Microfinance Bond Issue

From Reuters Africa:

"Investment bank Morgan Stanley and BlueOrchard Finance are launching a $108 million bond backed by loans to microfinance institutions that is the first to be rated by a major rating agency.

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"The assignment of a rating by Standard & Poor's to this deal will increase the number of investors who are able to buy it, possibly boosting the amount of cash that is available for microfinance purposes.

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"S&P said on Thursday it expected to rate another two or three transactions in the months ahead, with issuance possibly reaching $500 million by the end of 2007. Ultimately, issuance volumes could grow to $1 billion-$3 billion a year over the next decade, it said.

"The deal, dubbed BOLD 2, will fund loans to 21 microfinance institutions in 13 countries that will then make loans to around 70,000 low-income people to fund businesses. The countries are Azerbaijan, Bosnia, Cambodia, Colombia, Georgia, Ghana, Kenya, Mongolia, Montenegro, Nicaragua, Peru, Russia and Serbia.

"These loans will be offered in local currencies such as the Ghanaian cedi or the Mongolian tugrik, meaning borrowers do not face exchange-rate risk, as well as euros and dollars.

"Standard & Poor's will rate two classes of notes, a $42 million tranche at AA and a $16 million piece at BBB, with the remaining $50 million being unrated. Notes will be available in dollars, euros and sterling."