FINCA International Receives Innovative Multicurrency Loan to Fund Micro-Entrepreneurs in Nine Countries.

Deal Is Innovative Asset Class for Socially Responsible Investors;
Washington, DC, June 27, 2014 – Earlier this month, FINCA International received the third tranche in a series of ground-breaking transactions: a US$30 million loan made simultaneously in the local currencies of nine emerging and frontier markets. The multiple local currency loans will help fund financial inclusion services to low-income micro-entrepreneurs by global microfinance organization FINCA International, one of the world’s oldest and largest microfinance organizations with a 30-year successful track record and outreach in 22 countries.

“This transaction represents a milestone event in FINCA’s 30-year history”

Commenting on Local Currency Microfinance Note III, Rupert Scofield, President and CEO of FINCA, said: “This transaction represents a milestone event in FINCA’s 30-year history, greatly reducing the foreign currency exposure risk to FINCA’s participating Subsidiaries while, most importantly, reducing risks and costs to clients. Microfinance investment products like these Notes align perfectly with FINCA’s strategy for expanded outreach by partnering with socially responsible investors who share our poverty alleviation mission.”

Local Currency Microfinance Note III is the third and largest tranche in a series of notes funded by dozens of private and institutional socially responsible investors, building on the positive track record of Local Currency Microfinance Notes I and II, which were launched in 2011 and 2013 respectively. Note I, for US$10 million, matured in August 2013 and delivered solid financial returns, as well as the anticipated social benefit. During the same month, Note II, for $25.5 million, was successfully placed and continues to yield well even during volatility in emerging markets currencies.

These Local Currency Notes address the strong and unmet demand from the microfinance sector for funding in local currency while offering investors an opportunity to combine investment objectives with positive social impact. They also offer investors full exposure to a number of local currencies from emerging and frontier markets, providing portfolio diversification. The Notes provide unusual potential security against the devaluation of emerging market currencies through local currency risk hedging.

An international Europe-based commercial bank structured and placed all three Notes as part of its mandate to provide innovative solutions for clients like FINCA who are addressing key social challenges while generating a financial return. The portfolio includes nine senior unsecured loans in local currency made today to Subsidiaries of FINCA International in Azerbaijan, Georgia, Kyrgyzstan, Jordan, Mexico, Guatemala, Nicaragua, Tanzania and Uganda. While removing the foreign exchange risk inherent in typical hard currency loans for FINCA’s micro-entrepreneur clients in those countries, the local currency facility will allow these nine FINCA Subsidiaries to disburse an estimated 100,000 additional micro-loans over a two-year period to some of the world’s lowest-income entrepreneurs.