Even so, microfinance loans, by their very nature, do not lend themselves to securitization. MFI managers have to transform a grab bag of tiny loans—$50 for a cow here, $100 for a loom there—into a pool of loans homogeneous enough to securitize. Supporters say there are enough loans in the microfinance market now that sponsors are able to find enough similar transactions. The size of the market has grown 30 percent per year for the last decade, according to Grameen.

Proponents admit there are hurdles to overcome, but argue that microfinance securitization is in the same early stage of development as credit card securitization was in the 1980s and mortgages more than half a century ago. They contend that microfinance will experience the same growing pains, but eventually become a well-established asset class.

Too Much, Too Soon
Swack worries about the fate of the poorest of the poor loan applicants, who might fall by the wayside as MFIs cater to more-affluent borrowers in an effort to secure more easily securitizable loans. Microfinance supporters promise this will not happen; many, they argue, will refocus their mission on reaching the most indigent, while allowing the success stories to graduate to commercial banks or MFIs with a less-needy clientele. However, only a handful of the hundreds of MFIs around the world qualify as lenders to high-quality clients.

Another concern stems from the fact that MFIs can effectively administer only a limited number of loans. Inability to put the revenues from a securitization to work right away might cause them to loosen their standards and make unwise loans. “If you flood the market, you’ll increase the amount of defaults—that’s been seen by governments—so we’re doing it in stages,” says Drew Tulchin, program officer for capital markets at Grameen Foundation USA.