Deutsche Bank Launches Microfinance Credit ABS

Deutsche Bank launched and placed what it deemed the “first securitization of subordinated microfinance credits” last week. The firm said that these subordinated loans will help 21 microfinance institutions to make a contribution to the fight against poverty by distributing at least 120,000 very small loans to microbusinesses in 15 developing and emerging market countries. -ST_TD- “The new product shows how a business investment can be meaningfully linked with ethical and sustainable objectives,” said Hanns Michael Holz, Deutsche global head of sustainable development. The 60 million ($84.4 million) transaction, db Microfinance-Invest Nr. 1, was split into three tranches, including a senior tranche of 36 million taken up by private customers of Deutsche Bank and rated BBB’ by Fitch Ratings, a 20 mezzanine tranche million, taken by institutional investor, KfW, and a 4 million junior tranche taken by Deutsche Bank. The BBB’ rating has helped to attract certain institutional clients whose investment guidelines would otherwise have prohibited them to participate. The securitization targets high-net-worth individuals, foundations and church-affiliated institutions. These are investors who are increasingly attracted to the microfinance market, looking for investments which combine attractive returns with ethical values and sustainability. “The microfinance fund is able to bridge this gap and has therefore met with exceptional interest among our clients,” said Joachim Hager, head of Deutsche Bank’s private wealth management in Germany.