Period of Applying for Securitization in Azerbaijan Depends on Two Factors: IFC
Azerbaijan, Baku, 7 April /corr. Trend I.Khalilova / The low amount of the mortgage market in Azerbaijan testifies the premature timing of applying for securitization in the Country, said the Head of the IFC's Housing Finance Technical Assistance Program in CIS, Elena Klepikova, who arrived in Baku last week as part of the IFC delegation headed by Declan Daff, the vice-president of IFC for Europe and Central Asia.
Currently the mortgage market of Azerbaijan totals only $150mln, and in principle, even one deal on securitization may not be very effective. According to her, due to this, Azerbaijan needs time to apply this instrument. "Securitization is an expensive measure and only when the mortgage market totals huge amounts, the securitization may be effective," Klepikova said.
Approximately $100mln is required for one securitization deal.
She considers that firstly the securitization issues in Azerbaijan will depend on the banks' opportunities to form mortgage portfolios, as well as to search for long-term investors. According to Klepikova, the number of the long-term investors is few in Azerbaijan, and they are insurance companies and pension funds. These companies are capitalized at low levels in Azerbaijan, and therefore, the issue of placing their reserves in mortgage credits is under question, she said.
Due to the crisis in the developed markers, the foreign investors attentively approach the securitization. Re-assessment will be held and requirements will be toughened for certain investments on mortgage crediting in the world financial markets.
"Nearly one year must pass before making any conclusions to begin placements in these securities again," Klepikova said. Understanding and strengthening the situation in the market is very important, but unfortunately, the market is always shadowed by crisis, she added.
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