Buchanan Completes Microfinance Securitization Worth $60 Million

Buchanan Ingersoll & Rooney PC

January 29, 2007

New York, NY, January 29, 2007 — Buchanan Ingersoll & Rooney PC recently handled the MicroFinance Securities (MFS) XXEB deal, a securitization of cross-border loans to approximately 30 microfinance institutions. The transaction directed $60 million of international capital to low-income entrepreneurs in Latin America, Eastern Europe, Southeast Asia and Africa.

The financing, which the firm managed on behalf of Developing World Markets (DWM), a U.S. investment firm specializing in emerging markets, provided long-term financing for approximately 30 microfinance institutions in 15 countries. The issuer was a Luxembourg-based securitization entity, and the securities were issued in dollars and euros to investors, primarily institutional investors, in the United States and Europe.

The lead attorney on the deal for Buchanan was Howard Finkelstein. Finkelstein is a New York-based structured finance lawyer who handled the first-ever securitization of loans to microfinance institutions in 2004 (known as BOMSI-1), which was a $54 million transaction that spanned four continents and microfinance institutions in seven countries. He has since acted as counsel in other securitizations of microfinance-related obligations.

Other members of the cross-practice, multi-office team that put together this deal were John Warner, Penny Zacharias and Vivian Arias.

Finkelstein said, "While BOMSI-1 took more than two years to complete, the MFS transaction — which was even more complex and involved more institutional investors and microfinance companies — was closed in under a year. Essentially, we were able to complete the deal faster because many of the hurdles we faced in BOMSI-1 have since been overcome in the market.”

He continued, "The short timeframe for this deal also reflects the fact that the capital markets are taking this asset class more seriously, not only as an opportunity to put money to work for socially valuable purposes, but also as a means to invest in a profitable industry."
DWM engaged two primary servicers in this transaction — Symbiotics, a leading Switzerland-based provider of microfinance investment intermediation services and Global Partnership, a Seattle-based nonprofit organization that works to eliminate poverty through microfinancing programs. HSBC Bank USA, N.A., acted as Trustee and Paying Agent.

With the MFS transaction and other work done by Buchanan in this area, it has become one of the preeminent US-based law firms handling the securitization of microfinance-related assets.

The increased visibility and further development of microfinance into a bankable asset is partially due to the United Nations "Year of Microfinance" program. Credit can also be traced to the awarding of the 2006 Nobel Peace Prize to Muhammed Yunus, the founder of the microfinance movement.

About Finkelstein

Howard J. Finkelstein is a member of the Financial Services Group in the New York office of the law firm of Buchanan Ingersoll & Rooney PC. Howard's practice focuses on domestic and international structured finance transactions involving both traditional asset-backed transactions and emerging asset classes, such as non-performing credit card receivables, subprime auto loans, home alarm receivables and music royalties. He has represented a variety of clients, including issuers, institutional investors, conduits and their sponsors, underwriters and trustees, in areas such as finding the most appropriate structure for a transaction, drafting and negotiating program documents, issuing and reviewing opinions and dealing with rating agencies.

A magna cum laude graduate of the Yeshiva University, Benjamin N. Cardozo School of Law, Howard was notes and comments editor of the Cardozo Law Review. He received his masters degree in English from New York University in 1972, and his bachelor of arts degree from Yeshiva University in 1970.

About the Firm

Buchanan Ingersoll & Rooney PC has more than 550 attorneys and government relations professionals practicing throughout the United States, with offices in New York, Buffalo, Pittsburgh, Harrisburg, Philadelphia, Alexandria, Washington, D.C., Miami, Aventura, Tampa, Wilmington, Princeton, Newark, San Diego and Silicon Valley.