The International Finance Corporation (IFC), the private sector arm of the World Bank Group, and Merrill Lynch Mortgage Capital, have signed with Metrofinanciera the Mexican peso equivalent of a US$100mn revolving line of credit.


The financing will help fund mortgage loans for low to middle-income home buyers, diversify Metrofinanciera’s funding sources, and maintain its securitisation programmes in the capital markets.


IFC and Merrill Lynch will each provide the peso equivalent of US$50mn.


Metrofinanciera is a Sofol, or a special-purpose financial company, and is Mexico’s fifth largest specialised mortgage lending institution by loans market share. Its main activity is to provide mortgages to low-income individuals and construction loans to housing developers.


Atul Mehta, IFC’s director for Latin America and the Caribbean says, “IFC’s investment underlines our strategy to develop the housing sector in Mexico by providing funding to key players, as well as to contribute to the development of the country’s capital markets.  In addition, with this investment IFC is playing an important catalytic role in Mexico, particularly given the collaboration with another leading investment bank such as Merrill Lynch.”


Armando Guzman, CEO of Metrofinanciera adds, “This warehousing line of credit provided by IFC and Merrill Lynch is another success for Metrofinanciera in its long-term strategy of diversification of funding sources. The capacity and experience in financial markets of IFC and Merrill Lynch brings substantial strategic strength to Metrofinanciera.


“Within the Sofoles in the Mexican housing finance sector, Metrofinanciera is the largest issuer of debt instruments, mortgage backed securities, and construction loan backed securities in the capital markets.”


Jim Cason, managing director of Merrill Lynch, comments: “We are excited about our relationship with both Metrofinanciera and IFC. We believe there is great potential in the Mexican mortgage market and are pleased that with this transaction we are able to further our involvement in this growth sector.”


Metrofinanciera was established in 1996 in Monterrey, Nuevo Leon, Mexico.


Metrofinanciera had total on-balance sheet assets equivalent to US$963mn and equity of US$69mn by year-end 2005. Together with its off-balance sheet originated loans, its construction loans portfolio stood at US$802mn, while its mortgage loans portfolio stood at US$429mn.