Things just got cozier between the International Finance Corp. and Banco Davivienda, a major player in the mortgage sector. In a deal that cements an existing relationship, Davivienda will receive a total $60 million from the multilateral agency in the form of a $25 million purchase of new common shares and stand-by financing of $35 million for subordinated bonds, according to a press release by the IFC.
The percent of Davivienda that the IFC is assuming with its investment was roughly 4%, according to a source familiar with the bank.
The agency pointed out that housing finance is a leading focus of its Colombian business, a statement borne out by the stepped-up involvement with Davivienda. "This is the most active bank in providing loans to Titularizadora," said Claudia Salcedo, assistant director of Fitch Ratings affiliate Duff & Phelps. Basically a Colombian version of Fannie Mae, Titularizadora has re-packaged about Ps900 billion ($397 million) in loans from Davivienda since the agency launched its securitization program in May 2002. 1
So far, Titularizadora has placed seven RMBS backed by performing loans for a total of Ps3.1 trillion and three RMBS backed by a non-performing portfolio for Ps861 billion. All the deals, and their collateral, have been denominated in the UVR inflation index.
Apart from contributing to Titularizadora's multi-originator deals, Davivienda has issued roughly Ps170 billion in mortage-secured UVR bonds that in many ways resemble covered bonds issued in other countries. In addition, the bank has placed about Ps430 billion in UVR paper backed by fully provisioned non-performing loans
Davivienda recently introduced peso-denominated mortgages, but the portfolio hasn't reached the critical mass for securitization, according to Salcedo. A war among banks in Colombia to attract borrowers has sent mortgage rates tumbling and motivated lenders to offer more attractive products. Still, the offerings remain a far cry from those in the more developed markets. Mortgage maturities, for instance, seldom exceed ten years.
Davivienda was focused almost exclusively on mortgage lending when a financial crisis hit Colombia in the late 90s, forcing many banks to rethink their strategy or go under. Choosing the former option, Davivienda transformed itself into a full-service commercial bank. "They learned to this successfully in only five years," Salcedo said.
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