NHMFC Asset Sale

completed

The National Housing Mortgage Finance Corporation (NHMFC) has approached IFC seeking support for its May 2004 auction of non-performing housing loans. The sale portfolio, consisting of 55,000 mortgages, has an outstanding principal balance of ~PHP 13.5 billion (about $240 million), equivalent to about 32% of NHMFC’s total portfolio of PHP42 billion ($750 million). The winning bidder of the May auction was Deutsche Bank Real Estate Global Opportunities Fund, a $360 million fund managed by Deutsche Bank. Government agencies have dominated the low to medium-income housing sector in the Philippines, in both funding and origination. Because of resultant inefficiencies, and because of private banks’ focus on the medium to high end housing sector, there is significant unmet demand for low-income housing loans. The proposed transaction will be the first step in the Government’s effort to restructure NHMFC and the housing finance sector itself, an initiative to which the authorities attach great importance. The purpose of the project/investment is for IFC to provide funding for the following components:- assisting the purchase of the portfolio; - the subsequent resolution of the assets; and - the capitalization of the project-related entities (i.e., the Special Purpose Entity and the Servicer Company).