Loss Given Default Estimation using Transition Matrix (TM-LGD): A Case Study
IFMR Capital recently concluded a Rs. 339 million multi-originator microloan securitisation with three Indian microfinance institutions (MFIs). IFMR Capital Mosec II, the SPV, issued two tranches of securities backed by 36,972 microloans that were originated by Sahayata Fintrade, Satin Creditcare, and Asirvad Microfinance. One of India’s largest mutual funds subscribed to the senior P1+(so) rated tranche and IFMR Capital invested in the subordinated piece.
Click here for the official Press Release.
In the current financial year, IFMR Capital aims to structure many more such transactions that build on its track record of bringing efficient and reliable access to debt capital markets for high quality institutions impacting low-income households.
Watch this space for an inside scoop about the people behind the transaction and their experiences from it!
This is outstanding work indeed. IFMR Capital is making it possible for smaller and relatively less known microfinance institutions to access mainstream capital markets and obtain an adeequate amount of low cost funding. This will also exert pressure on them to maintain a high quality of orgination. My congratulations.
This is a meaningful initiative for providing access to debt markets for MFIs. Many smaller MFIs stand to benefit. How do you propose to communicate with the smaller MFIs the mechanics of securitisation and enable their participation?
Thanks for your comments Mr. Srinivasan. We are keen to conduct workshops with small MFIs to explain the benefits and mechanics of securitisation. We have done two of these in the past, jointly with CRISIL. See http://ifmrblog.com/2010/05/05/day-two-at-the-ifm…. Please do let us know if there are other ways to reach out to potential MFI partners,
I have seen lot of funding going to below povertyline people, but still I feel Microfinance has a lot to do with funding to Agri-workers, farmers .
Farmers are mostly dependend on Govt funding in the name of crop loans which is given only once for a season that is only once in 6months, I feel there are lot of phases in the farming cycle like funding on Commodities of farmers till they get a Good price, funding for Farm inputs like Fertilizers through Agri-input dealers, Commission agent.
I feel there is a lot of scope for funding at Farming levels for MFIs
Congratulations to IFMR Capital team on the second transaction of this nature. Structures like these are opening new avenues for small but high quality MFIs. This would bring equal focus on robustness of origination and need for growth.
Mr. Patel, thanks for your post. See this post http://ifmrblog.com/2010/05/19/taking-agriculture… and the comments that follow for some of our ideas on farmer financing.