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IDB announces partial loan guarantee to support first issue of mortgage-backed securities in Peru

The Inter-American Development Bank today announced that it will issue a partial loan guarantee supporting Peru’s first issue of mortgage-backed securities, a US$25 million package from BBVA Banco Continental S.A. of Peru. This marks the first issue by the First Program for Mortgage Securitization, whose maximum is US$100 million, and is part of the IDB’s US$100 million Partial Loan Guarantee Facility to support various Banco Continental mortgage-backed securitization programs.

BBVA Banco Continental is Peru’s second-largest bank in terms of assets and deposits. Mortgage financing is a key aspect of its business strategy.

With this issue, the IDB is supporting the first securitization of a mortgage portfolio in Peru, thus introducing a source of financing for the originators and a new financial instrument for investors.

"This first securitization of mortgages in Peru marks a milestone in the development of new and efficient sources of financing,” said Eduardo Avila Zaragoza, assistant finance manager for Banco Continental. “We are also offering the capital markets a very attractive new financial asset. Transactions like this provide both liquidity and financing capacity, enabling us to meet the growing demand for mortgages in the coming years.”

Banco Continental is the second-largest commercial bank in Peru. As of October 2007, it had US$7.8 billion in assets and total deposits of US$5.4 billion. Banco Continental has built an extensive network throughout the country, with 215 branches, 332 ATMs and 3,600 employees. The bank has a BBB international rating for long-term loans in national currency and a BBB--rating for long-term loans in foreign currency from Fitch Ratings. 

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