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Funding Operations January 2012 Slide 2 2 An Introduction to International Finance Corporation Member of the World Bank Group. Founded in 1956 with the primary purpose of providing debt and equity funding for project finance in developing countries. Only Supranational institution with fully paid in capital. Capital and reserves take up approximately 1/3 of the total balance sheet. Strong capital position and support from its 183 member countries. 51% of capital is held by G7 countries and c. 70% of capital is held by AAA/AA rated sovereigns. Consistent stable Triple A ratings from Moodys & S&P since ratings commenced. 0% risk-weighted under the BIS 2 guideline. Track-record of stable profitability. No net operating losses ever recorded by IFC. IFC 2011/12 fiscal year funding program 1 amounts to USD10bn. 1.IFCs 2012 fiscal year runs from 1 July 2011 to 30 June 2012 2.As per Basle II Slide 3 3 Vision People should have the opportunity to escape poverty and improve their lives. Mission Statement To fight poverty with passion and professionalism for lasting results. To help people help themselves and their environment by providing resources, sharing knowledge, building capacity, and forging partnerships in the public and private sectors. Slide 4 4 IFC, founded in 1956, is the main driver of private sector development in the World Bank Group Promote and support economic growth by catalyzing private sector investment in developing countries Legally distinct part of the World Bank Group with a shared Board of Directors and President, but separate development mandate, Articles of Agreement, staff, capital base, operating/financial policies Only global multilateral source of debt and equity financing for private enterprise in developing countries Over 102 offices worldwide in 92 countries with 55% of IFCs 3,438 staff in field offices. IBRD IFC IDAMIGAICSID Slide 5 IFCs Business Investment Services Advisory Services Asset Management Loans for IFC Account Equity and quasi-equity finance Syndicated loans Structured and securitized products Client Risk management products Trade finance Subnational finance Local Currency Access to finance Environmental and social sustainability Investment climate Public private partnerships Infrastructure advice Invests third-party capital in a private equity format Allows outside investors to benefit from IFCs expertise in achieving strong equity returns as well as development impact Helps IFC fulfill its role and leverage its balance sheet by mobilizing third-party capital to increase investments IFCs business consists of three complementary pillars that support its mandate and strategic priorities. 5 1. Wholly owned subsidiary of IFC Slide 6 6 Sustainability is Central to the IFC mission 72 leading financial institutions from 30 countries have adopted the Equator Principles as of June 2011, accounting for nearly 95 percent of project finance transactions worldwide. Pioneer of socially and environmentally responsible investments Strong environmental and social due diligence IFCs Equator Principles have become widely adopted by financial institutions A benchmark for the financial industry to assess and manage social and environmental risk in project financing IFC co-sponsors Sustainable Banking Awards with the Financial Times An award for banking innovators whose business practices reflect a commitment to values and practices consistent with sustainability Summary of Terms: Amount - USD 200,000,000 Maturity - April 28, 2014 Coupon - 2.25% p.a. Denomination- USD 5,000 IFC through its Green Bonds offers investment opportunities to sustainable and socially responsible investors who wish to support climate change-related projects in developing countries Proceeds from the Green Bonds are set aside in a separate green account for investing exclusively in renewable energy, energy efficient, and other climate-friendly projects in developing countries Inaugural USD200m due April 2014 Green Bond issued in April 2010 Slide 7 7 Consistently rated Triple-A & Risk Weight of Zero Percent Major Rating Factors Member of the World Bank Group Sovereign Sponsorship (Fully Paid in Capital) Strong financial profile including substantial capital and liquidity Conservative statutory and management policies As a multilateral development bank, IFC has a 0% risk weight under Basel II In addition to its reserves for losses, IFCs risk-bearing capacity is buttressed by its strong capital position. -Standard & Poors, January 2011 Long-term ratingsOutlook MOODYS S&P Aaa (June 2010)Stable AAA (January 2011) Slide 8 8 Strong Shareholder Support Global membership 183 member countries Capital increases Increase of US$200 million agreed in 2010 51% of the capital is held by the G7 countries 2 C. 70% 3 of capital provided by AAA/AA rated sovereigns No dividends paid / no taxes paid Member Countries Shareholder Headquartered in Washington D.C. 1-3 For additional Information please refer to Appendix (p.30) Slide 9 9 IFCs Preferred Creditor Status 1 IFC loans have never been included in a sovereign debt rescheduling, nor have payments to the IFC ever been permanently interrupted by a general debt- servicing moratorium Recognized by governments, rating agencies, investors and banks Favorable provisioning treatment for IFC syndicated loans As IFC remains the lender of record on the borrowers books, the expectation is that the borrower will be permitted to purchase the foreign exchange to service its IFCs loan (and, consequently, the participations in that loan) during times of financial stress, when exchange controls may prohibit it from doing so to service foreign-currency loans from commercial lenders. This expectation is based upon many years experience and was met most recently during the Republic of Argentinas financial difficulties during 2001-2002 1. For additional Information please refer to Appendix (p.31) Slide 10 10 Financial Strength (As of June 30, 2011) Only Supranational with fully paid-in capital, exclusively in US$ IFC has one of the lowest ratios of debt to paid-in capital plus retained earnings of any supra national Low leverage- Debt: Equity 2.6x Maximum Allowed: 4x Capital measures: Total Resources Required : US$14.4 bn Total Resources Available : US$17.9 bn High liquidity (83% of next three years estimated net cash requirements) Minimum required: 45% 1. Refer to Credit Rating Agency Supranational report 2. Debt to equity ratio is defined as the ratio of outstanding borrowings plus outstanding guarantees to subscribed capital plus undesignated retained earnings (less cumulative unrealized gain or losses on loans, equity investments, and other non-trading financial instruments accounted for at fair value in net income) at the end of the fiscal year. Slide 11 11 Balance Sheet Overview (As of June 30, 2011) * The accounting and reporting policies of IFC conform with accounting principles generally accepted in the United States of America (US GAAP) Slide 12 12 Substantial Liquid Assets (As of June 30, 2011) US$24.5 billion net of derivatives and securities lending activities (equivalent to 36% of total assets) High quality investment with mainly Sovereign and supra bonds Corporate bonds and ABS (Aaa/AAA) Financial institution deposits (Aa3/AA- or better) Performance measured against market benchmarks within risk parameters Three Tiered Investment Approach Diversification of investments by sector/asset class, country, investment horizon/trading style Use external managers for a portion In our view, the corporation continues to be among the most liquid of MDFIs. - Standard & Poors, January 2011 Slide 13 13 Net Income (As of June 30, 2011) Net Income (US$ billions) Asian & Russian Crisis Argentina Recovery & EM Growth Brazil Crisis Argentina Crisis & Turkey Crisis Global Financial Crisis 1. IDA - International Development Association: On August 7, 2008, IFCs Board of Directors approved grants to IDA for use by IDA in the form of grants in furtherance of IFCs purpose as stated in its Articles of Agreement. For additional Information on IDA please refer to Appendix (p. 31) No FY net losses ever recorded by the IFC, prior to grants provided to IDA Slide 14 14 Risks are Proactively Managed By Company Investment in a single obligor may not exceed 4% of Net Worth plus General Reserves on loans By Risk Sector Total exposure to a single risk sector may not exceed 12% of Net Worth plus General Reserves on loans By Country Exposure limit is 20% of Net Worth plus General Reserves on loans Strict Portfolio Diversification Guidelines: Market-based loan pricing Limit on equity and quasi-equity investments maximum 100% of net worth Loans match-funded to manage currency, interest rate and maturity risks Top Five Exposures by Country as a % of Total Committed Portfolio (FY11) Baa3/ BBB- Baa2/ BBB- Ba2/ BB Baa1/ BBB Aa3/ AA- Five largest country exposure equals 32.3% of total portfolio. 1. See page 33 2. Business sectors that are heavily influenced by a single, identifiable, world price index. 3. For additional Information please refer to Appendix (p.31) 1 Slide 15 15 IFC Disbursed Portfolio (As of June 30, 2011) Breakdown of IFC Total Investment (gross of $1.31 bn loan reserves) Portfolio Holdings (US$ billions) 23% Slide 16 16 Disbursed Portfolio Distribution (As of June 30, 2011) IFC the most geographically diversified DRE portfolio among MDFIs, as of June 30, 2010, in our opinion. - Standard & Poors, January 2011 IFC has diversified exposure in 146 countries and 1,737 companies. Breakdown by Geographical Region Slide 17 17 Conservative Write-off & Provisioning Policy Detailed portfolio review on a quarterly basis; any loan 60 days past due classified as non-accruing Total Reserves Against Losses equal 6.6% (US$1,307 million) of the total disbursed loan portfolio Loan Portfolio Performance Key Indicators % of Disbursed Loan Portfolio 1.The reserve against losses on loans reflects estimates of both identified probable losses on individual loans (specific reserves) and probable losses inherent in the portfolio but not specifically identifiable (portfolio reserves). IFC considers a loan as impaired when, based on current information and events, it is probable that IFC will be unable to collect all amounts due according to the loans contractual terms. 2.IFC Managements Discussion and Analysis, page 20. Slide 18 18 Funding Objectives To meet IFCs funding needs at favorable cost and maturity, while expanding and developing its investor base. Strategy 1. Provide liquid US$ global benchmark bonds annually IFC debt instruments are clearable through Fed Wire, DTC, Euroclear and Clearstream IFC is exempt from SEC registration and EU prospectus directive 2. Access broad array of public and private bond markets across multiple currencies (private placements, structured bonds 1, callable notes, Medium Term Notes, Kauri, Kangaroo, Maple, Sterling, Uridashi, Green Bonds, Microfinance Bonds) 3. Promote development of emerging capital markets by issuing bonds in local currencies, often in domestic markets 1. See page 32 Slide 19 19 IFC is a US dollar-based institution, all borrowings are swapped into variable-rate US dollar. 71% of all IFC disbursed loans are denominated in USD. IFC Approved Borrowing Program (US$ Billions) Funding Program FY12 approved funding program up to US$10 billion FY11 (US$10.0 bn) Borrowing Currency Mix (13) Slide 20 20 Funding Program Increase of funding program in the last few years has been due in part to the debt redemption cycle and organic growth in the overall IFC operations. Benchmark 30-40% Niche Currency Markets Retail Private Placements 10-20% 20-45% 20-25% Funding Program of IFC & peers for 2011IFC Funding Strategy (In US$ bn) 10-20% Structured Products Slide 21 21 IFC Local Currency Domestic Bond Issuances Brazil Amazonian Bond (2007) BRL 200 mn due 2011 IFR 2007 Awards, Best Latin America Domestic Currency Bond China Panda Bond (2005) RMB 1.3 bn due 2015 Asia Money 2005 Awards, Best Local Currency Bond Malaysia Wawasan- Islamic Bond (2004) MYR 500 mn due 2007 IFR 2005 Awards, Malaysia Bond of the Year CFA Franc - Kola Bond (2006) XOF 22 bn due 2011 Emerging Markets 2007 Awards, Deal of the Year Africa Morocco Atlas Bond (2005) MAD 1 bn due 2012 Peru Inca Bond (2004) Sol. 50 mn due 2007 Colombia El Dorado Bond (2002) COP 225 bn due 2007 CFA Franc - Kola II Bond (2009) XAF 22 bn due 2014 Gulf Cooperation Council (GCC) Hilal Sukuk (2009) USD 100 mn due 2014 Slide 22 22 Consistent Issuance Strategy Annual US$ benchmark issue in global format since 2000 Provide a reference bonds IFC versus its peer group Top rated global credit and consistent secondary market performance IFC US$ Secondary Trading Levels Libor Levels (bps) Slide 23 23 Consistent US$ Benchmark Execution Strategy Slide 24 24 Treasury Department Contact Details Jingdong Hua Vice President Phone: +1 202-473-1650 Fax: +1 202-522-6801 E-mail: Jhua@ifc.orgJhua@ifc.org John Borthwick Deputy Treasurer, Head of Funding Phone: +1 202-473-6797 Fax: +1 202-522-6807 E-mail: Jborthwick@ifc.orgJborthwick@ifc.org Andrew Cross Principal Financial Officer Phone: +1 202-458-4852 Fax: +1 202-522-6807 E-mail: Across@ifc.orgAcross@ifc.org Ben Powell Senior Financial Officer Phone: +1 202-473-1642 Fax: +1 202-522-6807 E-mail: Bpowell@ifc.orgBpowell@ifc.org Evelyn Hartwick Financial Officer Phone: +1 202-473-7994 Fax: +1 202-522-6807 E-mail: Ehartwick@ifc.orgEhartwick@ifc.org International Finance Corporation (IFC) 2121 Pennsylvania Avenue, NW Washington, D.C. 20433, USA Slide 25 25 Appendix Slide 26 26 Risk Profile Lending Fully Hedged Interest Rate Risk All issues fully hedged, no exposure to currency or structured risk Local currency exposure, if any, is hedged back to back via a loan /equity investment Currency RiskSwap Counterparties IFCs capital base and its assets and liabilities, other than its equity investments, are primarily denominated in US dollars. IFC seeks to minimize foreign exchange and interest rate risks by closely matching the currency and rate bases of its liabilities in various currencies with assets having the same characteristics. All proceeds are swapped to 6 month floating rate USD Zero threshold, CSA in place with all counterparties under AA-/Aa3 Implement CSA with all counterparties Slide 27 27 Historical Data 201120102009200820072006 Leverage2.62.22.11.61.41.6 Strategic Capital 1 (US$ bn)3.64.03.94.65.8n/a 1. Total resource available less total resources required. Historical performance of 5-year benchmarks issued by IFC and its peers Source: DB, GS and UBS Leverage Ratios and Capital Strength ASW in bps Slide 28 28 IFC - USD 3 billion 5 year Global Benchmark Transaction On November 16th, J.P. Morgan priced a new USD 5-year Global Benchmark for International Finance Corporation (IFC). This is IFCs second 5-year global USD benchmark bond issue of 2011. Against the backdrop of a worsening European sovereign crisis, the transaction was well received by investors who flocked to IFCs safe haven status. The 5-year maturity was chosen to capture the deepest investor demand. The transaction was announced at 2 pm London time on Tuesday 15th November. Orderbooks opened on November 16th, with a guidance of MS-8 area at London open. The transaction was met positively by investors, with the order book growing rapidly in the London morning. The book size was over $2 bn by 10am, with strong interest from Asian and European accounts. With no price sensitivity in the book, at 12pm price guidance was revised to MS-9bps. By 2pm London time, US investors saw the book grow closer to $3.5 bn, allowing for the transaction to be upsized to $3 bn, from an initial $2 bn target. Books closed at 2.30pm with total orders of more than $3.7 billion from 66 participating accounts. The deal priced in line with the revised guidance of MS-9bps, representing the tightest pricing achieved by any supranational for a 5year benchmark since 2008. All major regions were well represented in the book with Asia accounting for 37%, EMEA 34%, and Americas 29%.The book was of very high quality with Central Banks and Official Institutions accounting for the largest share at 76%. Transaction summary Transaction highlights Investor demand by region Investor demand by type Issuer:International Finance Corporation (IFC) Ratings:Aaa / AAA / AAA Joint bookrunners:J.P. Morgan / HSBC / Citigroup Pricing date:16 November, 2011 Settlement date:23 November, 2011 Maturity date:23 November, 2016 Amount:USD 3.0 billion Coupon:1.125% (s.a.) Re-offer vs. m/s:-9.0 bps Re-offer vs. UST:+34.25 bps vs. UST 1.000%, October 2016 Re-offer price:99.507 Re-offer yield:1.227% (s.a.) CBs/ Off. Institutions 76% Fund Managers 6% Slide 29 29 IFC - USD 2 billion 5year Global Benchmark Transaction Transaction summary Transaction highlights Investor demand by region Investor demand by type On April 4 th, the International Finance Corporation (IFC) successfully launched and priced their first Global benchmark bond offering of 2011 a $2bn 5year bond Official mandate announcement was on Friday, 1 st April for execution of a benchmark transaction in the near future The pre-announcement was intended to give investors time to consider the deal and is in line with IFCs programme approach at this time of the year Books opened early London morning on Monday April 4 th following positive feedback from investors at a spread guidance of MS-2bps area Price guidance was considered fair as Asian and European-based real money accounts drove the momentum of the book building process. Before 8.00am Washington time, the orderbook was approaching $2bn The bond priced at MS-2bps, equating to 18.4bp over the on-the-run UST With this transaction, the IFC, a member of the World Bank Group, has achieved an attractive funding result and the first sub-Libor 5year issue by a supranational since the autumn of 2008 In addition, this outcome demonstrates that IFC has sponsorship from some of the highest quality investors, not only in North America, but across EMEA/Asia and further strengthens its impressive reputation in the international capital markets Slide 30 30 Additional Information IFCs authorized share capital was increased to $2,450 million through two capital increases in 1992. On July 20, 2010, the Board of Directors recommended an increase in the authorized share capital of IFC of $130 million, to $2,580 million, and the issuance of $200 million of shares (including $70 million of unallocated shares).The Board of Governors also recommended that the Board of Governors approve an increase in Basic Votes aimed at enhancing the voice and participation of Developing and Transition Countries (DTCs) and requiring an amendment to IFCs Articles of Agreement. Currently the voting power of each IFC member is the sum of its Basic Votes, fixed at 250 votes per member, and its Share Votes, with one vote for each share of IFC stock held. At present, Basic Votes represents 1.88% of total IFC voting power. Once the amendment to the Articles of Agreement becomes effective, the Basic Votes of each member shall be the number of votes that results from an equal distribution among all members of 5.55% of the aggregate sum of the voting power of all members. The above is expected to result in a shift of the voting power to DTCs by 6.07% to 39.48% AAA/AA rated Member Sovereign shareholdings: Member SovereignShareholding (%) Member SovereignShareholding (%) Member SovereignShareholding (%) Australia2.00Germany5.44Saudi Arabia1.27 Austria0.83Italy3.43Singapore0.01 Belgium2.14Japan5.96Slovenia0.07 Canada3.43Kuwait0.42Spain1.56 Chile0.49Luxembourg0.09Sweden1.13 China1.03Netherlands2.37Switzerland1.75 Denmark0.78New Zealand0.15United Arab Emirates0.17 Finland0.66Norway0.74UK5.11 France5.11Qatar0.07USA24.03 Total 70.24% Slide 31 31 Additional Information (contd ) Not a matter of treaty or law, preferred creditor status derives from the incentives borrowers have to service debt from IFC when they are unable to service private sector or bilateral debt. These incentives, in turn, rest on the supranationals reliable lending, quality programs, and useful technical advice. IDA- International Development Association: Through June, 30, 2008, IFC had designated retained earnings in the cumulative amount of $650 million for grants to IDA for IDA to use in providing financing in the form of grants in addition to loans, all in furtherance of IFCs purpose as stated in its Articles of Agreement. On August 7, 2008, IFCs Board of Directors approved the designation of $450 million for grants to IDA for use by IDA in the form of grants in furtherance of IFCs purpose as stated in its Articles of Agreement, which was noted with approval by IFCs Board of Governors on October 13, 2008. FY11 largest country exposures June 30, 2011 (Based on IFCs Account) Country (rank)PercentagePortfolio ($ millions) India8.83,766 Brazil6.22,697 Russian Federation6.02,579 Turkey5.72,422 China5.62,411 Philippines3.01,086 Colombia3.01,073 Argentina2.41,038 Nigeria2.41,008 Mexico2.01,003 1. Excludes individual country shares of regional and global projects. CountryS&PMoodys USA AA+ Aaa Japan AA- Aa3 Germany AAA Aaa UK AAA Aaa France AAA Aaa Canada AAA Aaa Italy A A2 G7 Country Ratings Slide 32 32 Structured Products Callable or Puttable notes Zero Coupon Discounted Bond Step-up/Step-down coupon bonds Range Accrual Floating rate notes with caps, floors Notes linked to equity or currency indices Powered Reverse Dual Currency FX-linked coupon Commodity-Linked Inflation-Linked Examples of Structured Issues IFC has extensive experience issuing a wide range of structured products. This experience gives IFC flexibility in offering investors a range of customized private placements Slide 33 IFC own account investments are typically limited to 25% of the total capitalization of the company or the project IFC equity ownership is typically limited to 20% IFC does not operate companies IFC invests as a minority shareholder and structures investments with exit options, convertibles etc. to ensure a realistic exit mechanism. IFC has been able to achieve significant returns (e.g. telecom and banking) by seizing early market opportunities in emerging markets and partnering with the right sponsors. IFC has a long-term investment horizon that looks beyond short- term market volatility. IFC offers a full range of financial products across the capital structure to support investee companies through all business cycles and foster long term relationships. IFCs Approach to Equity Investments 33 Slide 34 34 This document has been prepared for informational purposes only, and the information herein may be condensed or incomplete. This document does not constitute a prospectus and is not intended to provide the sole basis for the evaluation of any securities issued by IFC. For additional information concerning IFC, please refer to IFCs current Information Statement, financial statements and other relevant information available at: www.ifc.org/investors For further Information