Azerbaijani bank expects favorable situation on world capital markets for securitization
Azerbaijan, Baku, Aug. 17 / Trend I.Khalilova /
The Azerbaijani Texnika Bank has set the task to increase the mortgage portfolio up to 100 million manat by late 2010, Bank Board Chairman Samir Huseynov said.
"This is one of the less risky instruments, since mortgage loans are long term. Given that while mortgage market in Azerbaijan undergoes the early stage of development, we can choose the most creditworthy clients," Huseynov said.
The bank's current mortgage portfolio amounts to 75 million manat, of which 22 million manat issued from the Azerbaijan Mortgage Fund (AMF) acting under the Central Bank, $ 8 million through a loan from the Black Sea Trade and Development Bank, and over 40 million manat -the bank's own resources.
The bank may draw 5 million manat from the Mortgage Fund by late 2010 and the remaining funds will be provided with its own resources, Huseynov said.
"We are in talks to attract foreign loans for mortgages, but because of the adverse conditions we do not hurry to draw them," Huseynov said.
There were problems in global financial markets in the first half of 2010 , where remained anxious mood in relation to transactions involving mortgage financing, but today the situation has improved. For this reason, the bank could not yet go to the securitization of mortgage portfolio.
"We formed a good portfolio to carry out such transactions, as this portfolio must be at least 75 million manat," Huseynov said. "We have such plans, but at the moment the capital markets are not favorable for securitization, as many investors have lost from the securitization. In this regard, investors are still regard the securitization with great caution, but I think that if not this year then in 2011 it will be possible to launch such a project to attract more long-term and cheap resources."
Under the AMF's terms, the maximum amount of the issuance of conventional mortgages in Azerbaijan is 50,000 manat at a rate of eight percent and for 25 years. But the amount in the social mortgage is 35,000 manat, at an annual rate of four percent and the term - 30 years. Initial fee for the ordinary and concessional loans is 15 percent.
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