In August of 2009 two microfinance institutions (MFIs) raised funds through offerings in capital markets. One was Compartamos Banco of Mexico[1], which raised funds in the corporate bond market, and the other was CARD of Philippines, which raised funds in the corporate note market [3,4,].
Compartamos Banco issued bonds worth 1 billion pesos (Ps.), the equivalent of over USD 75.8 million [3]. This, in addition to the Ps. 500 million (USD 37.9 million) issued in July 2009, has led to a total of Ps. 1.5 billlion (USD 113.7 million) raised in the capital markets over the two months [3]. The total issuance will come to maturity in three years [3]. Compartamos Banco says that the funds will be used to “finance portfolio growth, restructure short-term maturities, and strengthen [their] liquidity position” [3].
The Center for Agricultural and Rural Development (CARD) was able to raise funds by issuing USD 10.4 million worth of corporate notes in a move that was facilitated by a USD 5 million guarantee by the Grameen Foundation as part of its Growth Guarantee program [5], a program to “support the growth of high-performing microfinance institutions [4]”. This is the third transaction involving these organizations, the first two totaling USD 5.3 million worth of financing [4]. Investments in the latest transaction came from the Filipino organizations “Security Bank Corporation, Allied Banking Corporation, Banco de Oro Unibank, Inc., BDO Leasing and Finance, Inc., BDO Private Bank, Inc., and Rizal Commercial Banking Corporation” [4]. The lead arranger for the issuance was Security Bank Capital, Inc., the investment banking subsidiary of Security Bank Corporation, a universal (participates in investment and activities pertaining to savings and loans) Filipino bank [6]. The note has a maturity of five years. The Grameen Foundation claims that this is the first note of this maturity to ever be issued by an MFI in Southeast or East Asia [4]. CARD and the Grameen Foundation hope to provide loans for 100,000 new families with this investment [4].
Compartamos Banco is the “largest lender to microbusiness owners in Latin America” [3]. As was reported in the MicroCapital Monitor, the bank made its initial public offering in 2007, issuing “30% of [its] assets to stock markets in New York (80%) and Mexico (20%),” in a transaction “worth USD 467 million” [7]. According to the MIX Market, the microfinance information clearinghouse, Compartamos Banco has a gross loan portfolio of over USD 414.5 million and active borrowers totaling 1,155,850 [8]. As of December 31, 2008, it had a return on assets of 19.12 percent, a return on equity of 55.19 percent, and a debt to equity ratio of 1.85 [8]. A report on their second quarter results from 2009 can be found on MicroCapital [9].
CARD is the largest MFI in the Philippines [4]. According to its homepage, it is actually “a group of mutually reinforcing institutions” including CARD Rural Bank, CARD Development Bank, CARD NGO, CARD NGO Microfinance, CARD Training Center, CARD Development Institute, CARD Mutual Benefit Association, and CARD Insurance Company, all of which aim to financially “empower the poor”. As stated on the MIX Market, CARD has a gross loan portfolio of over USD 13.2 million, and 117, 195 active borrowers [10]. As of December 31, 2007, CARD had a return on assets of 1.9 percent, a return on equity of 9.27 percent, and a debt to equity ratio of 4.36 [10]. It did not report to the MIX Market with data from the year 2008.
The Grameen Foundation’s Growth Guarantee Program was developed with Citigroup, an “international finance conglomerate,” along with “nine donor-guarantors” [5,11]. These guarantors provide not funds, but instead “names and credit” to back the debts of partner MFIs [5]. The program allows MFIs to borrow in local currency to avoid foreign exchange risk and “[anticipates amassing] USD 50 million for disbursements as loan guarantees” [5]. The original portion of Growth Guarantees worth USD 31 million closed in October of 2005 [5].
Security Bank Capital, Inc. began commercial operations in 1996. According to its website, its services include “debt underwriting and syndication, project finance, equity underwriting, private placements, financial advisory, mergers and acquisitions (M&A), privatization, investment and corporate advisory services and stock brokering services through its stock brokerage subsidiary, SB Equities, Inc.” [6]. Its aims include “enhancing distribution and selldown capabilities, focusing investment banking activities on its market niche, nurturing a professional and competent deal team, and institutionalizing a client-centered approach in all aspects of operations” [6].
By Christopher Maggio, Research Assistant
Bibliography:
[1] Compartamos Banco: http://www.compartamos.com/wps/portal/!ut/p/c1/04_SB8K8xLLM9MSSzPy8xBz9CP0os_gADwNLcw93IwP_UHcXAyNjR6cgIy9TY2dfI6B8JG75QAMCusNB9pnFG-AAjgYQeRwmeBub4ZUH2e_nkZ-bql-QG2GQGZCuCADXzFXE/dl2/d1/L2dJQSEvUUt3QS9ZQnB3LzZfUEgwOTdIRzIwT1VHRDAyM0FCUjJKNTNLMzY!/
[2] The Center for Agricultural and Rural Development: http://www.cardbankph.com/
[3] Compartamos Banco press release entitled ‘Compartamos Banco Issues Long-Term Debt’: http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/ww…
[4] Grameen Foundation news release called ‘GF Catalyzes $10 Million Transaction for CARD’: http://www.grameenfoundation.org/resource_center/newsroom/news_releases/…
[5] Grameen Growth Guarantee: http://www.grameenfoundation.org/what_we_do/capital_mgmt_advisory/growth…
[6] SB Capital: http://www.securitybank.com/subsidiaries.asp#SBCAP
[7] MicroCapital Monitor article entitled: ‘Breaking the Mould: Mexican Banco Compartamos Drags Microfinance into a Controversial New Era Despite the Kicking and Screaming’: http://www.microcapitalmonitor.com/cblog/index.php?/archives/794-Breakin…
[8] Compartamos Banco on the MIX Market: http://www.mixmarket.org/mfi/compartamosbanco/data
[9] MICROCAPITAL STORY: Mexican Microfinance Institution Banco Compartamos Reports Second Quarter Results; Wall Street Journal Analysts See the Bank’s Target Market to be Largely ‘Recession Proof’: https://www.microcapital.org/microcapital-story-mexican-microfinance-inst…
[10] CARD on the MIX Market: http://www.mixmarket.org/mfi/card-bank
[11] Citigroup:http://www.citigroup.com/citi/homepage/
Similar Posts:
- MICROCAPITAL BRIEF: EIB Lends Credo Bank $10m for MSMEs in Georgia
- MICROFINANCE PAPER WRAP-UP: “Private Asset Impact Fund Report 2022;” by Anne Estoppey, Ramkumar Narayanan; Published by Tameo
- MICROFINANCE EVENT: Navigating the Future of Impact Investing in Asia; May 9, 2023; Hong Kong, China
- MICROCAPITAL BRIEF: Grameen Crédit Agricole Foundation Lends $525k to Smart Credit for Microfinance in Moldova
- MICROCAPITAL BRIEF: Zubaida Bai Is New CEO of Grameen Foundation
