New Investment Opportunity in Overseas Housing by Lew Sichelman
Since 1971, the Overseas Private Investment Corp. has supported some $130 billion worth of foreign investments that will generate an estimated $61 billion in U.S. exports and create more than 242,000 American jobs. Now the self-sustaining, federally-sponsored agency is turning its eye toward housing markets worldwide. "Opportunities abound for American businesses interested in overseas housing," according to George Munoz, OPIC's president and chief executive officer, who said the agency will develop "bold and innovative" ways to apply its financing and insurance products to housing markets in developing countries. OPIC offers a number of investment services to American businesses that want to expand into one or more of the 140 developing nations around the world. Among other things, it offers political risk insurance, project finance and investment funds, products that are not normally available from private entities. The agency's insurance coverage, for example, provides protection for up to 20 years against an investor's inability to convert local currency into U.S. dollars and transfer money out of the host country. It also covers loss due to nationalization or confiscation, and the destruction of physical assets due to political violence. OPIC also provides loans and loan guarantees of up to $200 million to commercially sound, private sector investors. And it backs privately managed and owned equity funds with capital to invest in American businesses looking to expand internationally. Over the years, the agency has assisted in a variety of industries power, telecommunication, water and transportation among them. Housing, says Munoz, "is the next logical step." "The commitment to developing housing markets exists everywhere, but the knowledge base, the legal and physical infrastructure and the access to resources are often lacking," he explained. "The United States has a tremendous amount of information, technology and expertise to offer. Moreover, the housing industry is looking for mechanisms to tap into international opportunities. And that it where OPIC can help." First up on the agency's radar screen will be finance. Munoz outlined several models by which OPIC's new capital markets insurance program could be applied to the creation of primary as well as secondary mortgage market systems in foreign countries. "Because the housing industry is so capital intensive and is such an enormous player in the U.S. capital market, it is natural that OPIC's first entry into housing would be through the capital markets through our political risk insurance," he said. With an initial focus on Latin America, the agency will work closely with the Department of Housing and Urban Development and other federal departments to develop programs that will serve as a springboard for American entry into oversees markets. HUD Sec. Andrew Cuomo said the effort will have "myriad positive benefits, social and economic, for developing countries which are also emerging trade partners." Roberto Zamora, president of the Lafise Group, a Central American banking consortium, and Brigitte Posche, an analysts with Moody's Investors Service, praised OPIC's entry into the housing sector. "The difference between success and failure in housing is finding long-term financing in places that have traditionally lacked capital," said Zamora. "OPIC's initiative will create real opportunities for housing with strong financing conditions." Posche said the establishment of primary and secondary mortgage markets in developing countries is important, not only across borders, but domestically as well. "OPIC is willing to take risks, and that is the first step on the path to mortgage security," she said. "We could expect that OPIC's example will bring other organizations and companies to the table." Though OPIC was established in 1971 as a stand-alone entity with the authority to issue loan guarantees, it was actually created in 1947 as part of the Marshall Plan to encourage private capital to re-enter war torn Europe. | 
