Standard Chartered and IFC partner to expand microfinance lending

Standard Chartered and the International Finance Corporation (IFC) have agreed to launch the first-ever issuance of notes backed by loans to microfinance institutions in Africa and Asia.

The securitisation, which is expected to close in early June, aims to provide investors in the emerging markets with access to microfinance as an asset class, and also generate additional revenue for expanded lending to the microfinance sector.

Under the terms of the agreement, the IFC will invest US$45mn in credit-linked notes to be issued by MILAA (Microfinance Institutional Loans for Asia and Africa), a special purpose vehicle established by Standard Chartered. The notes will be linked to a portfolio of loans that the bank has made to microfinance institutions in Sub-Saharan Africa and South Asia.

"This transaction will unlock more funding for microfinance. We believe improving access to finance is a key lever in reducing poverty and catalysing broader social and economic development. We hope other investors will be inspired by the IFC's support of this transaction," comments Peter Sands, Standard Chartered Group chief executive.

Under the aegis of the 2006 Clinton Global Initiative, Standard Chartered has committed to establishing a US$500mn microfinance facility over the course of five years. The bank supports 48 microfinance institutions across 15 countries in Africa and Asia and the proposed deal with the IFC will add to the US$285m in transactions either financed or arranged by Standard Chartered since 2005.