Arranging Banking Facilities
Grameen Capital India assists Microfinance Institutions in raising bank finance to fund expansion. This includes direct term loan financing as well as structure products
Debt Syndication
For top tear MFIs which have a large funding requirement, Grameen Capital India arranges debt syndication arrangement involving a lead bank and consortium arrangement ensuring a time bound and optimal solution of the MFI. We are one of the first to offer such a structured solution to Indian MFIs.
Securitization
Grameen Capital India offers structuring and arrangement capabilities to MFIs wanting to undertake securitization as a means of off balance shett funding. It offers advisory on protfolio structuring, in obtaining pool rating, preissue market and support for closure.
In addition, it is also able to arrange for credit enhancements required to raise investor acceptability for the securities.
Some possible debt financing structures
- Enhancement for conventional lending
- Assignment of microloan receivables (Portfolio sale)
- Securitization of microloan receivables
- Collateralized Debt Obligations (including CLOs, CBOs etc.)
- Bond issuances
Role of credit enhancement
Why credit enhancement
- Credit enhancement is needed to mitigate the inherent risks of servicing the portfolio and bring the security to an acceptable level as far as investors are concerned.
- Credit rating of the pool of assets determines the levels of additional credit enhancement required to bring the securities issued to a rating which would attract investors.
- However, portfolio sale transactions have been done without a rating of pool as well
Levels of credit enhancement
Considering the relative newness of microfinance as an attractive asset class in India, Banks require significant credit enhancement to provide additional comfort. Typical credit enhancement levels for portfolio sale transaction have been in the range of 15%-20%, seemingly higher than levels than those seen in conventional term loan facilities. However, it is expected that over time, these requirements will come down.
