Raiffeisen Leasing Kazakhstan LLP (RLKZ)

MIGA has issued a guarantee of $47.5 million to Raiffeisen Zentralbank Österreich AG (RZB) covering its shareholder loan of $50 million to Raiffeisen Leasing Kazakhstan LLP (RLKZ). The guarantee is covering the risks of transfer restriction and expropriation of funds for a period of up to six years.

RZB’s shareholder loan will enable RLKZ to expand its leasing portfolio and help strengthen the financial sector in general and the leasing sector in particular in Kazakhstan. It will enable RLKZ to provide customers with an alternative financing instrument with longer tenor and potentially more attractive pricing. The new funds will support growth in RLKZ’s portfolio. Further, it will improve the growth potential of small- and medium-sized Enterprises (SMEs) by facilitating the upgrade of their long-term assets and improving their competitiveness.

The guarantee represents MIGA’s first support to RZB’s leasing operation in Kazakhstan and its third guarantee in the country. Political risk mitigation was a key requirement for RZB to proceed with the investment. MIGA’s support will allow the project sponsor to fund its subsidiary at a critical time when financial institutions are facing difficulties in raising external capital due to the global credit crisis. The project is expected to help improve the leasing environment and develop a vibrant and competitive leasing industry in the country.

MIGA’s support is playing a critical role not just in encouraging the growth of financial markets in Kazakhstan, but also in building market confidence. The agency’s participation in the project addresses one of the main priorities envisaged in the World Bank Group’s country assistance strategy for Kazakhstan—supporting the diversification of its economy and improving its competitiveness. MIGA’s support for RZB also complements the IFC’s efforts to strengthen the existing leasing sector and facilitate medium- and longer-term financing in Kazakhstan.