The IIC’s participation will consist of a US Dollar denominated note subscription to Fedecredito Remittance Funding Company Ltd. (the “Issuer”) in an amount of up to US$15 million (the “Note”). IFC and responsibility have already purchased US30 million in notes of this issuance. IIC’s Note will have an individual maximum tenor of 7 years with a 2-year grace period (the “Financing”). The proceeds of the Financing will be used to increase its lending activities for low-income housing and MSMEs.
Brief Project Description:
The Fedecredito System (“FDCS”) comprises 48 Cajas de Credito (“CC”) and 7 Bancos de los Trabajadores (“BDT”). Fedecredito is a second-tier FI, 100% privately-owned and supervised by El Salvador’s “Superintendencia del Sistema Financiero”. It was established in 1943 and its mission is to help develop an effective FDCS by providing its members with training and specialized technical services. The FDCS in turn constitutes the largest network of financing service providers in El Salvador, present in 187 of the 262 municipalities of the country. Fedecredito only provides financing to their member entities. The CCs and BDTs funnel this funds into the local market. As of December 2016, the FDCS was the 5th largest lender in the country with a loan portfolio of US$1.4 billion (market share of 11%), deposits of US$740 million and more than 961k credit users serving mainly low-income families and MSMEs. FDCS’ portfolio distribution is as follows: MSMEs 35%; consumer loans 53% and housing 12%
Fedecredito is an existing client of the IDBG. In 2010, the Bank approved a US$19 million A/B Loan to increase financing for municipal market modernization. Fedecredito has also received funding and technical assistance from the Multilateral Investment Fund (“MIF”) to improve its ability to serve the poorest segments of the country’s population; and support modernization and institutional strengthening.