As government agencies both in the U.S. and abroad seek to develop and refine housing-finance mechanisms in emerging markets, 2001 may turn out to be the year for securitization in Latin America to swing into full bloom, sources say.
Last week, market participants reportedly were "hoping" to close an ongoing Costa Rican MBS deal by February 2001, with two smaller, less-developed deals from the same country rumored to be launching at the same time. Additionally, ideas of developing the secondary mortgage market have also been brewing in Nicaragua, Honduras and the Dominican Republic for quite some time (ASRI 5/8/00).
With intentions to develop a secondary mortgage market in Costa Rica, the anticipated February deal is said to be in the structuring stage. The issuer will be a special purpose corporation and will be enhanced with an offshore SPV. The mortgages will originate from Costa Rica-based Banco Interefin S.A. and Banco San Jose S.A.
The deal will place all at once as a sufficient pool of mortgages, and the one-time placement will be aimed toward qualified institutional buyers. While sources say the deal could be between $50 million and $75 million, it was originally expected to be $50 million and is currently said to be at the $60 million level.
MBS initiatives in emerging markets began surfacing about a year ago when the government agency, Overseas Private Investment Corp. (OPIC), in conjunction with HUD came to the rescue for victims of hurricanes George and Mitch (ASRI 11/1/99).
OPIC also announced it approved a direct loan for a housing project in Nicaragua in October. It is possible that the dealings in Nicaragua are intended to finance housing construction, in which case, deals similar to the Mexican transactions Consorcio Hogar and Geo S.A. de C.V. (ASRI 12/4/00) may also begin to step up in Latin American markets. "Countries like Nicaragua, Honduras, and El Salvador need the construction, it's not that they need a mortgage," one source said.
However, the source warned that if the deals are for the purpose of financing construction, it would be quite different than the Mexican deals, as a result of varying economies and political climates. While sources at OPIC would not say much on the matter, they did suggest that the loan for the housing project in Nicaragua was for a mortgage-backed securities transaction.