OPIC Board Approves $120M of additional guarantee for MFX Solutions
Washington DC, March 16, 2017 – MFX Solutions Inc. announced today that the Board of the Overseas Private Investment Corporation (OPIC) has approved a $120 million increase of its guarantee to MFX. MFX provides currency hedging services to impact lenders in developing countries to help lower the risks of development lending and make it more sustainable.
This guarantee increase comes on top of an existing $48 million guarantee from OPIC and a parallel $20 million guarantee from the Dutch development bank FMO, totaling $168 million. This increase will allow MFX to expand its hedging portfolio with investors in micro, small, and medium enterprise (SME) finance, clean energy, affordable housing, and sustainable agriculture from $600 million to almost $2 billion in the coming years. To date, loans hedged by MFX have helped support over 1 million entrepreneurs in over 45 currencies worldwide.
The currency swaps and forward contracts that MFX offers offset the risk impact investors take when they lend in the local currency of their borrowers rather than in dollars or euros. Allowing development loans to be made in local currency helps assure that borrowers are not wiped out when their currency depreciates.
Thanks to OPIC’s guarantee, MFX can offer terms that make hedging more accessible for impact lenders, including greatly reduced collateral requirements, longer tenors and contracts in exotic currencies not available from commercial providers. MFX also has a partnership with The Currency Exchange Fund (TCX), a Dutch wholesale provider of illiquid currency risk coverage.
“We credit OPIC for seeing early on the impact sector’s need for its own hedging facility and then for sticking with MFX for the long-term. With this new guarantee, we will be able to make local currency lending available to a much broader range of impact clients—including OPIC’s own borrowers—and scale the transition to a local currency lending model,” said Brian Cox, MFX’s CEO.
“OPIC’s new commitment to MFX is a major milestone. When Omidyar Network made its initial investment in MFX, it was based on the premise that making currency hedging easier would spark a positive shift in the way impact lending is done. The continued growth of MFX and demand for its products confirms that premise,” said Eliza Erikson, venture partner at Omidyar Network and chair of the board at MFX.
MFX is a specialized hedging facility formed in 2009 by major microfinance lenders, investors, raters, networks, and foundations. MFX operates globally, with headquarters in Washington, D.C., and an office in Nairobi, Kenya.
Patricia Cadilla, +1 (202) 652-4748, email@example.com