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Autumn 2013 Issue

South Africa: The Palace of the Lost City

are significant source of demand for the bonds, due to their longer term duration. Foreign investors are big buyers of Danish mortgage bonds as well.

Finance, the leading mortgage bank in Kenya, has worked with Absalon Project for a couple of years before a decision was taken to enter into an implementation study.

Pension funds have been introduce in many countries in Africa, all looking to invest in high quality, long duration securities. Furthermore, large scale residential communities are being developed which need permanent funding options for the future homeowners.

Sam Waweru, Housing Finance Chief Finance Officer, explains: “We have been investigating a number of different mortgage solutions and are seriously considering one along the Danish model, as it fits perfectly into what we try to achieve at Housing Finance. We are looking for sustainable and low-risk funding to offer cheaper and better mortgage products to our customers. He continues: “The funding of mortgages at equal terms in the capital market takes out a lot of risk for us which we can use to lower the cost to our customers.”

Kenya is a good example of a country that has both the need for affordable housing finance and strong demand for high quality investments. It has a population of approximately 45 million people but less than 20.000 mortgages. Housing

Housing Finance sees also other benefits of the new model. As the model by definition funds mortgages by issuing standardized bonds in the market, they can save a lot of management time and reduce financial risks. They can then use their short term deposits to finance shorter term lending. Absalon Project offers business and technical consultancy and Software as a Service (SaaS) solution, which means that all services will be delivered through the internet, and the local companies can focus on the business side and support of the participating banks, while Absalon Project will handle all IT related issues. i

FACTBOX VP SECURITIES A/S (VP) is the Central Securities Depository (CSD) in Denmark. It manages all registration of ownership, clearing and settlement of all securities in Denmark. VP is seen as the back office of all securities handling in Denmark. It was the first CSD to dematerialize securities in the world, with bonds in 1983 and shares and certificates in 1988.

CFI.co | Capital Finance International

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CFI.co Autumn 2013