The Inter-American Development Bank today announced the approval of $105 million in partial credit guarantees for Metrofinanciera S.A. de C.V., a Mexican lender specialized in providing mortgages to low- and middle-income clients and financing for housing developers.
Up to $55 million in partial credit guarantees will assist Metrofinanciera in obtaining a mortgage warehouse facility of $175 million from an international commercial bank to originate and accumulate mortgage pools prior to securitization. A mortgage-backed securities (MBS) guarantee facility of up to $50 million will provide partial credit guarantees for the issuance of Metrofinanciera-originated MBS in the Mexican capital market.
During its life the program could support the issuance of at least $800 million in MBS, providing Metrofinanciera more resources to finance mortgages for the purchase of up to 25,000 new homes and stimulating construction, a key engine of economic activity and employment generation.
The IDB expects the program to promote the development and standardization of Mexico’s market for MBS, which can be an attractive alternative investment for Mexican pension funds.
Additionally, the program will assist Metrofinanciera as it transitions away from public sector funding. The company has funded its operations mostly with financing from the state-owned Sociedad Hipotecaria Federal but plans to switch entirely to capital markets over the next few years.
The partial credit guarantees for Metrofinanciera are the second operation prepared by the IDB’s Private Sector Department under a new policy that allows the Bank to accept guarantee-related payments in local currency.
The IDB is the leading source of long-term financing for economic and social development programs in Latin America and the Caribbean. Its Private Sector Department is responsible for loans and guarantees made directly to private businesses.
The privately held Metrofinanciera is Mexico’s fourth largest specialized housing lending company, with a portfolio of 13.3 billion Mexican pesos ($1.25 billion) under administration at the end of 2005. Founded in 1996 by local businessmen, the Monterrey-based lender has developed a network of six regional offices and 50 branches that operates nationwide.