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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 24434 |
| Project name | Rio Bravo Securitizadora CLG |
| Country | Brazil |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Rio Bravo Securitizadora |
| Environmental category | C |
| Date SPI disclosed | January 30, 2006 |
| Projected board date | February 28, 2006 |
| Status | Completed |
| Previous Events | Signed: June 26, 2006
Approved: June 19, 2006 |
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| Description of company and purpose of project |
The project involves provision of an IFC guarantee (or the economic equivalent thereof) with a value of up to 50 million Brazilian Reais (approximately $22 million at current exchange rates) to a Brazilian bank (Banco ABN AMRO Real S.A.), in order for the latter to make long-tenor, local currency-denominated financing available to Rio Bravo Securitizadora S.A. (RBSec or the Company).
RBSec is one of the leading residential and commercial real estate securitization companies in Brazil. Its principal business activities include:
- Origination of residential and commercial real estate receivables from entities that make primary financing available to home purchasers and other end-users of real estate;
- Subsequent securitization in CRI format of the relevant real estate receivables which it originates, and placement of the resultant CRI's with Brazilian domestic capital market investors (CRI's, or Certificados de Recebíveis Imobiliários, are effectively the Brazilian equivalent of mortgage-backed securities); and
- Acting as a master servicer for CRI transactions.
RBSec will utilize proceeds of the BRL50 million financing from Banco Real which is supported by the IFC guarantee to acquire local currency-denominated residential real estate receivables from eligible developers, banks, and other sellers of such assets. Thus, the IFC Project is intended to help RBSec to further expand its residential real estate receivable origination, securitization, and housing finance-related securities placement activities. |
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| Project sponsor and major shareholders of project company |
Sponsors:
IFC has an equity stake of 19.9% in RBSec. Its other shareholders include:
- Rio Bravo Crédito Cia. de Securitização Imobiliária, which holds approximately 58% of the Company’s shareholders equity;
- GMAC-RFC, a strategic investor in the Company, which holds a 20% stake; and
- several individual investors, who hold the remaining 2% of its capital. |
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| Total project cost and proposed IFC investment |
| The proposed IFC investment involves provision of a guarantee (or the economic equivalent thereof) with a value of up to 50 million Brazilian Reais (approximately $22 million at current exchange rates) to a Brazilian bank (Banco ABN AMRO Real S.A.), in order for the latter to make long-tenor, local currency-denominated financing available to Rio Bravo Securitizadora S.A. (RBSec or the Company). |
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| Location of project and description of site |
| RBSec is headquartered in São Paulo. |
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| Project Development Impact and IFC's Role |
- Extension of additional housing finance to previously underserved home-buyers.
The project will increase the availability, as well as further demonstrate the viability of a new, alternative private sector channel of residential real estate finance. By complementing relatively limited sources of Government and bank funding for residential real estate construction and home purchases, it should thus help to address Brazil’s housing deficit and enhance the affordability of home-buying for middle-income families. In particular, the Project strives to provide further impetus to capital markets-oriented, housing finance structures based on the private sector-oriented Sistema Financeiro Imobiliario (SFI) framework put in place in Brazil over the last several years, as well as some of its legal and regulatory innovations -- such as Alienação Fiduciária (real estate-oriented, bankruptcy-remote funding vehicles) and the above-mentioned CRI's.
- Further improvement of the legal and regulatory environment for housing finance in Brazil.
IFC’s involvement in this Project has and will continue to allow the Corporation to play an active role in helping to improve the legal and regulatory underpinnings of Brazil's primary and secondary housing finance sectors, as well as the country’s growing securitization markets. In particular, IFC’s participation has and will continue to result in further standardization of eligibility, underwriting and servicing criteria for housing finance credit -- all of which are important preconditions for the accelerated development and viability of a large and liquid housing finance market in the country.
- Broadened availability for domestic investors of longer tenor, fixed income securities issued by private sector borrowers.
At present, there is a relative dearth in Brazil of investment opportunities associated with long tenor debt securities issued by private sector borrowers. Housing finance-related securities represent a major private sector investment asset class for institutional investors in most OECD countries, as well as an increasing number of emerging markets. Thus, by promoting more housing finance securitization activity, the Project strives to broaden the range of private sector investment opportunities for Brazil's capital markets. |
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| Environmental and social issues - Category C |
This is an environmental category C project. RBSec will be required to establish an appropriate screening procedure to ensure that properties associated with securitized real estate receivables are not environmentally impaired.
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| To contact the project company, please write to: |
Mr. Nicholas Reade, Chief Executive Officer
Rio Bravo Securitizadora S.A.
Av. Chedid Jafet 222,
Bloco B, 3º andar
04551-065 São Paulo - SP
Brazil
Tel 5511-2107-6655, or 2107-6684 |
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