Summary of Proposed Investment
Project Number
10564
Company Name
Hipotecaria Su Casita, S.A. de C.V., SOFOM, E.N.R.
Date SPI Disclosed
Feb 26, 2001
Country
Mexico
Industry
Financial Markets
Projected Board Date
Mar 28, 2001
Status
Completed
Sector
Primary Mortgage Institutions
Department
Global Industry, Financial Markets
Environmental Category
FI
Previous Events
Approved : Jun 27, 2001
Signed : Jun 28, 2001
Invested : Sep 21, 2001
Project Description
The company''s primary business is the origination and servicing of mortgage and construction loans. Currently, even though homebuilders hold about 75% of the shareholding, less than 20% of Su Casita’s business is originated with its shareholders. Since its founding, the company has obtained its financial support almost exclusively from a trust fund administered by the Central Bank of Mexico called FOVI, which has a particular focus on housing for low-income families. FOVI current regulations limit the price of the homes sofoles can finance to a maximum of US$45,000.
Over the past six years, Su Casita has experienced rapid expansion. It has grown the scope of its operations as measured by its physical presence and by its balance sheet. As of December 2000, it had 375 employees in 45 offices in 23 states, now covering most of Mexico. It held approximately US$428 million of mortgage loans, up from US$34 million at year end 1996, representing an annual compounded rate of growth of 150%. It is currently in the process of merging with Financiamiento Azteca (Finazte), another mortgage Sofol. The new entity will retain the name Hipotecaria Su Casita.
The project consists of creating and issuing Mexico’s first significant mortgage-backed securitization (MBS). It will be issued on behalf of Hipotecaria Su Casita which will use the proceeds of the bond offering to make mortgage loans to an under-served market segment of lower middle class families. IFC will invest in the mezzanine piece, or the B bonds.
IFC will play a critical and unique role in support of this first significant MBS issue in Mexico. As a new class of security, investors will be wary of investment performance and untested legal structures. By taking a mezzanine bond, IFC will provide investment confidence to senior bond investors, and assure rating agencies of adequate credit support for the transaction. In addition, IFC’s involvement will be part of a larger strategy to help develop the mortgage and capital markets in Mexico. The creation and issuance of this first deal is an important “proof of concept” step towards the overall goal of development of an active and liquid secondary mortgage market in the country. Finally, IFC will be playing an important role in supporting the growth of open-market institutions and in showing mortgage originators alternative funding avenues. This securitization will generate funds for new open-market (non-FOVI funded) lending, expanding the reach of Su Casita in particular and of Sofoles in general.
Over the past six years, Su Casita has experienced rapid expansion. It has grown the scope of its operations as measured by its physical presence and by its balance sheet. As of December 2000, it had 375 employees in 45 offices in 23 states, now covering most of Mexico. It held approximately US$428 million of mortgage loans, up from US$34 million at year end 1996, representing an annual compounded rate of growth of 150%. It is currently in the process of merging with Financiamiento Azteca (Finazte), another mortgage Sofol. The new entity will retain the name Hipotecaria Su Casita.
The project consists of creating and issuing Mexico’s first significant mortgage-backed securitization (MBS). It will be issued on behalf of Hipotecaria Su Casita which will use the proceeds of the bond offering to make mortgage loans to an under-served market segment of lower middle class families. IFC will invest in the mezzanine piece, or the B bonds.
IFC will play a critical and unique role in support of this first significant MBS issue in Mexico. As a new class of security, investors will be wary of investment performance and untested legal structures. By taking a mezzanine bond, IFC will provide investment confidence to senior bond investors, and assure rating agencies of adequate credit support for the transaction. In addition, IFC’s involvement will be part of a larger strategy to help develop the mortgage and capital markets in Mexico. The creation and issuance of this first deal is an important “proof of concept” step towards the overall goal of development of an active and liquid secondary mortgage market in the country. Finally, IFC will be playing an important role in supporting the growth of open-market institutions and in showing mortgage originators alternative funding avenues. This securitization will generate funds for new open-market (non-FOVI funded) lending, expanding the reach of Su Casita in particular and of Sofoles in general.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Mr. Manuel Campos
Av. San Jeronimo No. 478 4th Floor
Col. Jardines del Pedregal
Mexico D.F. 01900
Av. San Jeronimo No. 478 4th Floor
Col. Jardines del Pedregal
Mexico D.F. 01900