Peru looks to set up its own Fannie Mae

The Peruvian government plans to transform housing lender Mivivienda into a guarantee agency and bank lender in the model of Fannie Mae in the US, Finance Minister Alfredo Thorne told LatinFinance.

The change is part of an overhaul of Peru’s four state lenders – Banco de la Nacion, Cofide, Agrobanca and Mivivienda – to increase access to credit, he said.

“Similar to what you have in Fannie Mae, and similar to Mexico’s Sociedad Hipotecaria, the idea for Mivivienda is to work with the banking system and leverage ourselves on the private banks,” Thorne said. “Today the private banks do well, but they don’t access the low income population.”

Thorne pointed to a housing shortfall in Peru, saying the government needed to work with construction firms and borrowers to develop a “credit scheme” that would help low-income Peruvians access mortgages.

Alejandro Niezen became the head of Mivivienda at the end of September and has been charged with putting together a plan to implement the changes, Thorne said.

As Mivivienda evolves to become a guarantee agency, rather than a direct lender, Thorne said it is possible the fund will seek to split off the loans already on its PEN8.2bn ($2.35bn) balance sheet.

“We need to think what we will do,” Thorne said. “But there is a great opportunity to sell part of that portfolio to the private banks or to private financial institutions. Most of those loans have been co-financed with the private sector, so they know the quality. If we package them up and sell them we can create more space within the balance sheet of Mivivienda to achieve our objectives.”

The new Peruvian administration will have Cofide focus on SME lending, Banco de la Nacion advance a financial inclusion agenda and Agrobanco concentrate on rural development, Thorne said.

Separately, Peru has covered its cross-border financing needs for 2016, Thorne said. Some PEN3bn remains of the sovereign’s 2017 funding plan, which it will cover through its regular domestic auctions, he said. In the future, Peru will chose between curves in dollars and soles to borrow opportunistically, depending on where they see best value.

“Today we have two benchmarks that are highly liquid in dollars and soles,” Thorne said. “We will adapt our financing depending on the risks that we see outside. We should be able to prepare ourselves for either global risks coming from the Fed or for any tightening from that side or any international volatility.”