Nicaraguan crisis continues to impact Dexia Microfinance Fund: BlueOrchard

By Matthew Fuchs

Microfinance Focus, Dec. 15, 2009: Dexia Microcredit Fund (DMCF) posted slightly negative returns in November due to continued provisioning against loans to microfinance institutions in Nicaguara, according to fund manager BlueOrchard. The fund declined 0.04% during November but year-to-date performance remains on track, says BlueOrchard in its monthly report.

The microfinance sector in Nicaragua has been affected significantly by the international financial crisis, which has led to a decline in exports and income from remittances and a spike in unemployment. In addition, the “No Pay” movement in North Nicaragua continues to hamper the operations of MFIs in the region. These factors were also cited as the primary factor behind flat fund performance in September.

“BlueOrchard is actively involved in creditor discussions with key MFIs in the country, we will continue to keep investors updated,” it was stated in the report. Currently, investments in Nicaragua represent 2.5% of NAV, down slightly from 3% in September.

Elsewhere, four new investments were made in November. They included Dexia’s first investment in a Nigerian MFI, additional loans in Cambodia and Azerbaijan and a reinvestment in ProCredit Holdings.

Return on investment (ROI) year-to-date for the USD share class 2.17%, suggesting total returns for 2009 will be around 2.5%. The ROI for 2008 was 5.3%. NAV has grown significantly, from $352.8 million to in November 2008 to $536.3 million.

BlueOrchard is one of the world’s largest microfinance asset managers with over $800 million in assets under management and is based in Geneva, Switzerland. Dexia Microcredit Fund, launched in 1998, is a Luxembourg-based mutual fund that provides loans to MFIs.

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