IFC-arranged parallel loans give borrowers access to debt financing from multiple development institutions in a single package. IFC’s Master Cooperation Agreement (MCA) creates an efficient co-lending platform that has delivered more than $10 billion to over 30 developing-country firms in the last decade. Under the MCA, IFC has built a broad global network of development institutions who work together to offer borrowers a streamlined solution.
Private lenders that are ineligible for IFC’s B Loan program may also participate in parallel loans, including to support local currency syndications efforts. Public institutions that seek to deepen cooperation with IFC on upstream project development and offer IFC opportunities to participate in loans where they are lead arranger may join the Joint Collaboration Framework Agreement (JCFA).
How It Works
MCA signatories and other lenders follow a standard co-lending process where IFC is lead arranger and each lender provides a parallel financing tranche. IFC parallel loans rely on documentation templates, including a Common Terms Agreement, that significantly reduce costs and increase efficiency for all parties.
Benefits to Lenders
- Increased deal flow through IFC’s global origination capacity
- Access to IFC’s due diligence and structuring and restructuring skills and global presence
- Time and cost savings
- All lenders, including IFC, share the same rights and obligations
- In portfolio, IFC may occasionally act as administrative agent on behalf of parallel lenders
Benefits to Borrowers
- Enables loans with longer tenors
- Completes financial package
- Introduces new banking relationships
- IFC's "stamp of approval"
- IFC's environmental and social leadership
In 2020, IFC and its development partners created the Joint Collaboration Framework Agreement (JCFA) as a new structure for increased coordination and cooperation. For downstream project financing, the JCFA enables signatories to take a joint approach to origination and co-lending, supplementing the Master Cooperation Agreement (MCA) where IFC plays the lead arranger role.
The JCFA also creates a framework for development institutions to work together on a range of upstream activities, including policy dialogue, adjustments to local regulatory frameworks to promote private sector development, development of specific upstream projects, and project preparation activities.
How It Works
Parties to the JCFA participate in a pillar assessment, which entails review and due diligence of and by each signatory. Once this process is completed, any signatory can play the role of lead lender in a specific transaction, while others participate as parallel lenders in a streamlined manner.
JCFA members also agree:
- to promote the prioritization of private-sector solutions to development challenges in their countries of operation;
- to apply the Blended Concessional Finance Principles to downstream projects; and
- to work together to converge around standards, diligence and supervision processes, such as those for environmental, social and governance matters, for joint upstream projects.
Benefits to Participants
- Builds on successful established MCA partnership framework
- Encourages the development of upstream activities with the goal of increasing the pipeline of bankable projects that underpin investment and sustainable private sector economic growth
- Provides a framework for DFIs to share in the cost burden of such upstream activities
- Creates a framework that would allow two-way (reciprocal) co-investment and co-financing mobilization by and among DFIs
- Improves efficiency in processing co-financing, including credit analysis, ESG requirements, legal and compliance review, and other DFI requirements in working with shared borrowers
- Paves the way for DFI collaboration in other areas, such as staff exchange programs
Over the last two decades, development institutions have significantly increased cooperation to better coordinate the global response to market disruptions as well as key policy priorities. IFC was an early leader in this effort, designing and launching the Master Cooperation Agreement (MCA) in 2008. The MCA is a parallel lending framework that gives developing-country firms a streamlined way to obtain loans from multiple development institutions at once, with IFC playing the role of lead arranger.
The MCA established the first standard for how development institutions can jointly provide financing to private firms in developing countries. There are now over 35 signatories to the MCA, and new signatories are added every year. Since its launch, borrowers in developing countries have received loans of more than $10 billion under this framework.
How It Works
Under the MCA, IFC acts as lead arranger—and can also act as administrative agent—by using its existing syndication platform, deal-structuring expertise, and global presence to identify investments, perform due diligence, and negotiate loan documents in cooperation with its fellow DFIs. The MCA framework relies on standardized documentation templates, which significantly reduce costs and increase efficiency for borrowers and lenders alike.
Benefits to Partners
- Opportunity for increased collaboration with IFC
- Access to lending opportunities in IFC's global pipeline
- Introductions to other members of the global MCA network
- Standardized documentation provides cost savings and efficiency gains