Munich Re leads on Asian bond guarantee body’s inaugural reinsurance deal
The Credit Guarantee and Investment Facility (CGIF), an organisation that provides credit guarantees for local currency denominated bonds issued by companies from a range of countries in mainly South East Asia, has completed its first reinsurance deal in a move that will free up capacity to issue more guarantees.
The reinsurance treaty, which reinsures a portion of its guarantee portfolio up to the end of 2017, was completed with a panel of private reinsurers, led by the specialist credit reinsurance team of Munich Re.
The body was established in 2010 by the ten members of the Association of Southeast Asian Nations (ASEAN) along with China, Japan and the Republic of Korea and the Asian Development Bank. Its main function is to provide credit guarantees for local currency denominated bonds issued by investment grade companies in these regions, thereby promoting economic development in the region.
This deal means that CGIF can issue more guarantees, further developing the ASEAN local currency bond markets.
“The successful inception of this treaty demonstrates the attractiveness of CGIF’s guarantee portfolio to private reinsurers,” said Kiyoshi Nishimura, CEO of CGIF.
“It also validates the strength of CGIF’s guarantee operations in terms of its selection, assessment and monitoring of the region’s local currency corporate bond exposures.”
Thomas Lallinger, head of Munich Re’s financial risk division, said: “We do very much appreciate closely supporting CGIF as it is a very professional trust fund of ADB with the special mandate to develop local Asian bond markets. This perfectly goes along with Munich Re’s strategic ambition to further expand business opportunities in the Asian region.”
The reinsurance treaty was brokered by Guy Carpenter.
Peter Hearn, president and CEO of Guy Carpenter, added: “We are truly proud and privileged to have worked with CGIF to help deliver a unique solution that brings together different areas of the financial sector for the benefit of the Asian community.”
