24366 - Peruvian Home Mortgage Corporation

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Summary of Proposed Investment

Project Number

24366

Company Name

TITULIZADORA PERUANA SOCIEDAD TITULIZADORA S.A.

Date SPI Disclosed

Jun 19, 2006

Country

Peru

Industry

Financial Markets

Projected Board Date

Jul 25, 2006

Status

Completed

Sector

Secondary Mortgage Institutions

Department

Regional Industry - FIG LAC

Environmental Category

C - No Impact

Previous Events

Approved : Aug 3, 2006
Signed : Dec 12, 2006
Invested : Jul 13, 2007

Project Description

The project involves a comprehensive financing package from the IFC to support the creation of Peru’s first secondary mortgage market company, Titulizadora Peruana S.A (TP or the company). Titulizadora Peruana would be an independent, multi-function company with the main business objective of acquiring and securitizing high-quality residential mortgage loans. These would be sourced, initially, from the major mortgage originators in the Peruvian financial system.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	0.0
Loan	50.0
Equity	1.0

Development Impact

The project is expected to have a positive impact on the mortgage market, banking industry, capital markets, housing sectors, and the economy in general. This project would:

- Create and establish best international practices and technology regarding mortgage lending and a secondary mortgage market for Peru,
- Further develop the Peruvian capital markets by making MBS and TP’s debt available for institutional investors,
- Support the strengthening of the primary mortgage market in Peru by improving the efficiency of loan origination and standardization of loan files, loan file documents, mortgage loan quality, and new products,
- Improve the affordability of housing by lowering the cost of mortgage loans, making longer term funding available, improved pricing and through enhancing the liquidity of mortgage assets, and
- Strengthen the banking sector by making available the liquidity facility, adding mechanisms to improve their maturity profiles, term and interest rate risks.

The project is fully consistent with IFC’s strategy for Peru. This project would match the financing need of consumers and financial intermediaries with the need to provide longer term investment instruments for Peru''s private pension funds, and medium term investment instruments for insurance companies and banks. The standardization of mortgage assets would also further improve the liquidity of the Peruvian capital markets.

IFC will:

- play a critical institution-building role by supporting the development of an independent secondary mortgage market institution and a MBS market more advanced than the current Bonos Hipotecarios;
- catalyze new capital and human resources from the key actors of the country''s financial industry for this project;
- participate in the shareholder structure, and ensuring the company''s independence, transparent governance mechanisms and business procedures;
- enhance the company''s ability to obtain a favorable credit rating for its bonds and securitizations; and
- provide knowledge transfer to a start-up company, TP, drawing on IFC’s experience, especially the recent Colombian project together with Titularizadora, in technology development and organizational structure.

Contacts

For Inquiries About the Project, Contact

Marc Tristant, Investment Officer
International Finance Corporation
511 611 2515. Av. Alvarez Calderon 185, piso 2
Lima 27, Peru

Christian Laub, Corporate Finance Manager
BCP, 511 313 2664. Calle Centenario 156, La Molina
Lima 12, Peru

Mauricio Amador, Vice President for Finance
TC, 571 618 3030 ext. 225, Carrera 9A No.99-02, piso 7
Bogota, Colombia

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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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