Azerbaijani Bank Concludes Historical Microfinance Deal
Azerbaijan, Baku, 3 March / Trend corr I. Khalilova/ On 3 March, the Micro Finance Bank of Azerbaijan (MFBA) completed the second stage of its debut bond issue in the sum of $13.6mln, the bank reported on 3 March. The bonds were issued to be placed through the Luxemburg securitization intermediary for the international market's investors in order to attract a credit for four years and six months.
In the fist stage, MFBA issued bonds in the sum of $11.4mln over five years and their placement was completed on 29 August 2007. The funds will be spent on the allocation of credits to small sized businesses in Azerbaijan.
According to representatives of the bank, that was the second stage of the historical deal which includes three 'firsts':
- the first issue of bonds in international capital markets for MFBA;
- the first issue of bonds in international capital markets for an Azerbaijani issuer;
- the first issue of bonds in international capital markets for one micro finance creditor anywhere.
This deal is of epoch-making importance in the development of the capital markets in Azerbaijan and in the microfinance world as well. The first MFBA bond is the only Azerbaijani bond in international capital markets as the planned debuts of other issuers were postponed due to uncertain market terms.
"The successful second stage of the emission of the bond in such turbulent market terms once again shows the confidence of the capital market in the MFBA and in the microfinance sector," Andrew Pospilovski, the general manager of MFBA said.
The bonds were issued in Luxembourg as an MFBA Bond 1, a juridical mediator of special importance. The income from the bonds will be used as credit for MFBA to increase its portfolio. The American finance group with a social responsibility Developing World Markets (DWM) sponsored and organized the issue of the obligations. DWM offers its services to micro and small businesses to enter into international capital markets through emerging markets.
MFBA was established in 2002 to provide financial services to small businesses in Azerbaijan. The founders of the Bank are: European Bank for Reconstruction and Development, International Financial Corporation, Black Sea Trade and Development Bank, the German Development Bank KfW, the German consulting company LFS Financial Systems GmbH, and Access Microfinance Holding.
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