Mexican state housing agency Sociedad Hipotecaria Federal (SHF) is shooing its overgrown children into the arms of private bankers and bond investors. Dropping a chili pepper into the already hot sector of housing securitizations, the SHF is phasing out monies for construction bridge loans extended to housing finance companies. The result: Sofols - as the companies are known - will turn aggressively to the market. "They will have to diversify their funding sources," said Luis de la Pena, an analyst at Fitch Ratings. Sofol heavyweights Metrofinanciera and Su Casita have already started securitizing their bridge-loan portfolio (for interview with Su Casita Vice President Manuel Campos, see p. 21) and others are sure to follow suit, sources said.

The bulk of the housing companies' activity goes to financing mortgages, which the SHF will continue to fund, according to a source in the agency. But the hunger for bridge loans alone is stunning and in both sectors, growth is racing at breakneck speed. Sofol assets hit Ps63 billion (US$5.8 billion) in December, up 54% from the previous year. Some 75% pertained to mortgages and 25% to bridge loans for construction.

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