BLUEORCHARD MICROFINANCE SECURITIES 1 (BOMS 1)
Product summary
The first of its kind, BOMS 1 had two closings - in 2004 and 2005 - that provided seven-year loans at fixed rates to outstanding microfinance institutions (MFIs) in emerging markets.
Our BOMS 1 product offersed investors a unique opportunity to diversify their portfolio and acquire notes backed by MFI debt obligations, whilst at the same time helping to alleviate poverty and supporting the sustainable development of emerging economies.
Background
As they grow, MFIs mature into larger businesses that require a different type of funding. Typically, market-leading MFIs require large volumes of funding at longer maturities to complement their equity and savings base. Such longer-term funding provides them with stable and diversified sources of cash to fuel the growth of their portfolios and enables them to diversify their credit product range.
To address this need, BlueOrchard Finance pioneered the world's first international structured microfinance product (BOMS 1) and created, with two partners, a Special Purpose Vehicle registered in Delaware, USA, with a view to offering accessible long-term funding to leading MFIs and attractive returns for investors.
This CDO closed in two tranches (2004 and 2005) for a total of USD 87 million and financed 14 outstanding MFI in nine emerging economies with attractive 7-year loans at fixed rates. US investors included high net worth individuals, foundations, socially responsible investors, commercial banks and pension funds.
Key product features
- The world's first international structured microfinance product;
- Solid historical returns: no defauls to date;
- Attractive historical risk profile:
- Lower volatility than emerging market equities and bonds;
- Low correlation with other asset classes;
- Insulation from macro-economic shocks;
Social impact
- Facilitating the growth of MFIs; helping them support larger numbers of micro-entrepreneurs;
- Contribution to growth in emerging economies;
- Supporting the alleviation of poverty, leading to better housing, nutrition, health and education;
- Empowering marginalized groups, such as women, rural entrepreneurs and food producers.
Key figures as of September 2009
| Total assets | USD 81.1 million |
| Microfinance portfolio | USD 74 million |
| Nr. of MFIs with outstanding loans | 13 |
Regional concentration as % of the portfolio at inception
Fund description & disclaimer
The partners
Sponsors and Co-Structuring Agents: Developing World Markets Microfinance, LLC and BlueOrchard Finance S.A.
Guarantor (Senior Lender): Overseas Private Investment Corporation (OPIC)
Placement Agent: JP Morgan Securities
Paying Agent: JP Morgan Chase
Collateral Agent: JP Morgan Chase
Trustee: Christiana Bank
Servicer: BlueOrchard Finance USA, Inc.
Managing Member: BlueOrchard Finance USA, Inc.
Advisory Member: Developing World Markets Microfinance, LLC
Disclaimer
BlueOrchard Securities I is a Limited Liability Company (LLC) registered in Delaware, USA. The information contained herein does not constitute an offer or invitation to purchase units of the BlueOrchard Securities I. The BlueOrchard Securities I is not authorised for public sale in Switzerland and must therefore not be publicly marketed in Switzerland. The Manager, BlueOrchard, is not liable for any damages or losses of any kind that have arised from the use of the information contained herein.
The performance data quoted above represents past performance, and is no guarantee of future results. Your returns and the principal value of your investment will fluctuate so that your shares or accumulation units, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted above.
