The International Finance Corporation (IFC) is looking to invest in a Philippines housing receivables transaction, which would be the first time the IFC invests in a Philippine securitization. The transaction involves housing receivables of a private financial institution.
The IFC says it would be interested in helping Philippine financial institutions structure securitizations, introduce long-dated local currency debt instruments, and diversify the pool of investment instruments in the local debt market.
One of the reasons why the Philippine securitization market has remained undeveloped is because there is virtually no secondary bond market.
Securitization would also allow the IFC to develop housing finance and generate long-term funds for re-lending, which would lower the cost of mortgage loans. The new securitization law to be introduced in the Philippines is expected to focus on the country's housing needs in particular.
Meanwhile, the Development Bank of the Philippines (DBP) is considering securitizing its wholesale loan portfolio, which would allow the bank to continue making loans to financial institutions without exceeding the single-borrower limit that is imposed by the Central Bank of the Philippines.
Should the DBP move ahead with the transaction, it will be expected to close by year-end. However, bank sources said the plans and the time frame would weigh heavily on investor appetite. The DBP is also looking at other options, such as asking the Central Bank to increase the single-borrower limit, or pre-terminate the loans to the banks. The DBP is not keen to do this, however, as it feels it is not fair and is also not consistent with its mandate to provide funding.