MFBA completes $25 Million Bond Issue

The second closing on MFBA’s debut bond issue was completed today. Under the second closing additional bonds providing senior debt to Micro Finance Bank of Azerbaijan in the amount of USD 13.6 million and a term of four-and-a-half years were issued to international capital markets investors through a Luxembourg securitization vehicle. This was in addition to the USD 11.4 million in bonds with a term of five years that was issued under the first closing completed on 29 August 2007, for a total of USD 25 million. The funding will be used by MFBA for on-lending to Azeri small business. This was the second closing on a historic land-mark transaction that was a triple “first”:
• the first international capital markets bond issue for MFBA;
• the first international capital markets bond issue for an Azeri issuer;
• the first international capital markets bond issue for a single microfinance lender anywhere.

The transaction marks a historic step in the development of capital markets both for Azerbaijan and the world of microfinance. The MFBA Bond I remains the only Azeri Bond on international capital markets as planned debuts by other issuers have been postponed due to the uncertain market conditions.

MFBA General Manager, Dr Andrew Pospielovsky said: "The successful second closing of this bond, in such turbulent market conditions, is another demonstration of capital market confidence in MFBA and the microfinance sector. This is another historic step in the development of microfinance as an Asset Class for investors. MFBA is proud to be making this small contribution to the development of microfinance together with DWM.”

The bonds were issued in Luxembourg by MFBA Bond I, a special-purpose legal vehicle. The proceeds of the Bond will be used to provide a senior loan to MFBA for financing its portfolio growth. The bond issue was sponsored and arranged by Developing World Markets (DWM), a US-based socially responsible financial group. DWM assists micro and small businesses throughout the emerging markets to enter the international capital markets. More information can be found on its website, www.dwmarkets.com.