Washington, D.C., August 10, 2005 –
The International Finance Corporation, the private sector arm of the World
Bank Group, announced an agreement to provide a credit enhancement to GMAC
Financiera’s fourth mortgage-backed securities issuance in Mexico.
The credit enhancement is in unidades de inversion (UDIs) 13.5 million—Mexican
pesos linked to an inflation index—$4.5 million equivalent. This is the
first transaction under the $50 million equivalent credit enhancement facility
that IFC signed with GMAC in May 2005 to support the firm’s mortgage-backed
securities program in the country.
The enhancement announced on Wednesday helped make possible the mxAAA rating
by Standard and Poor’s, AAA (mx) by Fitch, and Aaa.mx by Moody’s—all
on the Mexican national scale—for a successful placement of UDIs 139.6
million ($46.5 million equivalent) of mortgage-backed securities notes.
Nina Shapiro, IFC’s vice president finance and treasurer, said, “We are
pleased to enter the Mexican mortgage-backed securities market with an
innovative enhancement structure and to support its development through
partnerships with key players such as GMAC. We look forward to participating
in this type of enhancement in Mexico and other countries in Latin America.”
José Landa, GMAC’s managing director, said, “GMAC Financiera is pleased
to have developed a strong relationship with IFC and to be working together
to support the development of the housing finance sector in Mexico. This
investment is a vote of confidence in GMAC’s operations in Mexico, and
we anticipate working with IFC on future mortgage-backed securities issuances.”
IFC’s strategy is to develop the housing sector in Mexico for mortgage
and some construction finance by providing funding to key players and to
contribute to the development of the country’s capital markets. Recognizing
the need for long-term local currency funding for mortgage finance companies,
to date IFC has committed the equivalent of $300 million in peso-denominated
collateralized revolving warehouse lines and other financing to Mexican
housing companies. This funding, part of the first phase of IFC‘s
housing sector strategy, focuses on the development of the primary market.
The most recent investment highlights phase
two of the strategy; promoting a vibrant secondary mortgage market while
fostering a liquid and efficient capital market in Mexico. IFC is
also exploring with others in the sector the development of a secondary
mortgage market conduit (similar to Fannie Mae in the United States) to
facilitate an even more vibrant secondary mortgage market. This effort,
in conjunction with the important work being done by Sociedad Hipotecaria
Federal, should help create a sustainable long-term mortgage market in
Mexico.
Atul Mehta, director of IFC’s Latin America and Caribbean Department,
said, “This transaction is a key step in the implementation of IFC’s
housing finance strategy in Mexico. A functioning mortgage system
will help create a more liquid housing market and enable more first-time
buyers to purchase their own property, which will improve living standards.”
GMAC Financiera was established in 2000 by GMAC Residential Funding Corporation
as part of its international strategy that identified Mexico as one of
the key growth countries for GMAC’s housing finance business. GMAC Financiera
has experienced high growth during the past four years and has successfully
developed strong relationships with the mortgage sofoles—specialized
financial intermediaries in Mexico—and other relevant industry players.
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people’s lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FY04, IFC has committed more than $44
billion of its own funds and arranged $23 billion in syndications for 3,143
companies in 140 developing countries. IFC’s worldwide committed portfolio
as of FY04 was $17.9 billion for its own account and $5.5 billion held
for participants in loan syndications.