Summary of Proposed Investment
Project Number
22235
Company Name
BALTIC AMERICAN ENTERPRISE FUND
Date SPI Disclosed
Feb 24, 2004
Country
Central Europe Subregion
Industry
Financial Markets
Projected Board Date
Apr 30, 2004
Status
Completed
Sector
Secondary Mortgage Institutions
Department
Regional Industry FIG LAC & EUR
Environmental Category
C - No Impact
Previous Events
Approved : Jul 1, 2004
Signed : Dec 3, 2004
Invested : Dec 9, 2004
Project Description
The project involves up to $43.0 million IFC investment in Baltic-American Enterprise Fund and/or subsidiary thereof, (BalAEF or the company) and comprises: up to $40 million IFC investment in the form of credit enhancement through a combination of :
- purchase/partial guarantees of upper equity,
- mezzanine and senior tranches of a cross border Mortgage Backed Securities (MBS) to be issued over the next three years by BalAEF, and,
-Euro/US$ swap facilities to support MBS issuances.
Under the project, IFC’s exposure will be to an off-shore Special Purpose Vehicle (SPV) which will issue Mortgage Backed Securities (MBS), to be sold to international investors. The SPV allows to achieve a true sale and bankruptcy remote structure; and under the proposed project, BalAEF will set up a securitization program which entails a series of MBS issuances for about $250 million over a three year period.
The first series of approximately $60 to $80 million MBS is expected to be issued within the coming six months. The securities will be backed by a pool of US dollar and Euro-denominated mortgages generated in Estonia, Latvia and Lithuania (the Baltics). The MBS program will represent the first cross border securitization of a portfolio of residential mortgages in the region and is expected to play a significant catalytic role in the development of this market. In particular, the securitization of mortgages would provide BaLAEF with additional liquidity to originate mortgage loans significantly in excess of what the company’s limited access to long term funding base has permitted so far.
- purchase/partial guarantees of upper equity,
- mezzanine and senior tranches of a cross border Mortgage Backed Securities (MBS) to be issued over the next three years by BalAEF, and,
-Euro/US$ swap facilities to support MBS issuances.
Under the project, IFC’s exposure will be to an off-shore Special Purpose Vehicle (SPV) which will issue Mortgage Backed Securities (MBS), to be sold to international investors. The SPV allows to achieve a true sale and bankruptcy remote structure; and under the proposed project, BalAEF will set up a securitization program which entails a series of MBS issuances for about $250 million over a three year period.
The first series of approximately $60 to $80 million MBS is expected to be issued within the coming six months. The securities will be backed by a pool of US dollar and Euro-denominated mortgages generated in Estonia, Latvia and Lithuania (the Baltics). The MBS program will represent the first cross border securitization of a portfolio of residential mortgages in the region and is expected to play a significant catalytic role in the development of this market. In particular, the securitization of mortgages would provide BaLAEF with additional liquidity to originate mortgage loans significantly in excess of what the company’s limited access to long term funding base has permitted so far.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Richard Sheridan, President /CEO
Baltic-American Enterprise Fund,
Phone: 410 224 8430
Fax: 410-224-8361
Baltic-American Enterprise Fund,
Phone: 410 224 8430
Fax: 410-224-8361