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Mexico Mortgage Agency Seeks $1.5 Billion From China, World Bank, CEO Says
Mexico is seeking a $1 billion loan from a Chinese development bank and another $500 million from the World Bank to finance home lending, said the agency in charge of developing Mexico’s mortgage market.
The Chinese loan may be signed as soon as September, Javier Gavito, chief executive officer of Mexico City-based Sociedad Hipotecaria Federal, said today in an interview at Bloomberg’s Mexico City office.
“The amount of funds and opportunities for investments are considerable,” Gavito said.
Sociedad Hipotecaria Federal, or SHF, obtained a $1 billion loan from the World Bank in 2008, and is receiving installments from a $2.5 billion 10-year conditional credit line granted by the Inter-American Development Bank. The SHF is using the funds to inject liquidity into Mexico’s mortgage market.
“We want another credit line from the World Bank for $500 million,” Gavito said.
Banks globally tightened loan conditions after sub-prime lending dragged some of the biggest financial institutions into bankruptcy and triggered the worst global recession since World War II.
Increased Funding
Mortgage lenders such as Hipotecaria Su Casita SA have increased their funding from SHF after a drop in the mortgage- backed securities market when investors around the world shunned mortgage bonds and related securities amid rising U.S. defaults on the underlying loans.
Mexico had a housing shortage of 8.9 million units at the end of last year, according an SHF report dated May 26. The figure is the broadest measure of housing needs and includes families without a residence as well as those living in homes that are overcrowded or in ill-repair. SHF forecasts that 1 million mortgage loans will be signed in Mexico this year.
Infonavit, Mexico’s state-owned mortgage lender, will sell 6 billion pesos ($466 million) in mortgage bonds in the second half of the year, Gavito said. Private banks “will sell at least 3 billion” pesos in mortgage securities this year, he said.
An increase in unemployment caused by last year’s recession led to a higher delinquency rate at Mexico’s Sofoles, specialized lenders, which now fund their operations partly through financing from the SHF. Mexico’s economy shrank by 6.5 percent in 2009, the most since 1932.
Delinquency Rate
The delinquency rate for Sofoles rose to 8.7 percent in March from 5.2 percent in the same month last year, the banking commission said in a statement on May 26.
Standard & Poor’s downgraded its credit rating for Hipotecaria Su Casita SA, Mexico’s largest Sofol, for the third time this year on July 19. S&P cut Su Casita’s long-term counterparty credit rating to “CCC” from “B-” on a global scale and maintained a negative outlook on the lender. Su Casita’s financial position will “weaken further,” the ratings agency said in an e-mailed statement.
The SHF has asked mortgage lenders to increase their capitalization in 2011.
“If they want ours loans, next year they must follow the capital requirements similar to the required to banks,” Gavito said.
To contact the reporter on this story: Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net
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