[Microcredit] Bangladesh hosts world's 1st microcredit securitisation

from Reuters

DHAKA, July 6 (Reuters) - Tiny loans for Bangladesh's rural poor became part of a groundbreaking financial product on Thursday through the world's first "microcredit" securitisation.

Anti-poverty non-governmental organisation BRAC said the deal, structured by a Bangladesh arm of Citigroup (C.N: Quote, Profile, Research) and a set of international partners, would provide it with $180 million of microcredit financing over six years for some of the poorest people in the world.

The deal creates a special trust to buy receivables -- the flow of loan and interest repayments -- from BRAC, and issues tradeable certificates to investors representing an interest in those receivables.

"As one of the largest financing efforts ever dedicated to advancing poverty focused microcredit, this is a landmark for the micro-finance industry," said Fazle Hasan Abed, Chairperson of BRAC.

BRAC said the transaction would also help in the development of Bangladesh's local capital markets, by marketing the first such securitization in the market and the first AAA rated local certificates issue in Bangladesh.

RSA Capital, a financial boutique based in Dhaka and Boston, is the lead arranger. Citibank N.A. Bangladesh and two development banks, FMO of the Netherlands and KfW Entwicklungsbank of Germany are co-arrangers.