Our range of services

Our range of services

Without substituting for the product ranges of local and international commercial banks, but in complementarity with them, Proparco’s financing is on market terms, in euros, USD or local currency.
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It offers several categories of financial products, which cover the bulk of the financing needs of the private sector in southern countries.

Proparco’s action bridges the gaps of local financial systems that are not always able to provide appropriate financing for the needs of their economies.

Proparco meets this objective without causing market distortions or crowding out effects for private financial actors, particularly local and international commercial banks. Its operations are complementary to their services (principle of subsidiarity), on terms that are as close as possible to those of the market, without grants or elements of concessionality.

By implementing a full range of financial instruments, from senior loans to equity, including convertible bonds and guarantees, Proparco can meet most of the financing needs that would not be covered by private actors.

In addition to their subsidiarity, its operations aim to contribute to achieving real progress in sustainable development in Southern countries (principle of additionality).


Proparco offers loans (from EUR 3m to EUR 100m), in foreign or local currency, to companies and financial institutions with long maturities (up to 20 years), and a grace period for the repayment of capital where warranted. This financing is tailored to the environment and needs of clients.

Equity and quasi-equity

Proparco can also mobilize various equity instruments:

  • Minority equity investments – direct or indirect – via financial intermediaries, particularly investment funds – in the capital of companies;

  • Subordinated or equity loans;
  • Shareholders’ current accounts;
  • Convertible bonds or bonds redeemable for shares, etc.

Guarantees to strengthen financial markets

By virtue of its signature, or that of its parent company, AFD, Proparco provides clients with a solvency or liquidity guarantee. This guarantee can take on various forms and includes a variety of underlying instruments : loans in foreign or local currency, bond issues, UCITS listed on financial markets, trade finance instruments, etc. 

Proparco is thus able to facilitate the mobilisation of resources from banks or institutional investors, in order to enhance the depth and liquidity of financial markets.  

ARIZ: Risk-sharing

Small and medium-sized enterprises (SMEs) make up the bulk of the economic base in developing and emerging countries. To set up and develop their activity, they need medium and long-term financial resources. However, as they are often perceived as a risky clientele, their access to financing remains extremely limited.

In response, Proparco proposes, on behalf of the AFD Group, a risk-sharing solution for private financial institutions: ARIZ.

ARIZ is a final loss guarantee provided by Proparco to private financial institutions to cover an individual loan or loan portfolio for SMEs (up to 50%) or for microfinance institutions (up to 75%). 

It allows:

  • Companies, from small business owners to structured SMEs, to access credit and financing ; 
  • Microfinance institutions to finance and expand their lending activities ; 
  • Our financial partners to share the credit risk, reduce the level of collateral required, be assisted in the development of a strategy and products for SMEs, and increase their lending capacity thanks to the improvement in their solvency ratio and Proparco’s AA rating.

Today, the AFD Group has established partnerships with over 100 financial institutions. The risk-sharing solution is being implemented in over 40 countries in Africa, the Middle East, Latin America and Asia.


  • ARIZ individual guarantee: risk-sharing allocated on a loan-by-loan basis;
  • ARIZ portfolio guarantee: risk-sharing for a loan portfolio.





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This project is funded by the European Union


​avec le soutien de l’Organisation des États d’Afrique, des Caraïbes et du Pacifique (ACP)​


AFD and Proparco, with the support of the European Union and the African, Caribbean and Pacific Group of States, are launching EURIZ, a new scheme enabling financial institutions to partially hedge their credit risk.

To facilitate MSME’s access to credit in Africa and the Caribbean, Proparco  and AFD, with the support of the European Union and the African, Caribbean and Pacific Group of States, are implementing EURIZ. This new guarantee mechanism enables partner financial institutions (public and private banks, specialised financial institutions), to which MSMEs will apply to obtain a loan in local currency, to partially hedge their credit risk.

EURIZ covers up to 70% of local bank loans granted to MSMEs located in the Caribbean, the Pacific and sub-Saharan Africa, particularly in fragile countries and operating in sectors with a high social and societal impact (the agricultural, health, education, digital, green economy or inclusive business sectors, but also young start-ups, companies owned by women or young people under 25 who are facing increased difficulties in accessing finance). 

The scheme also includes a technical cooperation component that will support these partner institutions to best serve these companies.

This new project is part of the Thematic Blending Framework of the EU’s Development Cooperation Instrument and European Development Fund. 

Trade Finance

Many companies in emerging markets lack access to financing for their import operations. While they are a key driver of trade, employment and economic development, it is the small and medium-sized enterprises (SMEs) that face the greatest obstacles in accessing affordable financing.

In line with its willingness to support the growing integration of emerging countries into world trade, Proparco has developed the Trade Finance Guarantee (TFG) program.

This guarantee insures confirming banks against the risk of default by banks that have issued a trade finance instrument - letter of credit, stand-by letter of credit, endorsed draft - on behalf of one of their importing clients.

It allows...

For issuing banks:

  • To increase their financing capacity for their importing clients;
  • To develop their network of international correspondent banks.



For confirming banks:

  • To finance operations in new geographies or those considered risky;
  • To develop a network of new correspondent banks and optimize their capital allocations

Proparco has established a partnership with more than twenty financial institutions. The program, which has been expanding since 2021, is used in 8 countries in Africa and the Middle East. 

List of confirming banks

List of issuing banks


Financing in local currency

A large number of companies, especially small companies, do not have incomes in euros or dollars.

In order to reduce their exposure to the exchange rate risk, which is likely to weaken them, Proparco seeks financing solutions in local currency.

Depending on the case, it uses financial markets that offer hedging instruments for the main currencies (Mexican peso, South African rand, Indian rupee…) or the multi-donor Currency Exchange Fund (TCX) fund. This fund gives it access to currency hedging products for less common foreign currencies.

IBOR transition and BMR regulation

Updated on December 29, 2020


IBOR (Interbank Offered Rates) is a type of reference rate for calculating interest. The IBOR rates  represent an average rate at which banks could fund themselves. Several IBOR exist for different currencies on different tenors (1m, 3m, 6m…): LIBOR, EURIBOR, EONIA…

LIBOR is being calculated on the basis of submissions from selected panel banks. These submissions are supposed to reflect the real interest rate that banks are paying for borrowing in the interbank market. The LIBOR scandal arose when it was revealed that several panel banks were deliberately inflating or deflating their submitted rates in order to make profit on their trade positions, or to give the impression by artificially lowering their rates of being more creditworthy than what the market would indicate based on an objective assessment.  


Since January 2018, the Benchmark Regulation (BMR) has been the European answer to address the benchmark rate manipulation in 2012. Indeed, the LIBOR scandal needed a strong answer due to risks of conflicts of interest and manipulation, ensuring that rates are adequately representing market conditions on the basis of reliable data becoming Risk Free Rates (‘’RFRs’’).

The purpose of this regulation is to reinforce the framework of benchmark rates by reviewing the computation methodology of these rates.


This regulation will cause the disappearance of some well-known rates like LIBOR or EONIA that would be replaced by RFRs.

In July 2017, the supervisory authority for LIBOR (UK Financial Conduct Authority – FCA) has stated that it will no longer require banks to submit rates used for the calculation of LIBOR after 31 December 2021. In November 2020, the administrator of LIBOR (ICE Benchmark Administration – IBA) has indicated its intention to cease the publication of LIBOR between 31/12/2021 and 30/06/2023 depending on currencies and terms (more details in the calendar below).


The Federal Reserve Bank of New York (Fed) has established a working group (the Alternative Reference Rate Committee – ARRC) to plan the transition away from USD LIBOR.

SOFR (Secured Overnight Financing Rate) is the recommended replacement rate of USD LIBOR by the ARRC, which supports the launch and widespread usage of SOFR-based financial products in the market. SOFR has been published by the Fed since April 2018.

The main differences between USD LIBOR and SOFR are the following:

  • SOFR is an overnight rate whereas USD LIBOR is a term rate with several tenors
  • SOFR is a risk-free rate (equivalent to a AAA credit risk), whereas USD LIBOR is an interbank rate (equivalent to a A area credit risk)

Thus, there is a risk difference between the two rates resulting in SOFR being structurally lower  than USD LIBOR. An adjustment spread to SOFR would have to be introduced compensating for the risk difference (liquidity premium and credit spread) with USD LIBOR.

Otherwise, in the absence of SOFR term rates, a computation methodology to use SOFR (overnight rate) for an interest period longer than one day will be necessary. Discussions are currently in progress between market participants and sponsored working groups: talks seem to be geared towards a SOFR compounded in arrears methodology, for which the interest rate would be known at the end of the interest period, whereas the LIBOR is “in advance”, i.e. known at the beginning of the interest period. The interest payment mechanism may need to be adapted consequently. The ARRC has also launched a request for proposal for the publication from H2-2021 of SOFR term rates (1-month and 3-month, possibly 6-month), but there is no guarantee that this process will result in ARRC endorsing term SOFR and appointing an administrator.


  • June 2016: EU Benchmark Regulation (BMR)
  • April 2018: publication of SOFR by Fed
  • December 2019: Finalization of EURIBOR Hybrid methodology
  • 2021: Transition from USD LIBOR to SOFR
  • 31 December 2021 : Cessation of publication of USD LIBOR 1 week and 2 months, and GBP, EUR, CHF and JPY LIBOR (all tenors)
  • From 31 December2021: No new loan agreements using USD LIBOR
  • 30 June 2023: Cessation of publication of USD LIBOR 1 day, 1 month, 3 months, 6 months and 1 year


The demise of LIBOR makes necessary for both banks and its clients to put in place measures in relation to the existing portfolio to avoid disruption of interest calculation mechanics within their contracts. Regulatory entities in the US, UK and the EU, have expressed their concerns on this regard, and have recommended to market parties to make the necessary arrangements to ensure a smooth transition before LIBOR is being effectively discontinued.

From a practical perspective, this implies the replacement of USD LIBOR by SOFR in the existing contracts, as well as introduction of:

  • An adjustment spread to maintain the economic balance once USD LIBOR is being replaced
  • The necessary adjustments in order to ensure that the calculation of interest remains to be operationally functional under replacement rate

The extent of these necessary adjustments will depend on the chosen methodology to compute SOFR and it is expected to be defined during the course of 2021 and in any case prior to the effective LIBOR discontinuation.


On EURIBOR, the computation methodology has evolved to be compliant with the BMR regulation. EURIBOR Hybrid methodology is fully implemented since December 2019. Thus, all contracts will be able to continue to use EURIBOR as benchmark rate after 1st of January 2022.






Background of the transition

  1. When is LIBOR expected to be discontinued?
  • LIBOR discontinuation date depends on currencies and terms. In November 2020, the administrator of LIBOR (ICE Benchmark Administration – IBA) has indicated its intention to cease the publication of LIBOR on:
    • 31 December 2021 for USD LIBOR 1 week and 2 months, and GBP, EUR, CHF and JPY LIBOR (all tenors)
    • 30 June 2023 for USD LIBOR 1 day, 1 month, 3 months, 6 months and 1 year

This follows the announcement on July 2017 that the UK regulator (Financial Conduct Authority – FCA) will no longer require banks to submit rates used for the calculation of LIBOR after 31 December 2021.

  1. How has LIBOR being manipulated in the past?
  • LIBOR determination is based on submissions from selected panel banks. These submissions are supposed to reflect the real interest rate that banks are paying for borrowing in the interbank market. The LIBOR scandal of 2012 arose when it was revealed that several panel banks were deliberately inflating or deflating their submitted rates in order to make profit on their trade positions, or to give the impression by artificially lowering their rates of being more creditworthy than what the market would indicate based on an objective assessment.



  1. Is SOFR (Secured Overnight Financing Rate) the mandatory replacement rate for LIBOR USD?
  • As of today, SOFR is recommended as alternative reference rate (ARR) for USD LIBOR by the ARRC (Alternative Reference Rates Committee). The ARRC is the working group established by the Federal Reserve of private-market participants in the US to support a successful transition. The ARRC supports the launch and widespread usage of SOFR-based financial products in the market. SOFR is already used in the capital and derivatives markets as ARR for USD LIBOR. The Loan Market Association (LMA) has also included SOFR as ARR in its recent exposure drafts.
  1. What are the current levels of LIBOR USD and SOFR?

    SOFR : https://apps.newyorkfed.org/markets/autorates/SOFR

    LIBOR : https://www.theice.com/marketdata/reports/170
  • Are there other risk-free rate alternatives than SOFR available to replace USD LIBOR?
  • At the time being, there is no risk-free reference rate available for USD other than the overnight SOFR published by the Fed.
  1. How does the volatility of SOFR compare to USD LIBOR?
  • Back tests performed by ARRC show that in the past five years, the 90-day average of SOFR (carrying a US-Treasury risk) has been less volatile than 3-month USD LIBOR (carrying a bank risk). Please see chart below :

    SOFR Volatility
  1. How will the overnight SOFR be used to determine interest for a 3 or 6-month interest period?
  • Several methodologies are under analysis by sponsored working groups and market participants. The more common methodology is SOFR compounded in arrears, where the daily SOFR rate is compounded during the interest period and payable quarterly or semi-annually. Dependent on the number of lag days, the rate would be set several days in advance of the payment due date.
  1. How will a backward-looking interest rate affect the timing of interests notice to borrowers?
  • It is expected that the rate will be determined several days in advance of the payment date, in order to allow sufficient time to notify the borrower.

Adjustment Spread

  1. What factors are captured in the adjustment spread?
  • The adjustment spread captures the difference of credit and term risk between USD LIBOR (term rate, bank risk) and SOFR (overnight rate, risk-free)..
  1. How will the adjustment spread be determined?


  1. How do borrowers avoid value transfer unwinding LIBOR swaps tied to the switch to SOFR?
  • The International Swaps and Derivatives Association (ISDA) has released the ISDA IBOR protocol as per 23 October 2020, being effective from 25 January 2021 onwards. The transition from USD LIBOR to SOFR is expected to be market value neutral.
  1. Will the adjustment spread be set once or will it be set for each interest period?
  • For each loan, the adjustment spread will be set at the transition date from USD LIBOR to SOFR and remains static until the maturity date of the loan.
  1. Will the margin part of the interest rate payment will remain unchanged in existing contracts?
  • For existing contracts, the credit margin will remain unchanged. Only the USD LIBOR will be replaced by the replacement rate (SOFR) plus the adjustment spread to account for the differences between the two rates.
  1. Is it possible that the adjustment spread will be included into interest/credit margin, instead of separate adjustment?
  • For existing loans where USD LIBOR is replaced by SOFR, the adjustment spread should not be integrated in the interest margin and should be considered as an addition to SOFR to compensate for differences in value with USD LIBOR. For new SOFR loans, the adjustment spread will not be required: SOFR and the interest/credit margin will reflect the total loan interest.
  1. How will the adjustment spread be presented to borrowers?
  • Borrowers will be informed on the adjustment spread as part of the contractual amendments to be made for the purposes of replacing USD LIBOR. The adjustment spread is expected to objectively reflect the differences in value between USD LIBOR and SOFR. Note that the adjustment spread is published on Bloomberg according to the methodology recommended by ARRC.
  1. Will the transition result in a higher or lower interest rate for existing loans?
  • The expectation is to maintain the economic balance between the parties as the adjustment spread only accounts for the differences between USD LIBOR and SOFR and the interest margin will remain unchanged.
  1. Regarding the legal aspect of the adjustment spread, should it be considered in fallback wording or is it allowed per international legal framework?
  • In principle the adjustment spread is being contemplated as part of the fallback wording to be implemented in the amendments to contracts. However, it is possible that regulators will impose a sort of adjustment spread for those contracts not explicitly including any mechanism for adjustment at the time discontinuation occurs.


  1. If a borrower asks for a conversion of its floating rate loan to fixed rate before the discontinuation of USD LIBOR, how will the lender fix the rate?
  • The borrower should contact the investment manager to discuss the conversion from floating to fixed rate. In principle, the fixed interest rate is set two business days before an interest payment date at the then prevailing swap market conditions for the remaining repayment schedule profile of the loan.
  1. When do you expect SOFR term rates?
  • Not before the second half of 2021. The ARRC launched in September 2020 a RFP for the publication of forward-looking SOFR term rates from 30 June 2021 (1-month and 3-month, possibly 6-month). But there is no guarantee that the ARRC will endorse Term SOFR or the appointment of its administrator and in any case there is no guarantee that participants will adopt such rates as reference rates to replace USD LIBOR for the loan market.

Transition process and timeline

  1. Should the national regulator be directly involved in transition process to increase the awareness of the transition to market and provide guidelines/fallback wording templates to banks? Or should banks develop their individual fallbacks for the floating loan agreements?
  • Regulators in Europe and the US are concerned about the readiness of supervised entities in the market, therefore encouraging the adoption of fallback provisions in their contracts to avoid disruption once LIBOR is being discontinued. Hoever the development of templates is being promoted mainly by the ARRC together with the Loan Syndications and Trading Association (LSTA) in the US, and the LMA in Europe, which are still based on recommendations being developed in consultation with market participants. Banks are expected to take the initiative to develop their own templates considering the recommendations of LMA and LSTA.
  1. When shall lenders make formal communication to their borrowers?
  • Lenders should attentively follow the market and regulatory developments to be ready for the transition and proactively communicate with their clients to ensure that steps are taken in sync with these developments. We will continue to communicate with our clients on these developments via mail, websites, calls and webinar to support a smooth transition process.
  1. What is the tentative timeline for amendment in facility agreements in order to adopt SOFR by 2021?
  • The process of adopting amendments to transition to SOFR should be initiated as soon as possible and in any case needs to be completed before the end of 2021 and might run into 2022 dependent on the last LIBOR fixing in the respective contract. However, at this stage (before initiating this process) further consensus in the market is needed around the methodology for calculation of the new rate.


If you want to know more about this regulation, please refer you to the following links:

You can also register to the replay platform of the Webinar “LIBOR-SOFR Transition” co-organized by DEG, FMO and PROPARCO: https://libortransition.fmocomms.nl/

If you have any question, please feel free to contact your relationship manager at PROPARCO.



The content of this page with respect to the IBOR transition and BMR regulation is based on information related to the reference rate reform available to the public, in particular information provided by regulatory authorities and working groups operating  in the public and private sectors. This information is not to be considered exhaustive and it has been elaborated considering the actual circumstances at this stage of the reform that could change in the future.

The information on the reform of the IBORS benchmarks shall not in any case be considered or taken as advice provided to its recipients. Clients should form their own opinions about the implications of the reform and are invited to evaluate by themselves their needs to avail of professional advice as well as about the potential consequences arising from the reference rate reform.