MICROCAPITAL BRIEF: Chatham Financial, Manager of Interest-rate, Currency Risk, Combines Operations with Subsidiary, Cygma

Chatham Financial, a US-based interest-rate and currency risk advisory company, plans to merge operations with its subsidiary, Cygma Corporation. Cygma was launched in 2007 with the purpose of serving the microfinance industry. The founder and CEO of Chatham Financial, Mike Bontrager, said “This combination of nearly ten years of involvement in microfinance and more than twenty years of currency and interest rate risk management experience uniquely positions Chatham to meet the challenges of these rapidly expanding markets” [1].

Since its inception in 1991, Chatham Financial has hedged approximately USD 2.5 trillion in notional principal, or predetermined capital, through its risk management solutions such as derivatives and debt advisory transactions [2]. Chatham’s clientele include fund managers in microfinance, private equity firms, institutional investors and small and medium-sized enterprises. Chatham serves approximately 1,000 clients annually through 8,000 transactions and hedges USD 350 billion per year.

By Amira Berrada, Research Associate

About Chatham Financial: Chatham Financial is a US-based company specializing in interest-rate and currency-risk advisory services, capital and debt advisory, debt derivative valuations and defeasance services. Defeasance occurs when a debtor sets aside a reserve of cash to a pay off a debt, whereby the reserve and debt offset each other, reducing default risk. Chatham serves approximately 1,000 clients annually through 8,000 transactions and hedges USD 350 billion per year. In 2012, Chatham merged operations with its subsidiary, Cygma Corporation, which had been founded in 2007 to serve the microfinance industry.

About Cygma Corporation: Cygma Corporation was founded in 2007 by its parent company Chatham Financial, advising Microfinance Investment Vehicles (MIV) on managing foreign-exchange risk. Cygma managed a fund to absorb foreign-exchange risk from MIVs. This is done via currency swaps, which involve two parties exchanging equal value loans in two different currencies with interest rates reflecting anticipated currency movement and institutional credit quality. The fund raised USD 50 million as of 2010 hedging up to ten times that amount. As of March 2012, Chatham Financial combined its operations with Cygma Corp.

Sources and Resources:

[1] Press Release supplied to MicroCapital: “Chatham Financial Expands Emerging and Frontier Market Advisory by Combining with Cygma”

MicroCapital.org article, January 14, 2010, “MICROCAPITAL BRIEF: International Finance Corporation (IFC) Considering $10m Investment in Cygma for Foreign Currency Hedges for Microfinance Investors” https://www.microcapital.org/microcapital-brief-international-finance-cor

MicroCapital.org article, November 21, 2008, “MICROCAPITAL BRIEF: “New Microfinance Foreign Exchange Risk Management Group, Cygma, Believes Credit Crunch Provides Business Opportunity” https://www.microcapital.org/microcapital-story-new-microfinance-foreign-

MicroCapital.org article, October 17, 2008, “GUEST EDITORIAL: Ties to Capital Markets Challenge Microfinance Institutions” https://www.microcapital.org/guest-editorial-ties-to-capital-markets-chal

MicroCapital Universe Profile for Chatham Financial: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cha…

MicroCapital Universe Profile for Cygma Group: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cyg

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

 

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Amira joined MicroCapital while working at Export Development Canada (EDC) as a Credit Insurance Underwriter. Amira holds a Bachelor degree in International Business and Finance from Concordia University in Montreal. While completing her bachelor degree, Amira spent a semester in France and upon graduation, three months in India working with non-governmental agencies, political and spiritual groups for various socioeconomic initiatives such as the advancement of women. While travelling to different cities and rural areas in India, Amira was touched by the poverty she witnessed and was dedicated to finding a way to intertwine her business interests with her passion for development. She hopes this internship in microfinance will provide the framework to integrate an element of development into her professional career as well as positively contribute to the field of microfinance. Amira speaks English, French, and Spanish fluently and has conversational knowledge in Portuguese and Arabic. In her spare time, she enjoys reading, trying new restaurants such as molecular gastronomy, restaurants made out of ice and Nicaraguan meals wrapped in banana leaves. Most of all, she loves to travel with loved ones.