quarta-feira, 10 de setembro de 2014

Brazil Covered Bonds Boosting Housing Key to Election: Mortgages

Wednesday, September 10, 2014

 

Sept. 10 (Bloomberg) -- Brazil President Dilma Rousseff, who has championed affordable housing since taking office in 2010, is turning to the international bond market for real- estate funds in the final weeks of her re-election campaign.

 

Finance Minister Guido Mantega said last month that Brazilian banks will be allowed to sell covered bonds -- financing pioneered in Europe to fund home loans. Banks can borrow more cheaply using the securities because mortgages provide additional collateral, giving homebuyers lower rates.

 

Rousseff, 66, frequently touts her signature program, My House, My Life, in a presidential race in which she lags behind her opponent in polls. As the program adds to the budget deficit, now at a seven-year high, the bonds will provide another financing source for banks, which rely on deposits and government loans to provide mortgages.

 

“It is necessary to create alternative sources of funding for the housing sector and it makes sense for this government to do it while it still is in office,” said Octavio de Lazari Jr., a deputy director at Sao Paulo-based Banco Bradesco SA and president of Abecip, an association of real-estate lenders.

 

Banks could issue a total of almost 200 billion reais ($89.6 billion) in a decade, according to Alexandre Assolini Mota, a partner at PMKA Advogados in Sao Paulo who specializes in real estate law. The securities probably would draw interest from Brazilian institutional investors such as pension funds, he said.

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