Bangkok--20 Nov--Standard & Poor's
Microfinance institutions (MFI) have made significant strides in recent years in generating interest among mainstream investors. And while current market conditions will likely dampen the rate of growth and present serious challenges to the sector, it still appears to be on the path to becoming an emerging market asset class, according to a new Standard & Poor's Ratings Services special report. The report, "Microfinance Institutions: Changing Strategies For Changing Times," is part of a special CreditWeek issue (Nov. 19 edition) based on a series of articles on the microfinance industry.
To achieve this potential, in our opinion, the industry must continue to widen and mobilize the investor base, especially given the current market turmoil, while expanding the universe of effective and sustainable MFIs. "As a key first step to meeting this challenge, industry constituents have recognized the need to create globally accepted metrics," noted Andrea Esposito, a managing director at Standard & Poor's. "These metrics could have the potential to provide investors with transparent and globally acceptable standards for credit analysis and performance evaluations, as well as enable comparisons of microfinance investment opportunities within and across borders and with other types of investment opportunities. In our view, the current financial crisis has made the need for transparency and industry benchmarks even more relevant to the microfinance sector as it faces new challenges."
The articles in the special report include:
-- "Microfinance Institutions: Changing Strategies For Changing Times";
-- "A Global Ratings Methodology For Microfinance Institutions May Help The Industry";
-- "Guest Opinion: For India's Microfinance Institutions, Governance Is The Key To Sustained And Scalable Growth";
-- "Market Perspective: Microfinance Institutions Reevaluate Their Growth Objectives Amid Global Turbulence"; and
-- "Methodology And Assumptions: Standard & Poor's Approach To Rating Microfinance Securitizations."
In our lead article, and the thread that runs through the special report, we discuss how the microfinance sector is reevaluating its strategies and growth objectives in response to recent economic and financial market turbulence.
In our market perspective article, Standard & Poor's spoke with a cross-section of microfinance market participants for their insights on topics such as risk management, inflation, competition, and regulation. Their responses, along with ours, tell a story of how a sector can at once mature and reshape itself for the future.
In our microfinance structured finance criteria article, Standard & Poor's goal is to make our methodology transparent and available to the public, in response to the increased interest from the market (issuers and investors) and the pipeline of potential transactions.
Our guest opinion, written by analysts at CRISIL Ltd., Standard & Poor's Mumbai-based affiliate, says that governance-related issues constitute the biggest challenge to the sustainability of India's microfinance industry.
For more articles and information on microfinance, please see Standard & Poor's dedicated Web site, at http://www.microfinance.standardandpoors.com.
The reports are available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected]. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request copies of these reports by contacting the media representative provided.
Media Contacts:
David Wargin, New York (1) 212-438-1579, [email protected]
Adam Tempkin, New York (1) 212-438-7530, [email protected]
Analyst Contacts:
Andrea M Esposito, New York (1) 212-438-6520
Gary Kochubka, New York (1) 212-438-2514
Nelun Wijeyeratne, Microfinance Project Manager (1) 212 438-3615