MICROCAPITAL.ORG STORY: IFC to Raise $300m in Bond Issue in Japan Market for Microfinance Programs

The International Finance Corp (IFC) will aim to raise USD 300 million through a bond issue targeted at Japanese investors to finance microfinance programs. This is the first time that the IFC will issue bonds with the intent to lend to microfinance institutions (MFIs). The bond listing and sale will be arranged by Daiwa Securities. The bond will be listed in Australian dollars and New Zealand dollars and will be restricted to Japanese retail and institutional investors. IFC has obtained ratings of Aaa/AAA (investment grade) from Moody’s and Standard & Poor’s rating services respectively. It is expected that IFC will invest an amount at least equal to the bond proceeds in supporting microfinance activities. See bibliography sections [7]-[15] for Microcapital.org’s coverage of recent IFC investments. According to Nina Shapiro, IFC treasurer and vice president for finance, the IFC is considering bond issuances in other regions as well, specifically the European bond markets. IFC estimates that financing needed in the microfinance sector will reach USD 1.8 billion in 2010. [3][4]

The International Finance Corporation was established in 1956 and is currently a member of the World Bank Group. The company was established to “foster sustainable economic growth in developing countries.” As of 2008, it has a net worth of USD 18.3 billion [1]. For MicroCapital’s detailed coverage of IFC’s Micro Small and Medium Enterprise Initiatives during 2008, look here.

Daiwa Securities focuses on asset management, retail and wholesale securities, and investment operations. Daiwa Securities SMBC offers investment banking services, mostly to domestic companies and Japan-based multinationals. According to the 2009 Annual Report, Daiwa Securities has total assets of USD 135 billion.[2] See another microfinance related deal lead by Daiwa Securities on Micocapital.org here.

[1] IFC

www.ifc.org

[2] Daiwa Securities

http://www.daiwa-grp.jp/ir/english/index.cfm

[3] Bond Issuance Announcement

http://www.ifc.org/ifcext/treasury.nsf/AttachmentsByTitle/Microfinancebond-september2009/$FILE/Press+Release_Final_E.pdf

[4] Reuters, “IFC to issue first bond for microfinance programs”

http://www.reuters.com/article/marketsNews/idUSN264186120091027

[5] Moody’s

www.moodys.com

[6] Standard & Poor’s

http://www2.standardandpoors.com/portal/site/sp/en/us/page.home/home/0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0.html