Homex Jumps as Government Expands Guarantees: Mexico City Mover

Desarrolladora Homex SAB (HOMEX*), Mexico’s biggest homebuilder, rose the most in a month after the government indicated it may expand a loan-guarantee program for companies in the industry.

Homex jumped 3.9 percent to 18.48 pesos at the close in Mexico City, the biggest advance since March 6, according to data compiled by Bloomberg. The Habita index of six Mexican homebuilders surged 3 percent, also the biggest increase since March 6 on a closing basis, paring the index’s loss this year to 36 percent.

Mexico may expand a homebuilder loan-guarantee program announced in March, Jorge Carlos Ramirez, minister of urban, agrarian and territorial development, said at a press conference on April 5, according to an e-mailed statement. The country had said when the program was unveiled March 6 that it would cover as much as 30 percent of banks’ losses on loans to homebuilders in a bid to reduce concern about their financing.

Investors are “are seeing it as somewhat positive,” Aldo Miranda, a trader with Intercam Casa de Bolsa SA in Mexico City, said in a telephone interview. The program “still needs to be implemented and business models still need to changed.”

Mexican homebuilders have tumbled this year on concern the government’s shift to promote capital-intensive apartment construction over single-family dwellings may whittle the companies’ cash holdings.

Urbi Desarrollos Urbanos SAB (URBI*), which had fallen 63 percent this year through yesterday, rose 5 percent today to 3.17 pesos.

The country said March 6 that the mortgage development bank known as Sociedad Hipotecaria Federal will offer guarantees to commercial banks to boost lending for housing by as much 50 percent. Under the program, Mexican homebuilders with “healthy balance sheets” will have access to additional funding of as much as 15 billion pesos ($1.2 billion).

To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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