CDB obtains its 1st foreign funding line for US$6M from BIO

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22.10.2013
Citizens Development Business Finance PLC in a breakthrough transaction obtained its first foreign funding line from a multilateral agency for US$6M (Equivalent of Rs.800mn approximately) from BIO. The funding line is with a tenure of 4 years and has been fully hedged against any exchange rate fluctuations on a fixed interest rate.

This funding line has been offered to CDB by BIO based on a comprehensive initial field survey. Apart from the Financial fundamentals and Governance structures the key criteria considered by the BIO in selection of CDB includes CDB’s urban funding –rural lending business model leading to being a net lender to the rural economy, and CDB’s base of the pyramid focus lending framework contributing to inclusive economic growth.

The Currency Exchange Fund (TCX) based in Amsterdam hedged the currency risk of BIO, who decided to underwrite a local currency loan for CDB. BIO is a shareholder of the Fund since 2007. Jerome Pirouz, who partnered with BIO to structure the loan, commented: “We have been actively focused on Sri Lanka for the last few years to promote local currency investments via our shareholders. We are pleased to see that FDI denominated in rupees is on the rise, as our mandate is to facilitate the origination of local currency transactions and to hedge the currency risk of our shareholders and their clients alike”.

Financial Sector Director of BIO Carole Maman stated “As a Development Finance Institution, BIO is committed to promoting financial inclusion to micro, small, and medium sized entrepreneurs. We are very pleased to bring funding to a financial institution which is dedicated to offering a full range of financial services to rural and bottom of the pyramid clients in Sri Lanka. We appreciate the motivation and quality of CDB’s staff and management, and its commitment to uplifting the skills and professional experience of its full staff.”

Read the complete CDB press release here.


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