Symbiotics closes Microfinance collateralized debt obligation (CDO) transaction

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Oct 2006
Geneva. Switzerland , October, 18 2006 - On 18th October 2006, Symbiotics S.A. concluded the third and final closing of “Microfinance Loan Obligations SA – Compartment Opportunity Eastern Europe 2005-1”. This deal raises funding through the capital markets for microfinance institutions (MFIs) belonging to the Opportunity International Network in the Balkans and Russia. The financing, with a total volume of EUR 26 million, is an asset-backed (Collateralized Debt Obligation) transaction structured under Luxembourg securitization law.

Notably, the third closing includes a bespoke lending structure for a Macedonian microfinance institution, which has previously been unable to tap international capital markets due to regulatory restrictions. In this deal, the lending to such microfinance institution is structured through a deposit with a Macedonian bank, which acts as credit derivative referencing a loan which is being provided to the microfinance institution domestically.

The deal is a further step of the integration of microfinance institutions to capital markets. Microfinance is considered as contributing to the development of economies by providing access to credit for micro-entrepreneurs and thereby generating economic activities and income. Microfinance institutions are often growing at double-digit rates. The financing arranged through this deal will ultimately support approximately 10,000 micro- and small entrepreneurs through commercial credits.

Symbiotics S.A. and the European Investment Fund acted as co-arranger of the transaction and were advised by Luxembourg law firm Arendt & Medernach. The deal is facilitated by a legal structure which allows for simple replication of the transaction through the segregated compartment technology available under Luxembourg securitization law. Microfinance Loan Obligations SA has been arranged to function as a platform for such type of asset-backed financing. The platform is meant to offer microfinance institutions a direct access to the capital market at relatively low intermediation costs, and therefore to complement their existing refinancing channels.

For more information:

Roland Dominicé, Investor Relationship Symbiotics SA

Philipp Jung, Structured Finance, Symbiotics SA

About Symbiotics SA Information, Consulting and Services    (www.symbiotics.ch)

Symbiotics is a professional services company offering innovative investment intermediation services to microfinance investors and fund managers.  The team is composed of eleven professionals with over two hundred cumulated microfinance transactions closed and five years of experience in microfinance monitoring systems. Symbiotics offers sophisticated investment advisory services for microfinance investment funds, including ongoing investment monitoring services, and acts as transaction arranger.

About Opportunity International   (www.opportunity.org)

Opportunity International is committed to solving global poverty. Serving more than 760,000 poor entrepreneurs in 27 developing countries, Opportunity International provides small business loans, training in basic business practices, counseling in personal development and other financial services to women and men living in chronic poverty.  Small loans – sometimes as little as $50 – allow poor entrepreneurs to start or expand a business, develop a steady income, provide for their families and create jobs for their neighbors.

About European Investment Fund    (www.eif.org)

EIF is a European Union financial institution that is specialised in providing guarantees and venture capital for SMEs. It is an AAA/Aaa/AAA rated institution with a Multilateral Development Bank status. Accordingly, assets guaranteed by EIF are 20% risk-weighted for solvency purposes under the current Basel accord and will enjoy a 0% risk weighting under the proposed Basel II.  EIF provides a wide range of guarantee products, particularly through the wrap of securities backed by SME-related financing, an area in which EIF has achieved a unique position as credit enhancement provider in Europe. EIF’s total guarantee portfolio now amounts to about EUR 6.5bn.



Source : Symbiotics
 

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