Mexican Government’s Stimulus Measures Are Credit Positive for Homebuilders
On 13 September, Mexican President Enrique Peña Nieto announced a MXN27 billion ($2 billion)
economic growth acceleration program that targets infrastructure, consumption credit and financing
support for the housing industry. The economic stimulus program will be credit positive for Mexico’s
beleaguered homebuilding industry.
The stimulus aims to reactivate a weak economy through public spending. Although many details are
currently unknown, the government has already announced that it would spend by year-end almost half the
new stimulus money (about MXN13 billion) to finance housing construction through Mexico’s
development banking sector and the National Housing Commission. The new stimulus funding means the
Peña Nieto government, which took power last December, has now allocated about MXN34 billion to
boost housing construction through resources other than commercial banks.
Homebuilders that will particularly benefit from the stimulus are those that already have better credit
quality than their peers, including Consorcio ARA S.A.B. de C.V. (Ba2 stable), Corpovael S.A. de C.V.
(Cadu, B1 stable) and Vinte Viviendas Integrales S.A.P.I. de C.V. (B2 stable).
Homebuilders in Mexico have long struggled with the unpredictable distribution of federal subsidies.
Delays in subsidies have created a high inventory of finished, unsold homes, and led to weaker sales. But the
new government’s strong support for the housing sector has raised our expectation that the government will
execute the stimulus program rapidly.
The housing stimulus is in line with the Peña Nieto administration’s other measures to improve the sector,
particularly a previous MXN6 billion revolving syndicated loan program from two development banks,
Sociedad Hipotecaria Federal S.N.C. (SHF, Baa1 stable) and Nacional Financiera (unrated). The banks
have set operating and financial requirements to determine which homebuilders would qualify for their
support. Under the program, Cadu has already received a MXN500 million credit line and Vinte is in the
process of receiving a MXN1 billion credit line.
The government announced the development banks’ loan when it presented its 2014 operating rules for
housing subsidies. As part of the MXN34 billion in federal resources allocated to housing construction,
SHF’s MXN15 billion program will provide partial guarantees to construction loans.
Since the development banks will provide most of the financing for new housing construction, those banks
should continue to set the operating and financial requirements for homebuilder eligibility, just as they did
for the syndicated loans and partial guarantees programs.
On 13 September, Mexican President Enrique Peña Nieto announced a MXN27 billion ($2 billion)
economic growth acceleration program that targets infrastructure, consumption credit and financing
support for the housing industry. The economic stimulus program will be credit positive for Mexico’s
beleaguered homebuilding industry.
The stimulus aims to reactivate a weak economy through public spending. Although many details are
currently unknown, the government has already announced that it would spend by year-end almost half the
new stimulus money (about MXN13 billion) to finance housing construction through Mexico’s
development banking sector and the National Housing Commission. The new stimulus funding means the
Peña Nieto government, which took power last December, has now allocated about MXN34 billion to
boost housing construction through resources other than commercial banks.
Homebuilders that will particularly benefit from the stimulus are those that already have better credit
quality than their peers, including Consorcio ARA S.A.B. de C.V. (Ba2 stable), Corpovael S.A. de C.V.
(Cadu, B1 stable) and Vinte Viviendas Integrales S.A.P.I. de C.V. (B2 stable).
Homebuilders in Mexico have long struggled with the unpredictable distribution of federal subsidies.
Delays in subsidies have created a high inventory of finished, unsold homes, and led to weaker sales. But the
new government’s strong support for the housing sector has raised our expectation that the government will
execute the stimulus program rapidly.
The housing stimulus is in line with the Peña Nieto administration’s other measures to improve the sector,
particularly a previous MXN6 billion revolving syndicated loan program from two development banks,
Sociedad Hipotecaria Federal S.N.C. (SHF, Baa1 stable) and Nacional Financiera (unrated). The banks
have set operating and financial requirements to determine which homebuilders would qualify for their
support. Under the program, Cadu has already received a MXN500 million credit line and Vinte is in the
process of receiving a MXN1 billion credit line.
The government announced the development banks’ loan when it presented its 2014 operating rules for
housing subsidies. As part of the MXN34 billion in federal resources allocated to housing construction,
SHF’s MXN15 billion program will provide partial guarantees to construction loans.
Since the development banks will provide most of the financing for new housing construction, those banks
should continue to set the operating and financial requirements for homebuilder eligibility, just as they did
for the syndicated loans and partial guarantees programs.
