Global Commercial Microfinance Consortium I

The Global Commercial Microfinance Consortium was a pioneering investment vehicle launched in 2005 that channeled $80.6 million in capital from institutional investors, individuals, foundations and development agencies to 41 microfinance institutions located in 24 countries. One of the earliest microfinance collateralized debt obligations (CDOs), it catered to a variety of investor risk-appetites and represented a milestone in the demonstration of microfinance as an asset class; 13 institutional investors participated in the fund. The Consortium was also historic in that it was one of the first investment vehicles to provide flexible products to microfinance institutions in local currency, at fixed or floating rates.

Financial description

From 2005-2012, the Consortium provided $89 million in senior debt funding to 41 MFIs in 24 countries. The Consortium utilized FX hedges, Letters of Credit and Guarantees from Deutsche Bank to deliver local currency solutions to many of its borrowers.
Despite maturing in 2010, in the midst of a global financial crisis, the Consortium provided returns to all investors classes ranging from 3.5%-7.0%; no principal loss occurred for any investors. A full profile of the financial structure and actual returns is detailed in the overview attached above.
Financing was made available through a private placement to a consortium of investors including, institutional investors, foundations, private individual social investors and development agencies. DFID provided a first loss equity donation and USAID provided a guarantee for the senior notes, equal to 24% of the Note’s value.