Washington, D.C., April 4 2006—
The International Finance Corporation, the private sector arm of the World Bank Group, announced today that it will provide $50 million to BACS Banco de Crédito y Securitización S.A., Argentina’s private secondary mortgage market company. IFC’s three-year term financing, structured in two $25 million tranches, will support the acquisition of eligible mortgage loans and mortgage-backed securities for securitization.
IFC, which has a 20 percent shareholding in BACS, is among its original shareholders. BACS fulfills a significant developmental role in the Argentine mortgage market, and this funding is expected to infuse medium-term liquidity to promote mortgage origination and securitization, thus lowering the cost of borrowing and increasing the affordability of mortgages.
Jyrki I. Koskelo, IFC’s director for Global Financial Markets, said, “Through this project, IFC will support BACS’s efforts to re-engage its original mission of providing broader liquidity to the Argentine primary mortgage market and fostering the development of the capital markets by issuing standardized, high-quality mortgage-backed securities that match the long-term requirements of institutional investors.”
Created in 2000 as Argentina’s first secondary mortgage market company, BACS is resuming a more active role in Argentina’s financial sector as the mortgage market reawakens along with the country’s economy. The Argentine mortgage market had significantly increased originations in 2005, in line with greater demand for longer-term financing for home ownership following three difficult years since the crisis of 2001. This project constitutes IFC’s first investment in the Argentine mortgage sector subsequent to the crisis.
Juan M. Daireaux, CEO of BACS, said, “We are pleased to be working with IFC at this important stage of the company’s growth. This medium-term facility, much needed in the market, will enable us to consolidate our mission to actively support and be involved in a sustainable mortgage sector development.”
Atul Mehta, IFC’s director for Latin America and the Caribbean, added, “IFC is pleased to continue to support the development of the Argentine mortgage market. Access to viable housing finance and the ability of the population to purchase their homes are crucial elements in improving the well-being of Argentine families.”
Housing Finance is one of IFC’s priority sectors for its significant social and economic impact. IFC has played an essential role in this sector, supporting the development of mortgage finance and the capital markets and providing funding to key players in the region. As of June 2005, IFC’s housing portfolio stood at $1.6 billion, representing some 70 housing finance projects in more than 30 countries. Many of these investments are in Latin America and the Caribbean, including Argentina, Brazil, Colombia, El Salvador, Mexico, Panama, and Peru.
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment in developing and transition 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 FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
