US$5 million in BBVA Codespa Microfinanzas hedge fund

(Special, November 26, 2008).- The Andean Development Corporation has made a capital investment of US$5 million in the Fondo de Inversión Libre BBVA Codespa Microfinanzas FIL hedge fund with the objective of increasing opportunities for Latin American microfinance entities. It is the first Spanish microfinance social investment fund for Latin America through which microfinance entities of the region can access financing in local currency. BBVA Codespa Microfinanzas is the first hedge fund approved in Spain under the new CNMV regulations. The fund’s current capital is 23,536,302 euros with a 6.96% accumulated return.

This fund was created on October 30, 2006 with the objective of developing the microfinance industry through investment in debt instruments issued by microfinance institutions which demonstrate solidity and viability toward sustainability, situated in Latin America.

The fund offers local-currency financing in microfinance entities, reducing risk through diversification of investments by term, country and currency. It also finances in securities denominated in euros or US dollars. The fund, which is currently diversified in nine countries of Latin America and in eight currencies, uses hedge instruments with a 30% maximum in non-hedged currencies. The fund finances both larger consolidated entities and smaller entities which need support to continue growing and expanding their activities.

It is targeted at qualified investors (according to the character of the fund) looking for an attractive return (not guaranteed) from a socially responsible investment with a minimum amount of 50,000 euros.

The combination of the BBVA’s broad experience in asset management and its presence in the region, with the knowledge of Codespa, non-profit Spanish foundation, with over 17 years' experience in the microfinance area, guarantees an investor process capable of achieving a return while maintaining the social objective.

CAF is currently supporting almost 40 institutions which serve the microenterprise sector in 11 Latin American countries, with total funds over US$120 million.