FOR IMMEDIATE RELEASE
December 19, 2002

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For further information, contact:
Lawrence Spinelli (202) 336-8690
Timothy Harwood (202) 336-8744

IN AGENCY FIRST, OPIC INSURES MORTGAGE PROJECT IN GUATEMALA

Project addresses housing shortage, industry lack of long-term capital

WASHINGTON, D.C. – The Overseas Private Investment Corporation (OPIC) will provide political risk insurance for a mortgage securitization project in Guatemala that will inject much-needed long-term capital into the industry, helping the country to alleviate its housing shortage and to standardize its mortgage procedures, OPIC President and CEO Dr. Peter Watson announced today.

The project represents the first offshore purchase of Guatemalan home mortgages and OPIC’s first insurance coverage for a mortgage securitization. 

OPIC will provide $15 million in insurance coverage to Mercury Mortgage Finance-Guatemala, Ltd., a financial entity with offices in Miami, in connection with a project which will which will raise $100 million through a bond offering in the U.S. capital markets for the acquisition and securitization of new home mortgages originated by local private banks in Guatemala. The mortgage notes will then be used as collateral and primary source of repayment for mortgage-backed securities to be issued by a Mercury Mortgage-created trust and sold in the U.S. to qualified institutional buyers. 

The residential real estate portfolio will consist of single-family homes with market value ranging from U.S. $30,000 to $350,000, to be built in or around Guatemala City.

“We can expect that this project will serve as a catalyst for the creation of a secondary mortgage market in Guatemala, thereby lowering interest costs, increasing the availability of mortgage funds, and standardizing mortgage procedures in the country,” Dr. Watson said. “Moreover, it will result in the unbundling of the mortgage industry in Guatemala into origination, servicing, investing, and risk bearing components, similar to the U.S. mortgage market.”

Dr. Watson noted that Guatemala’s housing market is characterized by little liquidity and an estimated housing shortage of over 750,000 units, according to the Guatemalan housing insurance agency. Low and medium income buyers are often unable to obtain mortgage loans due to a lack of consistent long-term financing; consequently, local builders are limited in their ability to expand their development operations.

“By accessing international capital markets as the primary funding source, this project established a mortgage program that will provide efficient, long-term funding on an ongoing basis,” Dr. Watson said.

OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers.

OPIC’s political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency’s 30-year history, OPIC has supported $142 billion worth of investments that have helped developing countries to generate over $11 billion in host-government revenues and create over 673,000 host-country jobs. OPIC projects have also generated $64 billion in U.S. exports and create more than 253,000 American jobs.