MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) Syndicates $19m Loan for Municipal Marketplaces in El Salvador with Participation from Oikocredit, VDK Spaarbank, Bank Im Bistum

The Inter-American Development Bank (IDB), a US-based development finance institution, announced that it recently closed a USD 19 million syndicated loan with participation from Dutch cooperative Oikocredit, VDK Spaarbank of Belgium and Bank Im Bistum Essen of Germany to upgrade municipal marketplaces in El Salvador. IDB’s Opportunities for the Majority, an initiative supports and promotes private sector engagement with low-income communities in Latin America and the Caribbean, issued a seven-year term loan of USD 10 million to the effort, while the three other investors each provided five-year term loan of USD 3 million as B-lenders. The Federation of Savings and Loan Associations and Workers’ Banks (Fedecrédito), a privately-owned cooperative financial institution in El Salvador, will channel the loan proceeds to municipal governments to revamp their marketplaces through its network of 48 savings and loan associations and seven workers’ banks.

The loan will finance the construction and remodeling of municipal marketplaces. Most of the beneficiaries are expected to be female heads of low-income households who sell food, clothing and crafts in the markets. Kristin Dacey, syndications officer at IDB, stated, “Bringing social investors into this deal was a win-win for everyone. The B-lenders were introduced to a new client via a highly impactful project, and the client was able to nearly double the proceeds for the transaction while having everything streamlined through IDB and in one contract.”

By Carol Kim, Research Associate

About the 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 nongovernmental organizations (NGOs) to provide both loans and grants to support small and medium-sized enterprises (SMEs), health, education and 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: Bank Im Bistum Essen eG: Founded in 1966, Bank Im Bistum Essen eG (BIB) is an “ethically oriented” German cooperative bank. Since 2007, BIB has supported poverty alleviation through global financial inclusion by funding microfinance institutions directly as well as through its LUX-Flag labelled microfinance investment vehicles KCD-Mikrofinanzfonds I “Global” and KCD Mikrofinanzfonds II “Lateinamerika”. Total outstanding microfinance investments managed directly by BIB reportedly total approximately USD 100 million. BIB is also co-initiator of the responsAbility Mikrofinanz-Fonds and investment advisor to the Dual Return – Vision Microfinance funds.

About Oikocredit: Oikocredit is a Dutch cooperative investment fund comprised of church groups, cooperatives and individual investors. Established in 1975, it works in 70 countries, investing mainly in microfinance institutions (MFIs) as well as trade cooperatives, fair trade organizations and small and medium-sized enterprises (SMEs) in the developing world. As of year-end 2010, Oikocredit reported USD 900 million in total assets and 790 active investees, of which 596 were MFIs.

Sources and Additional Resources:

Inter-American Development Bank News Release: “IDB closes $19 million syndicated loan with impact investors to revamp municipal markets in El Salvador”, September 2011, http://www.iadb.org/en/news/news-releases/2011-09-06/impact-investing-in-el-salvador,9517.html

MicroCapital.org: “MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) Group’s Multilateral Investment Fund (MIF) Approves $4.9m Package for Root Capital to Support Sustainable Agriculture in Honduras, Guatemala, Nicaragua”, August 8, 2011, https://www.microcapital.org/microcapital-brief-inter-american-development-bank-idb-group’s-multilateral-investment-fund-mif-approves-4-9m-package-for-root-capital-to-support-sustainable-agriculture-in-honduras-gua/

MicroCapital.org: “MICROCAPITAL BRIEF: IDB Provides Partial Credit Guarantee to Patrimonio Hoy Microfinance Program of Mexico’s CEMEX to Boost Lending in Mexico, Colombia, Costa Rica, Nicaragua, Dominican Republic”, July 4, 2011, https://www.microcapital.org/microcapital-brief-idb-provides-partial-credit-guarantee-to-patrimonio-hoy-microfinance-program-of-mexico%E2%80%99s-cemex-to-boost-lending-in-mexico-colombia-costa-rica-nicaragua-dominican-republ/

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

MicroCapital’s Universe Profile: Bank Im Bistum Essen eG, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Im+Bistum+Essen+eG+%28BIB%29

MicroCapital’s Universe Profile: Oikocredit, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Oikocredit

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