IFC Launches Mexican RMBS Support Facility

The IFC plans to launch a $150m debt facility to help mitigate potential liquidity shortfalls in Mexico’s housing finance sector. The Mexican Housing Finance Intervention Facility was structured in collaboration with SHF and the IDB and allows the IFC to purchase up to 15% of RMBS to offset future shortfalls in investor demand for these securities. The IFC can also provide credit enhancements to RMBS in the form of partial credit guarantees, in coordination with SHF, or by purchasing RMBS mezzanine risk tranches. “If there is an interruption in the local capital markets, our debt facility can step in and provide comfort to other investors that we are prepared to take senior as well as mezzanine risk, in order to encourage them to keep financing,” Atul Mehta, the IFC’s director for LatAm and Caribbean, tells LatinFinance. The IDB is considering a similar $150m facility, subject to approval next month. The IFC hopes the facility will serve as a model for products in other markets threatened by lack of liquidity. Since 2001, IFC has invested $531m to support Mexico’s housing finance sector.