Manila, June 03, 2005
—The International Finance Corporation, the private sector arm of the World Bank Group, has signed an agreement to provide its largest local currency term loan in the Philippines to Balikatan Housing, Inc. for up to $30 million equivalent. Balikatan is a special purpose entity, jointly owned by Deutsche Bank Real Estate Global Opportunities 1B and the National Home Mortgage Finance Corporation, a government-sponsored residential mortgage liquidity provider.
NHMFC auctioned nonperforming housing loans comprising more than 55,000 individual accounts, with an unpaid principal balance exceeding 13 billion Philippine pesos, or about $240 million. DBREG won the auction in May 2004 and today’s transaction supports its purchase. DBREG is also establishing a mortgage servicing company, with participation by the Asian Development Bank and IFC, to manage and service the portfolio. ADB is also providing debt financing to Balikatan for the same amount.
“This is a landmark transaction, because it introduces a model solution for distressed asset resolution in the Philippines. It should provide momentum to the development of a market for nonperforming assets, which is vital for reform in the financial sector,” said IFC’s Director for East Asia and Pacific, Javed Hamid.
Jyrki Koskelo, IFC’s Director for Global Financial Markets, added, “This transaction is consistent with IFC’s strategy in the housing finance sector to encourage private sector participation, strengthen credit culture in mortgage lending, support companies that develop housing stock for middle- to lower-income segments, and promote the development of capital markets.”
Celso delos Angeles, NHMFC’s President, said, “We are delighted that IFC has supported this transaction, as it signifies their support for what we believe to be a unique project. The project demonstrates NHMFC’s commitment to profitability and efficiency and the government’s resolve to rid the financial system of nonperforming loans. This is a very positive step for affordable housing in the Philippines.”
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.
Note: All dollar figures refer to U.S. dollars unless otherwise specified.
