Summary of Proposed Investment
Project Number
24099
Company Name
MEXICO MBS CREDIT ENHANCEMENT FACILITY
Date SPI Disclosed
Jul 22, 2005
Country
Mexico
Industry
Financial Markets
Projected Board Date
Aug 25, 2005
Status
Pending Signing
Sector
Mortgage Services and Other
Department
Regional Industry FIG LAC & EUR
Environmental Category
C - No Impact
Previous Events
Approved : Oct 18, 2005
Project Description
The project involves the establishment of a facility for IFC to provide up to MXN300 million of credit enhancement for the senior tranches of residential mortgage-backed securities (RMBS) to be issued in Mexico.
The project would help Mexican private-sector housing sofoles (specialized mortgage finance companies, requiring an aggregate of up to MXN11.7 billion per annum of new long-term financing in order to meet the current demand for new housing) tap domestic institutional investors (controlling at least MXN986 billion of funds but lacking highly-rated securities to purchase for the long term). The need for the sofoles to access alternative sources of long-term funding arises largely from the phased cessation of lending by the government housing development bank to sofoles. Commercial banks which may consider entering the market with RMBS would also benefit from the project.
IFC’s credit exposure would be to special-purpose vehicles (to be incorporated in future) by which Mexican local-currency residential mortgage loans would be securitized. The securities would be backed by future cash flows from the loan repayments. The loans would be secured by first-ranking mortgages over the owner-occupied properties.
The project would help Mexican private-sector housing sofoles (specialized mortgage finance companies, requiring an aggregate of up to MXN11.7 billion per annum of new long-term financing in order to meet the current demand for new housing) tap domestic institutional investors (controlling at least MXN986 billion of funds but lacking highly-rated securities to purchase for the long term). The need for the sofoles to access alternative sources of long-term funding arises largely from the phased cessation of lending by the government housing development bank to sofoles. Commercial banks which may consider entering the market with RMBS would also benefit from the project.
IFC’s credit exposure would be to special-purpose vehicles (to be incorporated in future) by which Mexican local-currency residential mortgage loans would be securitized. The securities would be backed by future cash flows from the loan repayments. The loans would be secured by first-ranking mortgages over the owner-occupied properties.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
For more information on the Project, please contact George Ombima (gombima@ifc.org).