There are tentative signs that a first securitization deal in the Philippines since the Asian Financial Crisis of 1997 may not be such a pipe dream. The government-supported National Home Mortgage Finance Corporation has upgraded its electronic accounts management and finance systems, a precursor to securitizing its performing loans.
Poor accounting systems among financial institutions in the Philippines have long been a major impediment to securitization, with overseas investors unimpressed by the quality of historical data.
According to NHMFC officials, the upgrade will significantly boost its collection and servicing capabilities.
The agency declined to offer details, including the potential size or timing of a first securitization. However, its ties with several international agencies - including the International Finance Corp. and Asian Development Bank - provide NHMFC with more creditability than the other entities linked to transactions since 1997.
Regarding a potential arranger, Deutsche Bank would seem a strong candidate. In 2004, Deutsche and NHMFC formed a joint venture special purpose company - Balikatan Housing - to resolve NHMFC's nonperforming loans.
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