Washington, D.C, August 2, 2004.—The
International Finance Corporation, the private sector arm of the World
Bank Group, provided a 34 percent partial credit guarantee to the bond
issuance program of 500 million pesos (approximately$43.4 million) offered
by Financiera Compartamos, a leading microfinance institution in Mexico.
Compartamos has successfully issued the first tranche of 190 million
pesos (about $16.5 million). With IFC’s credit enhancement of 64.6
million pesos, the five-year bonds have received an investment grade local
rating of AA by Standard & Poor’s, and Fitch Ratings.
IFC’s partial credit guarantee enabled Compartamos to access long-term
local currency financing from institutional investors, a deeper and more
credit sensitive investor base than the private investors that have subscribed
to Compartamos’s previous bond issues. The proceeds of the transaction
will be used to fund the entrepreneurial efforts of thousands of Compartamos
clients primarily in rural communities throughout Mexico. This is
an important component of Compartamos’s growth plans, which include an
expansion of its customer base to 1 million clients by 2008.
Compartamos is a financial institution that provides microloans with an
average size of $300, and 94 percent of its clients are women. The
company has a growing network of 94 branches in 22 states of Mexico and
more than 250,000 borrowers. Loans provide working capital for Compartamos
clients to build small businesses. In providing village banking loans to
groups of 15 to 50 women, Compartamos has become a role model for strong
financial performance and established a highly successful lending methodology
in microfinance.
Lead managed by Citigroup/Banamex, the issue was structured to attract
Mexican institutional investors including mutual funds, pension funds,
and insurance companies. The placement of bonds for Compartamos was
arranged by Acciones y Valores de Mexico (Accival), the brokerage arm of
Banamex. The wide distribution of the securities, long tenor, and
tight pricing relative to comparable benchmarks in the Mexican market,
attested to the successful placement of the issue.
This is the second time IFC has supported this company. In 2001, IFC provided
financing and equity to help Compartamos develop from a nongovernmental
organization to a commercially viable entity, thus facilitating access
to market-based funding and expanding services. As the largest international
provider of funding for microfinance, IFC is deeply committed to assisting
successful companies like Compartamos achieve their growth plans.
Nina Shapiro, IFC’s Treasurer and Vice President of Finance, said, “This
instrument will provide an alternative for local institutional investors
to diversify their holdings in terms of both asset class and underlying
credit. IFC has been actively offering local currency partial credit guarantees
in the region. This innovative product not only helps attract local financing,
but also helps to develop domestic capital markets."
This is IFC’s second partial guarantee in Mexico. Last year IFC offered
a peso-denominated partial credit guarantee of up to $3 million equivalent
to finance a water conservation project in Tlalnepantla, Mexico. IFC offers
partial credit guarantees for transactions globally in the emerging markets.
This has proved to be an effective product for enabling new issuers
to access the domestic capital market. Benefits for such issuers
include a diversification of their existing investor base, as well as longer-term
local currency financing that what is often available in the local bank
market.
Carlos Danel, co-CEO of Compartamos noted, “ This is a milestone transaction
for Compartamos, as it opens the way for a broader and deeper investor
base for future growth of the company. We are excited that institutional
investors in Mexico are willing to invest in microfinance and thereby continue
to build a stronger and more inclusive financial sector in the country.”
Carlos Labarthe, the company’s co-CEO added,“ We believe it’s also a
milestone for the microfinance industry worldwide. Not only is investing
in microfinance good business, but it’s also a way of creating enormous
social wealth in our communities.”
Jyrki Koskelo, IFC’s director for Global Financial Markets, noted, “This
is a landmark investment for IFC. We are committed to support the growth
of microfinance institutions and develop innovative structures to enable
local currency financing for our investee clients.”
Atul Mehta, IFC’s director for Latin America and Caribbean, said, “IFC
has a long-term relationship with Compartamos, and this financing will
enable the company to expand its microlending to new geographical areas
and reach a broader client base currently not served by the commercial
banks.”
About IFC
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people's lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FY03, IFC has committed more than $37
billion of its own funds and arranged $22 billion in syndications for 2,990
companies in 140 developing countries. IFC's worldwide committed portfolio
as of FY03 was $16.8 billion for its own account and $6.6 billion held
for participants in loan syndications.