Funder

This collateral debt obligation (CDO) closed in two tranches (2004 and 2005) for a total of USD 87 million and financed 14 outstanding MFI in 9 emerging economies with attractive 7-year loans at fixed rates.

BlueOrchard successfully closed the second tranche of BlueOrchard Microfinance Securities 1 on May 5th, 2005. In this transaction, $ 43.25 million of loans due July 2011 were extended to eight different MFIs. Together with the first closing of the Securitization in July 2004, a total of $81.25 million has been disbursed to 14 different MFIs across Latin America, Eastern Europe and Asia through this product.

These loans were financed through the issuance of notes with different risk and return profiles to investors in the United States and Europe.

This securitization marks an important innovation in the financing of microfinance: it is the first time that debt obligations have been issued backed by a portfolio comprised of loans to microfinance institutions, and was sold exclusively to private institutional and individual investors.

The structure offers several advantages to both MFIs and investors. For the MFI?s, it provides access to long-term (7-year) financing, large amounts of capital (the average loan size is more than $5 million), without guarantees and at fixed interest rates. For investors, the structure allows them to invest in a diversified portfolio of MFIs with a security that corresponds to their own individual risk/return profile. In this second closing, BlueOrchard was pleased to have the participation of a large pension fund and a large U.S. commercial bank as investors in the subordinated notes.

BlueOrchard Finance S.A.'s work reflects its strong belief that international capital markets have a key role to play in the development of microfinance. Its goal has always been to innovate and pioneer developments in this field, and to continue to strive to establish and strengthen links between private international investors and microfinance practitioners throughout the world.











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