Microfinancing by Pension Funds

[jartherrera]

Another question from the DOWS panel was, what needs to happen for pension funds capital to open up to microfinancing? Without a venture capital infrastructure like in the US, is this even possible?

[emerging11]

It is still a mistery to me that since I remember, I seen articles on local newspapers about initiatives to help SMEs (PYMES), and some have been successful, but I think this segment of the Dominican economy has not received the promotion it deserves. (I guess is the biggest emplloyment post producer in the country).

In DR they have entities like the Small Business Administration in the U.S. which has securitized its loans and make a huge market out of it. Why don't the local economic agents emulate the SBA and create cheap financing sources for the SMEs. Still a mistery.

Note: This is my personal opinion, an should not constitute investment advice. E-mail me at my personal address if you want to develop a dialogue

[Market Economy]

jrtherrera

One of the barriers of allowing pension fund money to go into microfinancing is that the funds can only be invested in BBB-rated (investment grade) securities. This is debatable as the returns may be limited (The U.S. has a similar conundrum as it has been proposed that a portion of Soc. Sec. funds be allowed to be invested in the stock market).

So the issue, I guess, is if a portion of the pension funds could be earmarked for risky investment. That's a tough sell in DR, where the business culture is somewhat risk-averse.


Note: This is my personal opinion, an should not constitute investment advice. E-mail me at my personal address if you want to develop a dialogue

[jartherrera]

Thanks "MarketEconomy".

Well, that leads to another question. Are there currently in DR acting rating agencies to publish their investment position on any securities currently being issued by private entities?

[Market Economy]

jartherrera

To the best of my knowledge, FitchDominicana and FellerRate Dominicana (an S&P partner) have done credit assessment of local issues. This is a wonderful development that helps tremendously in the development of the incipient local capital markets.





Note: This is my personal opinion, an should not constitute investment
advice. E-mail me at my personal address if you want to develop a dialogue

[Ishido]

Originally Posted by jartherrera

Thanks "MarketEconomy".

Well, that leads to another question. Are there currently in DR acting rating agencies to publish their investment position on any securities currently being issued by private entities?

Fitch Dominicana

[Market Economy]

Ishido,

Thanks for the link.

Here is the one for FelleRate Dominicana: Feller Rate - Calificadora de Riesgo, Clasificación de riesgo República Dominicana






Note: This is my personal opinion, an should not constitute investment
advice. E-mail me at my personal address if you want to develop a dialogue.