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December 1, 2022

GuarantCo provides First Finance with a loan guarantee to finance affordable housing in Cambodia


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First GuarantCo transaction in Cambodia. First internationally verified commercial social loan in Cambodia.

GuarantCo, part of the Private Infrastructure Development Group (PIDG), and Cargill Financial Services International have provided a c. USD 7 million debt financing solution to First Finance, a Cambodian micro finance institution, to provide affordable housing finance to low- and middle-income households in the country. Subject to certain criteria including market conditions, the overall size of the facility could rise to c. USD 22 million over next two years.

This is GuarantCo’s first transaction in Cambodia and marks the debut social loan in Cambodia. First Finance has committed to ensuring the use of proceeds will be administered in line with its Social Financing Framework based on the Loan Market Association’s Social Loan Principles on which Moody’s provided a Second Party Opinion (SPO).

The transaction is expected to support around 470 new loans targeted mainly to low- and middle-income households. It will enable First Finance to access their first-ever longer-term financing with a 7-year tenor, on a scale and at a lower cost of funding than would otherwise have been the case without GuarantCo’s involvement.

First Finance is the only microfinance institution in Cambodia that is dedicated solely to providing long-term mortgages to low- and middle-income households for affordable home purchases. GuarantCo’s contingent credit solution aims to cater to this significantly under-served and under-penetrated segment thereby helping with longer-term mortgage products to the unbanked population in Cambodia.

Aligned with Sustainable Development Goal 11 (Make cities and human settlements inclusive, safe, resilient and sustainable), this transaction will support access to safe, adequate and affordable housing in Cambodia. Moreover, women accounted for over 60 percent of loan recipients from First Finance’s portfolio in 2022 and a similar pattern is expected through this transaction which seeks to empower women and provide more opportunities for them.

A PIDG Technical Assistance (TA) grant was also approved for First Finance. The TA grant covered the costs associated with the SPO review by Moody’s on the social credentials of First Finance, including its social financing framework and the framework’s alignment with the Loan Market Association’s Social Loan Principles and International Capital Market Association’s Social Bond Principles.

Mr. Layth Al-Falaki, Chief Executive Officer of GuarantCo, said:

We are excited to have closed our first transaction in Cambodia and to support First Finance’s provision of affordable housing finance to low- and middle-income households in the country.  We hope that this innovative transaction, will increase familiarity with loan guarantees and longer-term debt solutions for Cambodia, and ultimately lead to a greater willingness to extend debt financing to similar institutions, thereby further developing the local capital markets in Cambodia.
Mr. Layth Al-Falaki
Chief Executive Officer of GuarantCo

Mr. Sim Senacheert, Chief Executive Officer of First Finance, said: “This loan guarantee not only demonstrates First Finance’s ability to expand its operations responding to market needs but also reveals the credibility and trustworthiness that we have established with members of the public, and local and international investors. First Finance is committed to utilising GuarantCo’s loan guarantee to provide financing for affordable housing to around 470 low- and middle-income households in Cambodia to improve the quality of their livelihood. The stability of homeownership allows a family to live in a more hygienic and healthier condition so that they can spend time and energy on other aspects of their lives. It allows children to have access to clean water and sanitation in order to remain healthy and are able to study whilst women can start their own business or job.

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