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Friday, February 23, 2018

Microfinance firm issues P2-B bonds for lending

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By Bernie Cahiles-Magkilat

Microfinance NGO ASA Philippines is issuing P2 billion in bonds, in a bid to cater to the credit needs of some two million poor women entrepreneurs in the country. The issuance is the largest by an individual microfinance institution (MFI) so far, and will largely be used to fund ASA’s expansion and related projects through 2021.

BPI Capital is the lead arranger of the issuance, and its initial bondholders are BPI, Land Bank and PNB. The Credit Guarantee & Investment Facility (CGIF), a guarantee facility established by the Government of the Philippines together with its fellow ASEAN member countries, China, Japan, South Korea, and the Asian Development Bank, is partially guaranteeing the bonds, which will have a 5-year maturity period and an interest rate based on PDST-R2, plus a credit spread mutually agreed between the parties.

With already over a million Filipino women as clients, ASA Philippines is now seeking medium-term bonds for the services it offers its entrepreneur-borrowers.

In addition to traditional microloans for business, these services include financing for water and sanitation products, housing improvements, and solar energy systems for homes; as well as providing scholarships, health care benefits, and business development training.

“This issuance is a milestone not only for us, but for the entire microfinance industry, as it allows us to further grow and expand, and essentially contribute to the level of financial inclusion in the Philippines, laying a strong foundation for the development of the lives of the poor ‘Nanays’ across the country, who through their hard work use the funds they borrow to generate necessary income to improve the lives of their families,” said ASA Philippines Foundation CEO Kamrul Tarafder.

Tarafder said that women entrepreneurs can avail of collateral-free micro credit from ASA. All they have to do is sign up in any of its offices nationwide and open a bank account with them. The loanable amount should be divisible by 1,000 but they can give out loans as low as P1,000 although the approved maximum loans is P200,000. The interest rate is 15 percent for 6 months and 30 percent annually.

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