MICROCAPITAL BRIEF: In Partnership with BlueOrchard and responsAbility Social Investments AG, Inter-American Development Bank (IDB) Syndicates $40m to Banco Continental of Paraguay to Support Small and Medium-Sized Enterprises (SMEs)

The Inter-American Development Bank (IDB), a US-based multilateral development organization operating in Latin America and the Caribbean, recently finalized a USD 40 million syndicated loan to Banco Continental, a commercial bank established in Paraguay in 1980, to help fund lending to small and medium-sized enterprises (SMEs). The transaction is billed as the first internationally syndicated loan in Paraguay.

The funds will be raised using an A/B loan structure, whereby IDB has pledged to provide a five-year loan of USD 25 million (A loan) from its own resources and will act as lead lender and administrative agent for the USD 15 million syndicated loan (B loan) which will be comprised of two tranches. The first tranche of USD 5 million, funded by Dexia Micro-Credit Fund, a microfinance investment vehicle managed by BlueOrchard Finance SA, a subsidiary of Switzerland-based commercial microfinance intermediary BlueOrchard, has a three-year bullet repayment. The second tranche of USD 10 million, funded by responsAbility SIVAC (Lux) Microfinanz-Fonds and responsAbility SICAV (Lux) Microfinance Leaders Fund, both microfinance investment vehicles managed by the Swiss firm responsAbility Social Investments AG, has a five-year maturity and a two-year grace period. This second tranche was announced by MicroCapital in the January 10 brief cited below [2].

In 2009 Banco Continental reported a gross loan portfolio equivalent to PYG 4.53 trillion (USD 1 billion).

By Jacqueline Foelster, Research Associate

About Inter-American Development Bank (IDB): The Inter-American Development Bank (IDB) is a US-based multilateral finance institution established in 1959 that operates in Latin America and the Caribbean. IDB works with governments, companies and non-governmental organizations (NGOs) to provide both loans and grants to support small and medium-sized enterprises (SMEs), health and education, among other sectors. IDB also provides technical assistance and research in these areas. Its Board of Executives is elected by 48 member countries, 26 of which are located in Latin America and the Caribbean. IDB reported total assets of USD 84 billion as of December 31, 2009.

About Banco Continental: Banco Continental was established in Paraguay in 1980. Banco Continental offers services such as deposits, investment financing and financial consulting with a stated commitment to social responsibility. In 2007 Banco Continental began a relationship with the World Bank, a multilateral, development finance organization, which led to the opening of a line of credit for foreign trade operations. The World Bank Group became a shareholder of Banco Continental with an equity investment of USD 20 million through the International Finance Corporation (IFC), the private investment arm of the World Bank. In 2009 Banco Continental reported a gross loan portfolio of PYG 4.53 trillion (USD 1 billion).

About BlueOrchard: BlueOrchard is a Swiss-based commercial microfinance investment manager. It is composed of two companies: BlueOrchard Finance S.A. which since 2001 has provided credit to microfinance institutions (MFIs), and BlueOrchard Investments Sàrl, which since 2007 has invested in the equity of MFIs and network funds.

About responsAbility Social Investments AG: Founded in 2003, responsAbility Social Investments AG of Switzerland is an investment company that aims to enable investors to earn a financial return while allowing people in developing countries and emerging markets to access markets, information and other services in sectors such as microfinance, small and medium-sized enterprise (SME) financing, fair trade and independent media. According to calculations based on data from the Microfinance Information Exchange (MIX) from 2009 and 2010, responsAbility manages approximately USD 800 million in total assets.

Sources and Resources:

[1] Inter-American Development Bank (IDB) Press Release, December 14, 2010, “IDB closes the first ever internationally syndicated loan in Paraguay”, http://www.iadb.org/en/news/news-releases/2010-12-14/microenterprise-paraguay-inter-american-development-bank,8852.html

[2] MicroCapital.org Article, January 10, 2011, responsAbility Social Investments of Switzerland Makes Loans Totaling $13m to Banco Continental of Paraguay, Financiera Confianza of Peru, https://www.microcapital.org/microcapital-brief-responsability-social-investments-of-switzerland-makes-loans-totaling-13m-to-banco-continental-of-paraguay-financiera-confianza-of-peru/

MicroCapital Microfinance Universe: Inter-American Development Bank (IDB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Inter-American+Development+Bank+%28IDB%29

MicroCapital Microfinance Universe: Banco Continental, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Banco+Continental

MicroCapital Microfinance Universe: BlueOrchard, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Blue+Orchard+Microfinance+Investment+Managers

MicroCapital Microfinance Universe: responsAbility Social Investments AG, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=responsAbility

MicroCapital Microfinance Universe: Dexia-Microcredit Fund (DMCF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Dexia+Microcredit+Fund+%28DMCF%29

MicroCapital Microfinance Universe: responsAbility Microfinanz-Fonds, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=responsAbility+Mikrofinanz-Fonds

MicroCapital Microfinance Universe: responsAbility Microfinance Leaders Fund, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=responsAbility+Microfinance+Leaders+Fund+%28rAMLF%29

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

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