Financing Report

The Client

Belgian housing construction company developing a series of large housing projects in Argentina.

Situation

The Company required construction and buyer financing for its projects in a difficult economic environment and dual currency market (US dollars and pesos). The Company also sought to make available financing for its buyers..

While experienced in housing construction, the Company had no expertise in the Argentine financial markets. Its previous work in Europe was generally in environments with well-established home mortgage markets where construction financing and buyer financing were readily available. Neither was readily available in Argentina.

Implications

Despite a shortage of moderate cost housing in Argentina, the Company's projects were delayed pending resolution of the financing issues.

Needs

The Company wanted recommendations on how to raise the required financing, in the hundreds of millions of dollars equivalent, despite the lack of readily available financing from banks.

Solution

PTC assessed the financing requirements of the Company's projects, evaluated existing financial sources, and met with commercial banking, insurance, investment banking, and law firms to determine possible solutions.

PTC concluded that a loan securitization program was feasible to support both construction financing and buyer financing, in both US dollars and in pesos. It showed that, at the time, there was sufficient demand among both US and Argentine investors for such securitized financings. It also identified local financial institutions with the relevant experience to a) provide interim funding pending securitization and b) underwiritng and distributing the mortgage-backed securities, in cooperation with international investment banks where appropriate.