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IFC Makes an Equity Investment in CIBRASEC, Brazil Securitization Firm Targets Housing Finance

Adriana Gomez
Phone : +(202) 458 5204

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Washington, DC, September 28, 2004.—The International Finance Corporation, the private sector arm of the World Bank Group, announced today that it will make an equity investment in Companhia Brasileira de Securitização (CIBRASEC), equivalent to approximately 10 percent of the company’s share capital.  The transaction is expected to close over the next two to three months.  This will be IFC’s first equity operation involving a Brazilian securitization company and IFC’s first investment targeted specifically towards Brazil’s housing finance markets.

CIBRASEC, Brazil’s first securitization company, was established in 1997 by the country’s major private and public sector banks, as well as foreign banks, to develop secondary markets for home finance.  Its shareholders are Banco Bradesco, Unibanco, Caixa Econômica Federal, Banco do Brasil, Banco Itaú, Banco Santander, and 26 other Brazilian banks, as well as financial institutions that operate in the housing market.  

The company acquires real estate receivables from financial institutions and developers, then securitizes these assets by issuing Certificates of Real Estate Receivables (Certificados de Recebíveis Imobiliários, or CRIs), which are effectively the Brazilian equivalent of mortgage-backed securities.  The certificates are placed with institutional and other investors.  To date, CIBRASEC has structured and placed over 350 million reais of real estate securitization transactions.

Jyrki Koskelo, director of IFC’s Global Financial Markets Department, noted, “IFC is extremely pleased with this transaction, as we expect significant growth in both primary and secondary market activity involving finance of Brazilian residential real estate.  As a leader in the country’s housing finance securitization activities, CIBRASEC is well-positioned to support further development of these markets.”

Anesio Abdalla, CIBRASEC’s president, concurred, observing, “IFC’s investment in CIBRASEC represents an endorsement of our firm’s activities.  But it is also a vote of confidence in the growth potential of Brazil’s housing finance markets and their ability to help meet the residential funding needs of ordinary Brazilians, as well as the investment requirements of our institutional investor community.”

A new legal and regulatory basis for primary and secondary housing finance markets in Brazil was established in 1997.  The new regime created the underpinnings for loans and financial securities to be efficiently secured by real estate.  Further refinements allow for the realization of bankruptcy-remote advantages of trusts/special purpose vehicles that are typically used for securitization in other countries.  These refinements are also expected to facilitate the secondary market liquidity of CRIs.

In 2003, 17 separate CRI transactions raised 290 million reais for issuers, and CRI issuance volume in 2004 is already above that figure.  Both demand for and supply of CRIs have increased in the last several years.  These trends are likely to accelerate further due to Brazil’s increasingly benign interest-rate environment and heightened investor demand for new types of investment assets that are long-duration and relatively low-risk.

In light of the favorable trends in Brazil’s housing finance markets, Atul Mehta, IFC’s director for Latin American and the Caribbean, emphasized the development impact of this investment: “CIBRASEC is increasing the availability and lowering the cost of housing finance in Brazil.  It is making home ownership more accessible to the country’s middle class and helping address Brazil’s housing deficit.”

The mission of IFC ( 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.