The board of directors of the Overseas Private Investment Corporation (Opic) has approved a US$54mn loan for a lending facility that will use money raised from US capital markets to lend to microfinance institutions (MFIs) in seven developing countries worldwide. The facility will be the first global MFI fund to access US capital markets for such a purpose.

Opic will provide the loan to BlueOrchard Microfinance Securities I; Developing World Markets Inc, of Darien, CT, and BlueOrchard Financewill be the structuring partners. The Opic loan, plus the proceeds from the issuance of subordinated notes on the US capital markets and sponsor equity will be used to lend to MFIs in Latin America, Eastern Europe and Southeast Asia. The MFIs will use the funds to expand their microfinance business, and make investments in staff, branches and other infrastructure. Project sponsors predict that 63,000 new microenterpreneurs will receive financing due to the facility.

The Grameen Foundation USA is also a sponsor of the project.

Opic president and CEO Peter Watson says establishment of the facility reflected MFIs “recent efforts to diversify their funding bases by turning increasingly to commercial funding, in particular to enhance balance sheet sustainability and long-term stability.

“Microfinance institutions are becoming increasingly savvy financially, and as such have matured into a transparent and regulated industry with a solid legal, financial and political framework,” Watson comments. “This facility will support that process, and at the same time provide much-needed capital to small entrepreneurs who have demonstrated their ability to spur local economic growth. Opic is pleased to support such an innovative project.”