Looking to boost the economies of the region and open new investment opportunities for U.S. businesses, the Overseas Private Investment Corp. recently launched its Central America & Caribbean Initiative.
"Central America and the Caribbean have begun to emerge as one of the most lucrative regional markets worldwide for American good and services," said George Munoz, president and CEO of OPIC, during a round table discussion with Hispanic-American businessmen in New York. "At the same time, the large-scale destruction caused by Hurricanes Georges and Mitch call for governments, private enterprises and non-governmental organizations to join forces and coordinate efforts to help the region."
OPIC's CACI initiatives include loans, microcredits and bond insurance. The agency already has a track record in the area: it has supported $3.2 billion in investments in the last five years and is structuring a $30 million MBS transaction with the U.S. Department of Housing and Urban Development that will finance housing for 5,000 Dominicans whose homes were destroyed by Hurricane Georges (ASRI 11/1/1999 p.1).
"Our aim is to promote the use of securitization as an alternative to government-subsidized housing and as a way to inject liquidity into the market," said Munoz. "We think that we will see more securitization in the area. It's been a long time in coming but statistics show that people don't renege on their mortgage payments regardless of how poor they are. So the only real risk that exists is that of currency fluctuation which is an issue we address through our political insurance."
Munoz also sees advantages to securitized transactions involving other assets. "We've been very instrumental in port facilities, airports and other major infrastructure projects," he explained. "And we see a potential for securitization of these type of projects as well, although it might take some time."
CACI has been shopped to potential investors in Los Angeles, Miami, Chicago and New York but the initiative will take full force later in July, during a project investment forum in Panama.
According to OPIC officials, the forum will be the first of its kind since President Clinton signed into law the Trade and Development Act of 2000 on May 18. The new measure includes the U.S.-Caribbean Basin Trade Partnership Act and other provisions designed to expand two-way trade and to create incentives for the countries of the Caribbean to continue reforming their economies and participate more fully in the global economy.
OPIC is expected to announce a housing program as well as a microlending program for the region during the Panama conference.