Risk-Sharing Facility

IFC risk-sharing guarantees help share the risk of losses on portfolios of eligible loans or other assets. Through these agreements, IFC reimburses a portion of principal losses incurred by originators like banks or corporations beyond an agreed-upon first-loss threshold. The guarantees consist of the structures below. 

IFC Risk Sharing Facilities (RSFs)

These are agreements between IFC and originators like banks or financial institutions, where IFC reimburses a portion of principal losses incurred on portfolios of eligible assets as per an agreed risk-sharing formula. The assets must meet pre-defined eligibility criteria set at the outset. RSFs enable originators and IFC to partner in growing new business lines or expanding into target markets, sometimes collaborating with third-party sponsors. 

Beyond risk sharing, IFC can provide advisory services to strengthen originators' capabilities in asset origination, monitoring, and servicing across various sectors like SMEs, agribusiness, energy efficiency, and more. While typically covering newly originated assets, RSFs may also extend coverage to existing portfolios predating the facility. They are suited for originators seeking credit risk protection without funding needs. However, IFC can couple an RSF with a loan if both credit protection and funding are required, accelerating portfolio growth. 

RSFs prove valuable when introducing new products or tapping into new consumer/business segments lacking performance data, helping originators build track records. Their structuring allows flexibility based on originator and third-party needs, enabling benefits like improved risk management, portfolio diversification, and preparation for future securitizations.