The purpose of the project is to support ION’s first long-term corporate bond issuance of Mex$200 million in Mexico. This issuance is part of ION’s Mex$500 million corporate bond issuance program to be registered in the Mexican Stock Exchange. The project will support ION’s strategy to: (i) expand its SME lending portfolio; and (ii) extend its funding tenors and diversify funding sources by tapping capital markets and reaching a new base of investors. IIC’s participation will strengthen ION’s business plan of increasing its SME lending portfolio from Mex$30 million in 2016 to Mex$285 million in 2021.
1. Project Description:
IIC’s financing (the “Financing”) will consist of a Partial Credit Guarantee (“PCG”) of up to one hundred million Mexican Pesos (Mex$100 million) guaranteeing the first long-term issuance under ION’s program. The Financing will not exceed the equivalent in Mexican Pesos to five million United States Dollars (US$5 million).
2. Environmental and Social Categorization and Rationale:
FI-3 (low risk).
3. Environmental and Social Risks and Impacts:
Sub-project environmental and social risks are most likely in the small industry segment, which represents building material manufactures to their construction business. ION will be required to manage these risks through the application of a set of environmental and social procedures, which will include development of an environmental policy, application of local law, confirmation of environmental permits, application of the IIC Exclusion List, and training at IIC’s annual course on Environmental and Social Risk Management. Additionally, sub-loans will be capped with an individual client exposure of US$1 million.
4. Mitigation Measures/E&S Action Plan:
Development of an Environmental Policy and Procedure.