Mizuho Bank and the International Finance Corporation launched a $1 billion risk-sharing supply-chain finance facility for Asia-Pacific markets. The facility will operate for three years. IFC will provide up to $500 million in risk sharing for the portfolio. The financing will cover payables finance, receivables financing and pre-shipment programmes.
The partners announced the facility on 29 September after a signing ceremony at Sibos in Miami. It was structured through IFC’s Global Supply Chain Finance programme. IFC’s project disclosure describes a 50-50 risk-sharing structure, with IFC contributing up to $500 million from its own account. Mizuho will originate the underlying assets, initially supporting obligors in Asia-Pacific markets.
RISK SHARING EXPANDS MIZUHO’S FINANCING CAPACITY
The arrangement allows Mizuho to share risk on a portfolio of supply-chain finance assets rather than transferring ownership of the bank or its platform. IFC’s participation is intended to increase the amount of working-capital finance Mizuho can provide. The bank will use its global transaction-banking network and relationships with multinational buyers to identify eligible transactions.
Supply-chain finance can give suppliers earlier payment on approved invoices and help distributors fund inventory. The facility is aimed particularly at small and medium-sized businesses facing working-capital constraints. Financing linked to stronger buyers can reduce reliance on additional collateral and shorten the gap between delivery and payment.
ASIA-PACIFIC SUPPLIERS ARE THE INITIAL FOCUS
The initial portfolio will support suppliers and distributors in Asia-Pacific emerging markets, although Mizuho may originate assets involving obligors operating globally. IFC said its Global Supply Chain Finance programme had supported more than $3.8 billion of supplier-finance transactions before this partnership. The Mizuho facility adds a commercial-bank channel for deploying that risk capacity.
The next test is how quickly Mizuho builds the eligible portfolio during the three-year period. Disclosures on participating supply chains, geographic allocation and utilisation will show whether the facility reaches smaller suppliers as intended. The partners will also need to monitor credit, environmental and social risks as the portfolio expands.