by Bharathi Ram -

MICROCAPITAL STORY: MFX Solutions Inc. (MFX) in Washington D.C., USA Launches Hedging Operations Dedicated to Microfinance Institutions (MFIs)

MFX Solutions Inc. (MFX), a new company based in Washington D.C. in the United States dedicated to providing microfinance currency risk solutions announced the launch of its hedging operations recently, according to a press release on the electronic news and information portal PR NewsWire. With the launch, MFX, in keeping with its mission to ‘make sure that existing flows of microfinance lending are not disrupted by currency devaluation’, will focus on making modern hedging instruments accessible to microfinance lenders in developing countries. As per information available on their website, MFX will focus on ‘high-risk markets in Africa and elsewhere where hedging can have a transformative effect’. Additionally, MFX will also create education programs in the form of easy-to-use web-based tools designed to help MFI managers analyze the risks they face under different economic scenarios. (PR Newswire is headquartered in New York, USA and is a subsidiary of the London based global business media company United Business MediaPlc).

by Laura Anderson -

MICROCAPITAL STORY: Inter-American Development Bank’s Multilateral Investment Fund (MIF) and Corporation Andina de Fomento (CAF) Back Ratings For Microfinance Institutions

The Inter-American Development Bank’s (IDB) Multilateral Investment Fund (MIF) and Corporacion Andina de Fomento (CAF) have announced they will support a project to assist small-scale microfinance institutions (MFIs) in Latin America and the Carribbean obtain credit risk ratings and performance assessments.  The new project will give priority to MFIs with loan portfolios between USD 1 million and USD 15 million, with average loans not exceeding USD 3,000. The MIF and CAF will help cover part of the cost of the credit risk ratings and performance assessments:  the MIF will provide a grant of USD 986,161, CAF will provide USD 200,000 and participating MFIs will provide USD 400,000.

by Zoran Stanisljevic -

MICROFINANCE EVENT: Second Annual Microfinance Investment Summit, October 6-7, 2009, London, United Kingdom, Sponsored by Incofin

Microfinance Event: Second Annual Microfinance Investment Summit, October 6-7, 2009, London United Kingdom, Sponsored by Incofin

Second Annual Microfinance Investment Summit, October 6-7, 2009, London, United Kingdom, Sponsored by Incofin

See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events

by Zoran Stanisljevic -

MICROCAPITAL STORY: The International Finance Corporation (IFC) to invest $ 7.4 million (16.4 percent equity stake) in Microfinance Institution Caja Nuestra Gente of Peru

IFC, a member of the World Bank Group, has announced that it will invest USD 7.4 million (a 16.4 percent participation/stake) in Microlender Caja Nuestra Gente, a Microfinance Institution serving 170,000 clients microlending in Peru.  The IFC investment is also aimed to promote the growth and expansion of the Fundación BBVA para las Microfinanzas (owner of microlender, Caja Nuestra Gente) in Peru and Peruvian rural geographies.  The IFC provides investments and advisory services to build the private sector in developing countries.   Terms of the IFC’s investment are not provided.  According to the IFC, Caja Nuestra Gente loan portfolio is currently at USD 146 million (average loan of USD 1,506 dollars) and presently serves 170,000 borrowers from low-income economies.  Caja Nuestra Gente’s largest funder is Fundación BBVA para las Microfinanzas.

by Zoran Stanisljevic -

MICROCAPITAL STORY: VG Microfinance – Invest Nr. 1 GmbH’s senior CDO notes downgraded by Fitch Ratings from ‘BBB’ to ‘BB+’ (assigned a Negative Outlook) with Deutsche Bank AG in its role as seller and protection buyer

Fitch has confirmed a downgrade of VG Microfinance – Invest Nr. 1 GmbH’s senior CDO notes to ‘BB+’ and assigned a Negative Outlook.  According to Fitch, the downgrade of the senior CDO notes is the result of the rating agency’s concern for the political uncertainty and sharp asset deterioration of the Nicaraguan MFI, Asociación de Consultores para el Desarrollo de la Pequeña, Mediana y Microempresa (ACODEP’s) loan book.  ACODEP currently represents 8.8 percent of the portfolio with default risks that have materially increased.

by Zoran Stanisljevic -

MICROCAPITAL STORY: Will Peru’s Sluggish Economic Growth Impact Microlending? Microlender, MiBanco Plans to Slow their Loan Growth Rate to 25-30 Percent this Year in Light of Current Economic Conditions

MiBanco CEO Rafael Llosa recently informed Business News Americas (BNA) (a provider of Latin America news and business information, headquartered in Santiago, Chile) that the microlender will ease the loan growth rate this year.  “We plan to slow our growth rate to 25-30 percent this year. Our strategy includes adding new clients but not aggressively as last year.  In light of the current economic environment, the bank is focusing on its core business (loans to micro and small enterprises) and has stopped issuing home loans,” Mr Llosa stated.

by Zoran Stanisljevic -

PAPER WRAP-UP: Cautious Resilience: The Impact of the Global Financial Crisis on Latin American & Caribbean Microfinance Institutions, by Sebastian von Stauffenberg

Sebastian von Stauffenberg, MicroRate’s author of the 52 page report, provides a framework for how the impact of the global financial crisis on Latin America and the Caribbean MFIs evolved during the last quarter of 2008. 

While MFIs initially reported that the global financial crisis had yet to affect the economy in the LAC region, the latest data suggests that lending in 2008 slowed more dramatically than MFIs admitted to in October and November 2008.  MFIs reduced the number of loans to higher risk clients, enforced stricter lending criteria and strengthened provisioning policies, with some MFIs reducing their average loan balance.

by Bharathi Ram -

PAPER WRAP-UP: Performance and Corporate Governance in Microfinance Institutions (MFIs) by Roy Mersland and R. Oystein Strom

Written by Roy Mersland of Agder University and R. Oystein Strom of Ostfold University College, this report analyzes the relationship between firm performance and corporate governance in Microfinance Institutions (MFIs). It studies the effects of ownership type, competition and regulation using a global data set on MFIs, collected from third-party rating agencies. The 36 page document was published by the University Library of Munich, Germany in June 2007 and the full text of the report is available here.

by the MicroCapital Team -

MICROCAPITAL STORY: How Far Will the Credit Crunch Affect the Microfinance Industry?

At the Worldwide Microfinance Forum, 1st-2nd October in Geneva, the investment managers and financial specialists of the industry met to discuss how they could improve their returns. The mood was upbeat, with a general agreement that this emerging sector has a growing and buoyant future ahead of it, despite the panic and events that were unfolding in the mainstream financial world as the conference took place.

by Greg Casey -

MICROCAPITAL STORY: Examination of Fitch Rating Standards for Microfinance Institutions

The credit ratings assigned to corporations affect the cost of borrowing money in international capital markets. Microfinance institutions (MFIs) are no exception. As more and more MFIs look to raise money from capital markets, their credit ratings will become increasingly important in their ability to provide financial services at a low cost. Fitch Ratings is a premier international ratings agency, which has evaluated a number of MFIs around the world. This story will examine how Fitch approaches ratings of microfinance.

by Greg Casey -

MICROCAPITAL STORY: ICICI Foundation, IFMR Trust and CRISIL to Develop Rating Standards for Microfinance Institutions (MFIs) in India

The ICICI Foundation, IFMR Trust, and CRISIL have entered into a deal to rate microfinance Institutions (MFIs). The organizations believe that rating evaluations will help MFIs develop into viable commercial entities with increased access to mainstream financial investors. In the agreement, CRISIL will rate the institutions and develop rating criteria to be used by others, IFMR will provide access to enterprises working in microfinance and the ICICI Foundation will assist in the dissemination of new ratings criteria.

by Greg Casey -

MICROCAPITAL STORY: Equity Bank, a Kenyan Microfinance Insitution, to Cross List on Uganda Securities Exchange after Recent Acquisition of Uganda Microfinance Ltd (UML)

Equity Bank, a leading provider of microfinance in Kenya, plans to cross-list on the Uganda Securities Exchange. This decision was spurred by the finalization of Equity Bank‘s acquisition of Uganda Microfinance Ltd (UML), which had been pending shareholder and regulator approval.

by Stephen Son -

MICROCAPITAL STORY: Commercial Bank Banco de Crédito del Perú to Lend $1.2m to Microfinance Institution Pro Mujer Peru

Banco de Crédito del Perú will make a USD 1.2 million-equivalent local-currency loan to microfinance institution (MFI) Pro Mujer Peru, according to a statement by the international non-profit Grameen Foundation, a major backer of the transaction.

by Sarah Knapp -

MICROCAPITAL STORY: responsAbility Global Microfinance Fund Invests $4.2m in EDPYME Confianza, EDPYME Alternativa, Hattha Kaksekar Ltd. and CREDIT

In its Microfinance Capital Markets Update, CGAP (Consultative Group to Assist the Poor) reports that responsAbility Global Microfinance Fund has recently made investments in microfinance institutions (MFIs) in Peru and Cambodia. Two Peruvian institutions EDPYME Confianza and EDPYME Alternativa received USD 1 million and USD 1.2 million respectively. Cambodian institutions Hattha Kaksekar Limited (HKL) and Cambodia Rural Economic Development Initiatives for Transformation (CREDIT) each received USD 1 million.