Whoa, Did Mexico Just Bail Out Its Homebuilders? Financial Times
go to original March 7, 2013

It’s not exactly a bail-out, but it’s pretty close.

On Wednesday, Mexico threw a 15bn peso ($1.2bn) lifeline to the country’s beleaguered homebuilders, whose balance sheets have been hard hit by a change in government policy away from single-family home construction.

Through the mortgage development bank Sociedad Hipotecaria Federal, the government has agreed to absorb as much as 30 per cent of losses on loans made by commercial banks to the country’s homebuilders. The guarantees, set to the tune of 15bn pesos, is the equivalent of 40-50 per cent of loans made to the sector last year. The aim, it is hoped, is to ease the credit crunch faced by homebuilders at the moment.

“With this program, financing and credit for construction will become more attractive to commercial banks and it will create an incentive for a bigger flow of financing,” Fernando Aportela, deputy finance minister, told reporters on Wednesday.

The share price reaction was immediate.

Read the whole story at Financial Times

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