The International Finance Corporation, the private sector arm of the World Bank, has made its first strategic investment in China's mortgage sector. 
 
The International Finance Corporation, the private sector arm of the World Bank, has made its first strategic investment in China's mortgage sector in an attempt to promote the development of a new market for mortgage-backed securities.

The IFC says the corporation's US$2 million investment in a Shanghai mortgage broker, the Anjia Group, could be increased later if a vibrant domestic market for mortgage-backed securities emerged.

One possibility would involve the transfer of mortgages from banks to a special purpose vehicle that would then sell securities with a long maturity to institutional investors.

Such a system would provide much-needed long-term instruments for investment from institutions such as insurance companies, which are keen to match their long-term liabilities.

(CRI February 25, 2004)