The disbursed tranche of the peso fixed rate loan has a maturity of eight years. The IFC funded this tranche by entering into an eight-year Philippine peso / US dollar cross-currency swap transaction carried out in the local market by Standard Chartered.
The cross-currency swap transaction executed by IFC is one of the longest swaps executed in the onshore market in terms of maturity. While the loan addresses the local currency needs of FLI, the swap transaction encourages local capital market development.
The loan will be supported by a technical assistance program, funded by IFC, to assist Filinvest in improving credit policies, loan management procedures and risk management systems in its mortgage operations.
"IFC is delighted to have undertaken this long-term peso-dollar swap to fund Filinvest Land," said IFC vice president and treasurer Nina Shapiro.
"This loan provides Filinvest Land with long-term Philippine peso financing without foreign exchange risk. It also contributes to local capital market development by using a long-term transaction executed in the onshore Philippine peso and US dollar swap market," added IFC country manager for the Philippines Vipul Bhagat.
IFC works closely with local branches of major commercial banks to extend the maturities available.
Such transactions, by increasing liquidity in the long end of the swap market, help develop this market further and ultimately benefit other Philippine corporations by providing them with long-term hedging tools. This underlines IFC’s commitment to using and promoting market-based mechanisms in providing local currency financing.
IFC’s loan will contribute to increasing the availability of mortgage financing to lower and middle income buyers in a market dominated by government-owned financial institutions and commercial banks that are not capable of serving these households.
As one of the premier housing development companies in the Philippines, Filinvest has been rapidly extending mortgage financing to homebuyers, including many unable to obtain mortgages from other sources.
IFC promotes sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. It finances private sector investments, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Its 178 member countries provide its share capital and collectively determine its policies.