daniel Baeza, Frontclear, Banesco República Dominicana and TCX on achieving this pioneering DOP repo deal!

Earlier this month, our partner and shareholder FMO - Dutch entrepreneurial development bank issued the first-ever offshore Jordanian dinar-indexed bond. TCX provided the JOD exposure to FMO through a swap transaction. "The issuance by FMO establishes greater market depth in the local fixed income curve. This milestone will facilitate greater private sector mobilization for future bond issuances and we look forward to supporting further synthetic local currency financing in Jordan", said Othman Boukrami. See the link in the comments for the press release. Paul Blower, Arthur Leijgraaff

In our new Making Finance Work for Women Podcast episode, Ruurd Brouwer, CEO, TCX and Board Chair of the Global Gender-Smart Fund (GGSF), shares his experiences in seeing the harsh realities of gender inequality and GGSF's mission to address it. The GGSF, the world’s largest gender-lens investment fund, has implemented a new strategy focused on gender-smart financing. Women’s World Banking is one of the Preferred Technical Assistance Providers supporting the new strategy that aims to address the USD 1.7 trillion #GenderGap through #FinancialInclusion. We're also now available on Apple Podcasts! Listen to the latest episode: https://bit.ly/4fo61l0

The TCX team is proud toshare that we have been upgraded by Moody’s to Aa3, from A1, entering ‘AA’ territory. For us it shows that solving the challenge of currency risk in development finance can be done! And it can be done with a solid business and risk model. The Moody’s upgrade is based on the fund’s strong and growing shareholder base, as well as its strong growth whilst remaining profitable and maintaining robust capital and liquidity metrics. On the stable outlook Moody’s states: We expect interest from other DFIs and governments to support its pioneering work to remain strong, and TCX's aim to extend into providing local-currency financing solutions for sovereigns, climate finance and sustainable infrastructure is fully aligned with the interests of its shareholders and government sponsors. #developmentfinance #capitalmarkets #innovation Thanking our investors; FMO - Dutch entrepreneurial development bank, EBRD, KfW European Investment Bank (EIB) IFC - International Finance Corporation Oikocredit Agence Française de Développement Development Bank of Southern Africa (DBSA) BIO - the Belgian Investment Company for Developing Countries Proparco ASN Bank COFIDES @EMF BlueOrchard Finance Ltd Oxfam Novib Grameen Credit Agricole Foundation MFX Currency Risk Solutions Ministerie van Buitenlandse Zaken Federal Ministry for Economic Cooperation and Development (BMZ) SECO Economic Cooperation and Development Foreign, Commonwealth and Development Office. And special thanks to the European Commission.

How can we reduce high levels of #currency risk exposure in public debt books of developing countries?   Hedging FX risk is an important tool to protect public sector borrowers from currency volatility. It is available for larger volumes, long tenors, and even the most challenging markets.   TCX works with #developmentfinance lenders, the IMF, policy setters and borrowers to increase understanding, encourage appropriate risk management and build technical capacity.    6 colleagues give their views on mitigating FX risk in public debt books and increasing #debtsustainability — check it out below!   #sustainablefinance #debtmanagement #emergingmarkets Harald Hirschhofer Xander Goudriaan Sophie Peeters Jerome Pirouz Bert Van Lier Fizo Haddad