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Press Release

Friday, September 21, 2007

OPIC Board Approves $250 Million for Low-income Housing Development In Mexico

Project will build over 15,000 low and middle-income homes, support growth of capital markets in country

WASHINGTON, D.C. – The Board of Directors of the Overseas Private Investment Corporation (OPIC) approved $250 million in financing to fund the construction of more than 15,000 low and moderate-income homes in Mexico, in a project that will also enable smaller Mexican mortgage lenders and larger developers to tap capital markets for additional financing for housing development.

The OPIC investment guaranty will enable Reforma BLN-Backed I (Reforma), a U.S.-based structured vehicle, to provide loans to finance housing construction, land development and infrastructure development. In particular, Reforma will provide funds to smaller real estate companies and mortgage lenders – called sofoles or sofomes – that have lacked access to financing that would enable them to keep up with market demand.

Reforma, backed by AAA-rated Mexican Bridge Loan Notes (BLNs), allows U.S. qualified institutional buyers to invest in Latin America's strongest asset-backed securities market with enhanced credit risk by a partial guaranty from OPIC. Deutsche Bank Securities Inc, is the sole lead arranger of Reforma BLN-Backed I.

A 2007 report by the International Monetary Fund indicated that while mortgage lending activity in Mexico had been impressive recently, housing production still lagged new household formation, and is therefore insufficient to address a 4.5 million-unit deficit.

Upon his election last year, Mexican President Felipe Calderon announced a plan to build one million new houses per year during his administration. During several visits to Mexico in 2006 and 2007, OPIC made clear its intention to support that goal, and concluded several small projects. Today’s board project has the potential to generate a much broader impact.

“This housing project, OPIC’s largest to date in Latin America, stands not only to help Mexico address its housing deficit, but to stimulate the growth of the country’s capital markets, by allowing U.S. investors to support sofoles and real estate developers for the first time,” said OPIC President and CEO Robert Mosbacher, Jr. “Adding much-needed liquidity to the Mexican housing market is an important innovation in this project, and will help to increase the overall efficiency of the industry.”


OPIC is the U.S. Government’s development finance institution.  It mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy.  Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad.  OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.

 

Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers. OPIC services are available for new and expanding business enterprises in more than 150 countries worldwide. To date, OPIC has supported nearly $200 billion of investment in over 4,000 projects, generated $74 billion in U.S. exports and supported more than 275,000 American jobs.