With the partial-guarantee game in Mexico picking up steam, the FMO has positioned itself as a player. For the Dutch bank, funding the private sector in the developing world through subordinated loans, equity investments and other activities is old hat, whereas guarantees are a fairly new animal. But it's in good company in Mexico, where a handful of local and foreign entities have debuted their own partial guarantees for securitized deals only in the last year (see ASR 4/7 p.1). "As a development bank, we feel developing capital markets is actually the best thing to do," said FMO Investment Officer Remco Polman.
The FMO was founded 30 years ago as a joint venture between the Dutch government and a group of private banks. Financing activity in Latin America, Asia, Eastern Europe and Africa have taken the balance sheet to US$2 billion.
On the guarantee front, the bank went Mexican by providing a 7.2% enhancement for Credito y Casa, a Ps1 billion (US$96 million) securitization of bridge loans run by domestic brokerage IXE Casa de Bolsa (see ASR 3/31, p.17). "We are definitely there to stay," Polman said. An enhancement for housing developer Consorcio Hogar, another IXE-led deal, is understood to be in the works. Polman said the bank aims to branch out from the housing sector.
For now however, the subnational sector - populated in Mexico with securitizations by states and municipalities - is off-limits. "We only finance the private sector," Polman said. That still leaves a generous asset base. Deals in the pipeline include collateral such as power supply contracts and account receivables.
The bank is also eyeing other Latin American markets in the domestic and cross-border arenas. A partial guarantee is in the works for a Peruvian securitization in the real estate sector sized at roughly US$50 million. Outside the region, the bank has extended a partial guarantee in India. Only a few emerging markets have capital markets mature enough for the product to make sense, Polman said.
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