High finance reaches Bangladesh’s poor
Friday, July 7, 2006
Excerpt: Tiny loans for Bangladesh’s rural poor became part of a groundbreaking financial product on Thursday through one of the world’s first “microcredit” securitisations.
BRAC, a Bangladeshi anti-poverty non-governmental organisation (NGO), said the securitisation would provide it with $180 million of financing over six years, helping it to make small loans to some of the poorest people in the world.
BRAC’s deal is the latest example of the microcredit industry, which lends to people too poor to get bank loans, adopting sophisticated financing techniques. Earlier this year BlueOrchard Finance SA securitised $106 million of unsecured loans to microfinance institutions.
The deal is structured by a Bangladesh arm of Citigroup and a set of international partners.