Far Below Subprime, the Credit News Is Good

Here are quick profiles of a few MFIs that are attracting attention from the investment community.

On June 1, 2006, Compartamos was authorized by the Mexican government to operate as a bank, Banco Compartamos SA, Institución de Banca Múltiple. It sees itself as a social company with its role as one of generating development opportunities among the poorer population. Its credit quality has been rated by Standard & Poor's and by Fitch, and this has allowed Compartamos to enter the market by issuing bonds.

It made news earlier this year with its highly successful, oversubscribed IPO. Compartamos was the first microfinance company in the world to issue debt on the stock market with its own collateral and to become a financial intermediate between large investors and low- income groups.

Equity Bank, an MFI and bank based in Nairobi, Kenya, is a young and fast-growing MFI. Its mission is to "mobilize resources to maximize value and economically empower the microfinance clients and other stakeholders by offering customer-focused quality financial services and solutions."

SKS Microfinance (Swayam Krishi Sangam), based in Hyderabad, India, is one of the fastest-growing microfinance organizations in the world. Founded in 1998, it provided over $36 million in loans to close to 275,000 women clients in one of the poorest parts of India, the drought-prone Deccan region. In the last year alone, SKS Microfinance grew by nearly 300%, with a 99% on-time repayment rate.

Interestingly, Sequoia Capital, which backed enterprises such as Google and YouTube, bought $11.5 million worth of shares in SKS. Since its founding nine years ago, SKS has made loans at rates of 24% to 30% to 731,000 Indians.