Not for distribution or publication in the United States
Landmark Rated Microfinance CLO
These materials are not an offer of securities for sale in the United States. The securities to which these materials relate have not been registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. There will be no public offering of the securities in the United States.
BlueOrchard Finance S.A. ("BlueOrchard") and Morgan Stanley announced today the successful pricing of BlueOrchard Loans for Development 2007-1 (“BOLD 2”). BOLD 2 is a $110.2 mm equivalent CLO of unsecured loans to 20 Microfinance Institutions or their affiliates (“MFIs”) based in 12 different developing countries (Azerbaijan, Bosnia, Cambodia, Colombia, Georgia, Kenya, Mongolia, Montenegro, Nicaragua, Peru, Russia and Serbia).
The transaction has been rated by Standard & Poor’s. This is the first time an international capital markets microfinance transaction has been rated by a major rating agency, and thus represents a major milestone for the microfinance industry.
BOLD 2 follows a similar but unrated transaction brought to market by BlueOrchard and Morgan Stanley in 2006, which was the first ever to be arranged by an investment bank.
Like its predecessor, BOLD 2 funds unsecured loans to a diverse portfolio of microfinance institutions globally. These funds will be on-lent by the MFIs to approximately 70,000 low-income people in the developing world for entrepreneurial activities. The loans to the MFIs will be provided in a number of local currencies including Mongolian Tugrik, Colombian Peso, Peruvian Sol and Russian Rouble, as well as USD and EUR. The provision of local currency assists MFIs with their risk management and micro-entrepreneurs with their ability to match the currency of their liabilities and revenues. In order to protect investors, all the currencies will be swapped back to the currencies of the notes by Morgan Stanley.
The $110 mm equivalent CLO consists of two tranches of rated notes and two tranches of unrated notes, issued in GBP, EUR and USD. All notes have an expected maturity of 5 years. The notes were issued and priced as below. The weighted average price of the Notes, excluding the Class X, equated to 137 bps over USD Libor.
Over the past 25 years, microfinance has become an effective way to promote economic and social development by aiming to build inclusive commercial services for the poor. BOLD 2 offers the widest possible range of institutional investors the opportunity to invest in an industry which has attractive financial returns as well as developmental benefits.
The 21 investors in BOLD 2 include banks, insurance companies, money managers, mutual and hedge funds and corporate accounts. 86% of the issue was placed in Europe, and the balance in the U.S.
Jack Lowe, CEO BlueOrchard Finance S.A., said, “This transaction marks another important step forward for the microfinance world. BOLD 2 having secured a rating from a mainstream rating agency is a huge plus for the industry, and has brought many mainstream institutional investors into the CLO, adding credibility to the microfinance industry as a whole. In doing so this has exposed all investors to this growing asset class. Including more local currency loans than ever before also gives the industry and investors more complete coverage of worldwide microfinance markets. Blue Orchard is pleased to have taken a lead in bringing these innovations to the market and to have provided continuing medium to long term money to outstanding MFIs.”
Ellen Brunsberg, Managing Director and Head of the European Securitised Products Group at Morgan Stanley, said, “Securing a rating for this transaction is another significant development for microfinance, building on our demonstration with BOLD 1 last year that the international capital markets can help fund microfinance on a commercial basis and in scale. The rating enabled a far greater range of institutions to participate than in 2006, and this interest can only be good for the future expansion of microfinance.”
Note to Editors:
BlueOrchard is a Swiss company, based in Geneva, specialised in the management of microfinance investment funds. It assists banks and financial intermediaries to access investment opportunities in the microfinance industry by offering a comprehensive range of products and services.
About Morgan Stanley
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management, wealth management and credit services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 31 countries. For further information about Morgan Stanley, please visit www.morganstanley.com.
About some of the loan clients
Cambodia: At 40 years old, Pin Phi, a mother of four, first joined a group of five people in order to obtain a loan from a Cambodian MFI ten years ago. Starting with her first loan of 30,000 KHR ($7), she bought a few sacks of fertilizer for rice and palm tree sugar cultivation and bamboo for making ladders to climb the palm trees. After 11 cycles of loans, she now owns two motorbikes, two cows, two pigs and one more plot of land. She also supports one of her sons to attend a university in Phnom Penh.
Peru: Mrs. Pachamango and her husband have been selling fruits and vegetables for several years. They started as peddlers selling their wares from a bicycle and have moved to a market stall. Cmac Trujillo has been supporting the businesses in this market for nearly ten years; this includes a loan to the market's business association to make improvements to the market. Mrs. Pachamango's first loan was for 200 soles, or about $60; the most recent loan she was offered was for an amount of 10,000 soles, or about $2,860, to be used for working capital purposes. Thanks to these loans, the business has expanded to four stands in the market and three bicycles for itinerant trading, and hired five additional employees.
Nicaragua: Cony Alquiloz, aged 45, sells shoes in Mercado Central, one of the big markets in the heart of Managua. She owns three stalls, which offer a wide range of footwear, from children's sneakers to fashionable ladies' shoes. She has been working for the last two years with Findesa, who gave her a credit line of $1,500 and an ordinary individual loan of $3,000 dollars over three years. She used these loans to purchase shoes, mainly from Panama, and to acquire two new stalls next to her first shop. She now has five employees, whom she pays a monthly salary of 1,000 Cordobas. Her business, which keeps her busy from 6 a.m. to 6 p.m. daily, allows her to support her son's education.
For more information, please contact:
Morgan Stanley, Carlos Melville, +44.207.425.8955, firstname.lastname@example.org
BlueOrchard Finance S.A., Jack J. Lowe, +41.22.339.0890, email@example.com
Camilo M. Mendez, +41.22.339.0896, firstname.lastname@example.org