Morgan Stanley's work on a US$110.2mn collateralized loan obligation for BlueOrchard Finance S.A. took "Sustainable Deal of the Year" at the FT Sustainable Banking Awards Ceremony on June 3.

The awards recognize banks and other financial institutions that have shown leadership and innovation in integrating social, environmental and corporate governance considerations into their operations. The winners were picked from the 182 entries from 129 institutions across 54 countries.

The Financial Times and International Finance Corporation announced the winners of the 2008 awards at a gala dinner at the Dorchester in London. Boris Johnson, the newly elected Mayor of London, delivered the keynote.

The Firm acted as arranger and placement agent of the transaction, which consisted of two tranches of rated notes — AA and BBB from Standard & Poor's — and two tranches of unrated notes issued in Sterling, Euros and U.S. dollars, in April 2007. The offering was the first of its kind to be rated by a major ratings agency. The S&P rating enabled the transaction to attract a broad institutional investor base in support of the microfinance industry.

"BlueOrchard Loans for Development (BOLD) 2007 is a groundbreaking microfinance transaction," the FT reported in announcing the award. "It provides capital for microfinance institutions (MFIs) to make loans to approximately 70,000 low-income entrepreneurs while adding to the international momentum of this rapidly growing asset class."

BlueOrchard used the proceeds from the sale to fund loans to 20 MFIs in 11 developing countries in Latin America, Eastern Europe, Africa and Asia. "Landmark currency swaps allowed nearly 60 per cent of the loans in BOLD 2007 to be in local currencies, including Mongolian tugriks and Peruvian new soles," the editors noted.

As BlueOrchard noted, denominating loans in local currency assisted the MFIs with their risk management and micro-entrepreneurs with their ability to match the currency of their liabilities and revenues. The currencies were swapped back to the currencies of the notes, in order to protect investors, with Morgan Stanley providing the swap.