Washington, D.C. / Mexico City, September 8, 2006
—The International Finance Corporation, the private sector arm of the World Bank Group, has signed an agreement to provide a 780 million peso ($70 million equivalent) revolving line of credit to Hipotecaria Su Casita, S.A. de C.V., a specialized housing finance institution that targets low- and middle-income people in Mexico.
This loan is part of a 2,670 million peso ($240 million equivalent) funding package to Su Casita over three years, which provides credit enhancements for securitizations and corporate loans for new products targeted at low-income customers, as well as revolving credit lines.
IFC’s financing will help Su Casita reduce its reliance on Sociedad Hipotecaria Federal, the government’s development bank, which will cease new funding operations in 2009. The financing will also support Su Casita’s securitization program.
Su Casita is increasing its presence in the often overlooked low-income segment of Mexico’s housing market, where it plans to expand its business with customized products for the target segments. With this facility, IFC will support this expansion.
IFC has implemented a long-term, relationship-based approach to addressing Su Casita’s business needs. This approach will be used by IFC to support high-impact projects through strategic partnerships with local financial institutions and to design comprehensive multiyear financing packages.
Atul Mehta, IFC’s Director for Latin America and the Caribbean, noted, “Our partnership with Su Casita is being strengthened through this innovative means to address the company’s need for strategic expansion. This financing fits well with IFC’s commitment to developing a broad-based housing finance market, an important building block for Mexico’s financial sector.”
IFC’s investment underlines its strategy to broaden the housing sector in Mexico by providing funding to key players and contributing to the development of the country’s capital markets. Since 1998, IFC has provided debt funding and equity capital to Mexico’s specialized financial intermediaries.
Jyrki Koskelo, IFC’s Director of Global Financial Markets, said, “IFC’s financing will support Su Casita’s efforts to diversify its funding base for primary mortgage market activities, which will put housing finance in reach of low- and middle-income people who otherwise could not afford to buy a home.”
Mark David Zaltzman, Chief Financial Officer of Su Casita, said, “We are pleased to be working with IFC to develop the housing sector in Mexico. IFC’s financing is a vote of confidence in our operations, and we look forward to maintaining this strong partnership in the future.”
IFC’s Strategy in Mexico’s Housing Sector
Recognizing the need for local currency financing so that companies can match the currency of borrowings to their revenues, IFC has committed the equivalent of approximately $290 million in peso-denominated loans and other financing to Mexican housing companies to date. IFC’s investments in the lower-income housing sector will finance about 31,000 residential units per year, with the greatest development reach in the low-income segments. IFC’s credit enhancement facilities are expected to mobilize close to $880 million.
IFC’s strategy in Mexico’s housing sector has adopted a phased approach, in collaboration with Sociedad Hipotecaria Federal. The first phase focused on helping develop a vibrant primary mortgage market through local currency debt facilities to major originators in the sector. Now, in the second phase, IFC is helping develop the secondary mortgage market by providing warehouse credit lines to support mortgage securitization programs and credit enhancement facilities for residential mortgage-backed securities and other capital market securities.
IFC in Mexico:
Since 1956, IFC has invested $5.6 billion, including $2.2 billion in syndications, in Mexico, in sectors ranging from infrastructure and manufacturing to agribusiness and the financial sector, making the country the third-largest recipient of IFC financing in dollar value, after Brazil and Argentina. IFC committed $279.8 million in FY05 as new financing in Mexico, and it held a total portfolio of $1.6 billion, including syndications, as of May 2006.
IFC's strategy for Mexico focuses on enhancing the international competitiveness of the country’s private sector, especially by further deepening the financial sector; promoting investments where the private sector can play a larger role; and promoting sustainable social and environmental development and good corporate governance.
About IFC
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.
