BACS Warehousing Credit Line II

completed

_x000C_The proposed project consists of a new Warehousing Credit Line (WCL) of up to $25 million for BACS Banco de Credito y Securitizacion, S.A. (BACS or the Bank), to fund the origination and securitization of mortgages and mortgage-backed securities (MBS). In conjunction with this project, IFC would also modify the FIDEX project (#20942), to re-orient the use of proceeds in a similar structure to that of the WCL. The Fidex project was originally intended for securitization of trade receivables, but the client has requested the modification due to changing market dynamics.Following the higher than expected 76% acceptance of the sovereign debt restructuring offer in February 2005, and in an environment of continued improvements in the Argentine economy, the mortgage market is beginning to re-emerge. The contemplated project would support BACS’ original business plan, which was curtailed by the Argentine crisis. The warehousing line would help BACS rebuild its business in line with the purpose that it was originally set up for, at a time when there is growing demand for mortgage products.BACS was created in May 2000, with Banco Hipotecario, S.A. ("BH") as the main sponsor. BACS was Argentina''s first secondary mortgage market securitization company. As of December 31, 2004, BACS had $58.7 million in assets, $23.2 million in liabilities, and a relatively strong capital position (with a ratio of equity to total assets of 60%). As a result of the Argentine financial crisis, the bank registered losses in 2002 and 2003 totaling $12.7 million. However, the bank returned to profitability in 2004, with net income of $2.8 million.