$20 million financing package will help boost mortgage financing for low- and middle-income individuals, contributing to lower the region’s housing gap
La Hipotecaria will get a financial package of approximately $20 million from the Inter-American Development Bank (IDB) to boost residential mortgage financing to low- and middle-income individuals in El Salvador, Panama and Colombia.
The IDB financing comprises a senior, secured and revolving credit line for up to $15 million for the company’s units in the three countries and local currency partial credit guarantees to be issued in Colombia for up to 9.5 billion pesos (equivalent to $5 million). Depending on market conditions, the company may raise an additional $10 million through the IDB loan syndication program.
“There is an important housing gap in the region and reducing it is not only a priority for governments and the IDB, but represents an important opportunity for higher private sector participation in mortgage financing,’’ said Daniela Carrera-Marquis, Chief of the Financial Markets Division at the IDB's Structured and Corporate Finance Department.
“At the same time the project supports La Hipotecaria in its efforts to continue to tap the capital markets for long-term financing for their mortgage origination, thus contributing to close the region's housing deficit and to deepen local capital markets.’’
The financial package provided by the IDB will pave the way for La Hipotecaria to expand its mortgage portfolio while maintaining an adequate balance sheet position, according to Marisela Alvarenga, the IDB project team leader. It will also allow the company to better tap local capital markets to fund its lending, particularly in Colombia where it has recently started operations. La Hipotecaria is expected to finance purchases of as many as 2,400 additional houses annually in the three countries.
The project supports the area of accessBanking within the beyondBanking program, an IDB program that promotes sustainable banking principles and practices in Latin America and the Caribbean. The accessBanking projects aim at promoting financial deepening strategies and at supporting the development of products and services for persons with limited access to the financial system.
La Hipotecaria is a leading mortgage lender in Panama and El Salvador and started operating in Colombia last year. The company is a pioneer in the creation of investment-grade mortgage-backed securities offered through local and international markets to local and international institutional investors, while retaining servicing rights on all originated mortgage loans.
“The partnership with the IDB comes at this important moment in our growth strategy. This long term financing is closely aligned with our strategic objectives and supports our efforts to improve life quality for our clients in Panama, El Salvador and Colombia by providing adequate mortgage financing solutions,” said John D. Rauschkolb, Vice President of La Hipotecaria.
The IDB’s Structured and Corporate Finance Department (SCF) manages all IDB non-sovereign loan guarantee loan operations for large-scale projects, companies, and financial institutions in Latin America and the Caribbean. Through its syndicated loan program, SCF plays a catalytic role in helping to mobilize third party resources through partnerships with commercial banks, institutional investors, co-guarantors and other co-lenders for projects with high developmental impact.