Washington, D.C., October 9, 2008—IFC,
a member of the World Bank Group, today announced that it will launch an
innovative facility designed to support Mexico’s housing finance sector
and help mitigate potential liquidity shortfalls arising from the United
States and global credit crises.
The $150 million Mexican Housing Finance Intervention Facility was structured
in close collaboration with Sociedad Hipotecaria Federal (SHF), the Mexican
government’s housing development bank, and the Inter-American Development
Bank (IDB). It aims to provide a comprehensive response to recent liquidity
shortfalls in Mexico’s residential mortgage-backed securities (RMBS),
also called BORHIS locally. IDB is considering a similar facility, which
would make available an additional $150 million. The impact of both IFC
and IDB facilities would be of $300 million.
Through the facility, IFC can purchase up to 15 percent of BORHIS to offset
future shortfalls in investor demand for these securities. IFC will also
provide credit enhancements to BORHIS in the form of partial credit guarantees,
in coordination with SHF, or by purchasing RMBS mezzanine risk tranches.
Each component should stimulate private sector investor flows into the
BORHIS and housing finance sectors—both of which have sound credit fundamentals
and underwriting standards, in spite of global liquidity pressures.
Javier Gavito, General Director of SHF, said, “Mexico’s capital markets
continue to be a viable source of funding for housing. By providing liquidity
to BORHIS, IFC is helping address the shortage of adequate housing, bridging
the housing gaps in our country, which is in line with our long-term strategy.”
James Scriven, IFC Director for Global Financial Markets, said, “This
innovative and counter-cyclical initiative is the first of its kind for
IFC—not only for housing finance, but also for any emerging markets asset
class in a client country. Given the current global financial crisis, it
is also likely to serve as a model for similar initiatives in other emerging
Since 2001, IFC has invested $531 million to support Mexico’s housing
finance sector and help expand access to mortgages for lower- to middle-income
families. As part of its strategy, IFC has collaborated with SHF to develop
a vibrant primary and secondary mortgage market in the country.
IFC has collaborated on this effort with IDB, which also aims to support
Mexico’s housing finance sector in response to the increasingly challenging
market conditions. IDB expects to put forward its facility for board consideration
IFC, a member of the World Bank Group, creates opportunity for people to
escape poverty and improve their lives. We foster sustainable economic
growth in developing countries by supporting private sector development,
mobilizing private capital, and providing advisory and risk mitigation
services to businesses and governments. Our new investments totaled $16.2
billion in fiscal 2008, a 34 percent increase over the previous year. For
more information, visit www.ifc.org.