MIGA Political Risk Insurance Supports Expansion of Istanbul Metro System
WASHINGTON, DC, June 13, 2011—The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, today announced that it is providing an investment guarantee to support the expansion of Istanbul’s metro system, which will improve the quality of life in the metropolis.
MIGA is insuring €280 million on a loan provided to the Metropolitan Municipality of Istanbul by WestLB of Germany and a consortium of banks. MIGA’s insurance will cover non-honoring of sub-sovereign financial obligations. The proceeds of the loan will be used exclusively for the Kadikoy-Kartal-Kaynarca Metro Project, which will be the first underground metro system on the Asian side of Istanbul and will eventually connect with the European side of city.
The first phase of the project involves finishing the construction of 22 kilometers of the line from Kadikoy to Kartal, which includes 16 metro stations. The second phase consists of extending the metro line from Kartal to Kaynarca, the construction of a parking and maintenance area, and the construction of pedestrian subways. The project is expected to be completed by December 2012.
The project uses MIGA’s new authority to provide a non-honoring of sovereign financial obligations guarantee to cover a large infrastructure project. MIGA’s Director of Operations Edith Quintrell notes, "Our support of WestLB and the other consortium banks demonstrates that MIGA can cover sovereign and sub-sovereign risks for large-scale and complex transactions. This means that MIGA is able to support more developmentally-sound foreign direct investment, which is our mission."
"From a development perspective," adds Quintrell, "extending coverage of Istanbul’s metro system will reduce the city’s significant traffic and congestion problems and provide better access to jobs." In addition, the expansion of public transportation in the city will reduce dependence on automobiles. This will help reduce pollution and help make Istanbul a more attractive location for residents and business.
Turkekul Dogan, Executive Director at WestLB’s Istanbul Branch, notes, "MIGA’s non-honoring cover is a welcome addition to the risk-mitigation instruments that banks can use, particularly where MIGA can complement public sector insurance agencies and boost capacity in the private insurance market. At West LB, we are pleased to further build upon the relationship we have had with the agency."
MULTILATERAL INVESTMENT GUARANTEE AGENCY
A Member of the World Bank Group
1818 H Street, NW, Washington, DC 20433
Mallory Saleson, MIGA
Tel: +1 202 473-0844
Rebecca Post, MIGA
Tel: +1 202-473-1964
Cara Santos Pianesi