Funding
Refinancing of mortgages for acquisition, construction and renovation of residential real estate, at fixed rate, for up to 12 years maturity. - Armenia
| 1 | Funding /risk transfer / both |
NMC funding base: - equity from Central Bank of Armenia; accumulation of retained earnings; - corporate bonds (local capital market), green bond (eurobond France); - credit lines from local banks; - credit facilities from IFIs (kfW, AFD, BSTDB, etc) |
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| 2 | Eligible assets |
Standard products: fixed rate mortgage loans compliant with minimum standard requirements (LTV, DTI, purpose, etc.) Green products: minimum contribution to energy savings and reduction/avoidance of GHG emissions in accordance with impact importing metrics evaluated by unified public assessment tool. Social products: use of financial instruments (certificates, state refinancing) available to specific categories of population (displaced, low income, state employee, etc) |
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| 3 | Brief description of structure for each | Detailed above. | |
| 4 | Fees / pricing structure |
NMC raises funds and lends to eligible banks and credit organizations (Partner Financial Institutions) based on the following formula: Product Price=Cost of Funding+Credit Risk Cost+Capital Cost+Operating Cost+Strategic Adjustment The price is periodically adjusted for new refinancing on the basis of re-assessment of components of the formula reflectingthe market. There are no other fees or charges. |
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| 5 | Servicing | Partner financial instritutions (PFI) service the loans monthly, annuity type repayment (not a pass-through). | |
| 6 | Risk sharing (if appropriate) |
The underlying assets remain on the balance of the originating institution, which bears the credit risk. Should the underlying mortgages become delinquent, or prepay faster than the schedule, PFIs have to transfer/match the repayment. Therefore, the collateral pool of underlying mortgages always exceeds or equal to NMC's refinancing. NMC bears the liquidy risk, standing always ready to refinance the qualifying assets and accept early repayments/prepayments. |
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| 7 | Other Comments | NMC has historically been facing very high early repayment/prepayment rates. |
| Any further comments/information? |