With the soon to be finalized purchase of R$100 million ($51 million) worth of mortgages from Caixa Economica Federal, Brazil's secondary mortgage company Cibrasec is inching closer towards its first sizeable securitization.
"We hope to reach R$140 million in assets by the end of the year," said Luiz Pinto Lima, executive vice president at Cibrasec. "Then, we'll have enough size to sit at the table with prospective investors."
If the relationship with Caixa continues to develop, Cibrasec is likely to be able to do just that. Caixa is Brazil's largest bank in terms of lending and credit and its mortgage portfolio consists of over 1.5 million contracts amounting to over R$59 billion.
The bank provides 95% of the housing loans taken out by low-income sections of the population and over 50% of all the mortgages issued in Brazil. It is thus the principal pillar of the federal government's housing policy, which aims to help families purchase homes of their own, through the provision of credit directly to the purchaser.
Local pension funds are receptive, in principle, to Cibrasec's securities. "They still need to get comfortable with us and with the assets," explained Pinto Lima.
With a total of around $12 million in local deals so far, Cibrasec is still far from launching its first international transaction. "We would need much more volume before we go international," said Pinto Lima. "We think it is important to establish a track record in the local market before we tap foreign investors."