iBonds or EYE Bonds?: Citi Talks EYE Bonds and Why They Stand Apart – Part II

When we think Citi, we think Wall Street, but over the past few decades, this banking giant has expanded its reach, playing a significant role in microfinance in emerging markets. In a continuation of our interview with Bob Annibale, which was published on November 5, 2014, hear from this valued partner again as he talks impact and the role of partnerships as a vehicle to achieve it.

IDB: Under your leadership, Citi has been a leader in the global microfinance industry, with the securitization of Banco Compartamos, Latin America’s largest microfinance institution, being one of Citi’s many notable deals.  The strategic use of external partnerships has been a key factor to your success in emerging markets.  Can you elaborate?      

BA:  I must acknowledge the long history of support by Citi colleagues for the microfinance sector going back to the 1980s, when, for example, the Citi Foundation made its first grant to Accion International. As with the IDB, we have long focused on promoting greater access to financial services and ensuring consumers have the financial capability to play an active role in their local economies. We first began to work with Compartamos when it was a non-governmental organization, and then arranged a private placement followed by a locally-issued bond to assist it in raising and diversifying local funding before working on the IPO in 2007.

We have worked with a wide range of microfinance institutions in Mexico and across the region–those that operate as NGOs and others that have become banks. External partnerships with microfinance institutions like Compartamos will continue to be a priority, as will deepening the partnership with the IDB and other leading development agencies and multilaterals. The IDB has extensive development expertise and reach in areas beyond financial services—including education, youth and employment programs—that complements the reach of private sector investors.

As the EYE bond and Compartamos’ IPO demonstrate, engaging with capital markets investors is an important tool to unlock large-scale resources for development goals, furthering responsible and progressive finance. For many investors, this is also an opportunity to become more familiar with the IDB’s work and partners across a huge and diverse range of countries.

IDB: How does the EYE bond reflect Citi Microfinance’s strategy?

BA: The EYE bond is a great example of how Citi Microfinance, which is focused on expanding inclusive finance opportunities, is launching new tools that result in increased access for underserved communities. When we started in 2005, we focused on enabling microfinance institutions to access local currency financing and markets, and we successfully built a platform to reach organizations at scale – over 42 microfinance institutions in 22 countries.

Now, ten years since our launch, we are focusing on enabling sustainable and scalable programs for financial inclusion that build on our microfinance core, but expand our reach much more broadly. This includes digital banking services for the underserved, innovative financing instruments for small suppliers and distributors in emerging markets, and crafting socially responsible instruments (SRI) for our investor clients. In addition, dovetailing with the needs of our SRI-focused clients, we are pushing the existing definitions of impact investing in the capital markets.

This EYE bond represents the latest step of progress in the field of investing with social impact and we at Citi are delighted that both the IDB and the investors in this new IDB credit agree that it is a valuable step forward.

Click here to read Part I of “iBonds or EYE Bonds?: Citi Talks EYE Bonds and Why They Stand Apart”