Tuesday, July 3, 2007

[Latest Global Dollar Liquidity Measure: +14.6% annual growth rate; latest Endogenous Liquidity Index: -4.0%]

A few months ago I read about Kiva's website, which enables pretty much anybody to lend to an entrepreneur in the developing world. It turns out that microfinance, according to this excellent Financial Times article by Joanna Chung (*), is "quickly becoming a popular corner of the capital markets as more investment banks and investors see the business of providing small loans to low-income individuals in poor countries as potentially profitable as well as a powerful tool for development".

To my great surprise, Morgan Stanley (together with Swiss company Blue Orchard) has just issued the first microfinance Collateralized Debt Obligation in a deal worth more than $100 million. According to Ms. Chung, Standard & Poor's "expects to rate an additional two to three microfinance CDO transactions and around 25 MFIs in the coming months, with CDO issuance levels potentially reaching $500m by the end of 2007".

Absolutely fantastic!

(*) Joanna Chung. "Calls for ratings framework amid surge in microfinance", Financial Times.

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