Micro, small, and medium-sized enterprises (MSMEs) are the lifeblood of economies, yet they often face a persistent struggle for access to adequate capital. Securitization offers a powerful, scalable solution by transforming the large, diverse, and often illiquid loan portfolios of microfinance institutions (MFIs) and SME lenders into marketable securities. This sophisticated financial technique not only provides a crucial source of long-term funding for lenders to expand their reach but also opens up a new, socially impactful asset class for institutional investors seeking diversification and competitive returns. This program provides an essential blueprint for mastering this transformative process.

This intensive 10-day training course will equip participants with the skills and knowledge to structure and execute microfinance and SME loan securitization deals from concept to close. You will learn to navigate the unique credit risks of this asset class, develop robust financial models, and understand the critical legal and regulatory considerations. Through hands-on exercises, real-world case studies, and a deep dive into the transaction mechanics, this program will enable you to unlock new capital for MSMEs, driving economic growth and creating sustainable financial ecosystems.

Duration

10 days

Target Audience

• Microfinance institution (MFI) and SME lender executives
• Securitization and structured finance professionals
• Development finance professionals and investors
• Investment bankers and underwriters
• Credit analysts and rating agency analysts
• Regulators and policymakers
• Legal and compliance officers

Objectives

• Master the fundamentals of microfinance and SME lending.
• Understand the core principles of securitization and its application to MSME loans.
• Develop a systematic approach for structuring securitization transactions.
• Identify, analyze, and mitigate the unique risks of MSME loan portfolios.
• Learn to build and interpret financial models for securitization deals.
• Navigate the regulatory and legal frameworks governing these transactions.
• Evaluate the role of credit rating agencies and credit enhancement.
• Explore the motivations and requirements of various investor types.
• Understand the post-issuance management of securitized portfolios.

Course Modules

Module 1: Foundations of Microfinance and SME Lending

• An overview of the microfinance and SME lending sectors.
• The socio-economic impact of small business finance.
• Understanding the borrower profile and unique credit characteristics.
• The role of MFIs and commercial banks in the ecosystem.
• Analyzing different loan products and lending methodologies.

Module 2: Introduction to Securitization

• Defining securitization and its key drivers.
• The benefits for originators and investors.
• The securitization value chain and key participants.
• Different types of securitization structures.
• A high-level overview of the securitization process.

Module 3: Portfolio Aggregation and Data Analysis

• The process of identifying and selecting a portfolio for securitization.
• Data requirements and the importance of data integrity.
• Analyzing historical performance and default patterns.
• The role of data cleaning and normalization.
• Tools and techniques for portfolio data analysis.

Module 4: Structuring the Securitization Deal

• Designing the securitization structure (e.g., trust, corporation).
• The role of the Special Purpose Vehicle (SPV).
• The waterfall mechanism and cash flow distribution.
• Creating different tranches (senior, mezzanine, equity).
• The importance of legal true sale and non-consolidation opinions.

Module 5: Legal and Regulatory Framework

• The legal requirements for a securitization transaction.
• Navigating different jurisdictions and legal systems.
• The role of key legal documents (e.g., trust indenture, pooling agreement).
• Understanding the regulatory bodies involved.
• The importance of disclosure and transparency.

Module 6: Credit Risk Analysis and Mitigation

• The unique credit risks of microfinance and SME loans.
• The use of statistical models and probability of default.
• Understanding concentration risk and geographic risk.
• Analyzing the impact of macroeconomic factors.
• Techniques for stress testing the portfolio.

Module 7: Credit Enhancement Techniques

• An overview of internal credit enhancement.
• The use of overcollateralization and subordination.
• The role of external credit enhancement.
• Understanding cash reserves and letters of credit.
• Selecting the right credit enhancement strategy.

Module 8: The Role of Credit Rating Agencies

• An introduction to the credit rating process for securitizations.
• The key factors considered by rating agencies.
• How to prepare for a rating agency review.
• The importance of ongoing surveillance and reporting.
• The impact of a rating on investor demand and pricing.

Module 9: Financial Modeling and Valuation

• Building a dynamic financial model for an MSME securitization.
• Projecting cash flows and collateral performance.
• Calculating key financial metrics (e.g., WAL, yield, duration).
• Performing sensitivity and scenario analysis.
• The use of specialized securitization modeling software.

Module 10: Investor Perspectives and Marketing

• Understanding the investor base for microfinance and SME securities.
• The role of investor due diligence.
• Crafting the marketing materials and offering memorandum.
• The role of roadshows and investor presentations.
• Addressing investor concerns regarding social impact and performance.

Module 11: Deal Execution and Closing

• The steps involved in the deal closing process.
• The roles and responsibilities of the various parties.
• Managing the documentation and legal finalization.
• The post-closing transition and ongoing servicing.
• Best practices for a smooth execution.

Module 12: Post-Issuance Management

• Servicing the underlying loans and collections.
• Monitoring the performance of the collateral pool.
• Managing reporting to investors and rating agencies.
• Handling amendments, waivers, and covenant breaches.
• The process of unwinding the securitization at maturity.

Module 13: Emerging Trends and Innovations

• The use of FinTech platforms in SME lending.
• The potential of blockchain for securitization and data management.
• The rise of green and social bonds in microfinance.
• The integration of ESG criteria in deal structuring.
• New funding models and structural innovations.

Module 14: Case Studies and Best Practices

• A detailed analysis of successful securitization deals.
• Learning from past failures and restructuring events.
• Comparing different structural approaches and outcomes.
• Examining transactions from different geographic regions.
• A discussion on the long-term impact on the market.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.