Supporting local currency loans with TCX

TCX is a global development finance initiative which offers long-term currency swaps and forwards for over 100 countries where such products are not available or poorly accessible. The Fund started operations in 2007 and has since then provided hedging instruments with a total volume of well over USD 10bn, spread over 4,000+ transactions. Today, the fund has a total gross exposure of USD 5bn in 60 frontier-market currencies. 

Proparco has partnered with Germany (BMZ and BMU), the European Commission, the Netherlands (DGIS), the UK (FCDO) and Switzerland (SECO) to strengthen the equity of TCX via the allocation of a subordinated convertible loan. This loan benefits from the support of the Ministry for Europe and Foreign Affairs.

This project’s contribution to Proparco’s impact indicators is not counted in order to avoid double-counting with the impacts of underlying projects. Indeed, the impacts of Proparco’s underlying projects will be counted at the time of their appraisal.

By strengthening the first-loss tranche of TCX, this loan is contributing to increasing the attractiveness of TCX for future investors. It is also contributing to increasing the financial resilience of companies in the poorest countries, in particular by protecting them against the foreign exchange risk.