MIGA Insures Rehabilitation of Critical Road in Vietnam
March 10, 2014
Improvement in the road will increase safety and regional economic integration
Washington, DC, March 10, 2014 – The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank Group, announced today that it is supporting the rehabilitation and expansion of BT20 National Highway 20, a critical transportation link in Vietnam. MIGA is providing non-honoring of sovereign financial obligations cover of $500 million to the project’s lenders for a period of 15 years.
The NH20 is the main route connecting Ho Chi Minh City, the political and economic center of southern Vietnam, with the Central Highlands region of the country. The MIGA-insured loan funds the rehabilitation of a severely deteriorated section of the road, a source of significant transportation bottlenecks and accidents.
“This investment supported by MIGA will help reduce travel time, improve safety, and increase rural incomes in a region where close to 40 percent of the rural population still lives below the poverty line despite considerable tourism, mining and agriculture resources,” explains Victoria Kwakwa, World Bank Country Director for Vietnam.
This large public infrastructure project being implemented by the Government of Vietnam will follow MIGA's environmental and social sustainability policies. “MIGA's standards should ensure that the environmental and social risks of the project are taken into account and mitigated. This approach could have a demonstration effect beyond this specific project,” explains Michel Wormser, MIGA Vice President and Chief Operating Officer. “This project will complement the World Bank’s involvement in the transport sector and will leverage the expertise of our World Bank colleagues based in Vietnam, thus increasing our impact in boosting shared prosperity in the country.”
Goldman Sachs was the loan arranger and lender alongside Sumitomo Mitsui Banking Corporation and a syndicate of other international commercial banks. “The BT20 financing is a landmark transaction. With the support of MIGA and the risk coverage provided, we were able to provide a 15 year financing solution for Vietnam for a major public infrastructure project with significant benefits for the country,” said Tim Leissner, Vice Chairman Asia Ex-Japan of Goldman Sachs.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment into emerging economies to support economic growth, reduce poverty, and improve people’s lives. MIGA fulfills this mandate by offering political risk insurance and credit enhancement to investors and lenders.
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