Capítulo I Presentación

TranslationInto EnglishSpecifically, 120- to 180-day time deposits made up thegreatest share, with 26.2% of all time deposits. On theother hand, longer deposits of 180 to 270 days represented13.9% of all time deposits made by FMV S.A.Given that the activities of FMV S.A. are regulated by theSuperintendency of Banking, Insurance and Private PensionFund Management Companies (SBS), they were subject to allregulations and circulars issued by this entity, mentioned inResolution SBS-980-2006, Regulations on FMV S.A.• Po rtf o l i o Pe r fo r m a n c eIn 2010, as a result of the continuous reference rate hikesby the BCRP, interest rates on time deposits began to riseover the course of the year. While the performance of timedeposits dropped between 2009 and 2010, a decline hadalready been observed from the levels of 7.57% registeredin 2008. Meanwhile, the performance of current accountsfell from 3.35% in 2009 to 3.03% in 2010. For their part,the performance of investments also dropped from 5.35% to5.10% during the same period.In order to take advantage of the favorable marketconditions in a more dynamic and efficient manner (i.e. in theleast time possible and in conditions favorable for FMV S.A.),the Take Profit and Stop Loss indicators were used, whichhelped streamline and add flexibility to the decision to selldebt instruments from the portfolios administrated, in aneffort not to miss any opportunities that might arise andwhich normally change constantly in continuous time. Thiswas done in order to: a) make profits from the revaluationin the market price of debt instruments; b) rebalance theportfolio based on the target range of duration; c) complywith the investment limits established in the investmentpolicy; d) obtain the liquidity necessary to comply with theloan placements of FMV S.A.; and e) liquidate holdings due tosystemic risk.• Exc h a n g e r is k m a n a g e m e n tAgreement 06-01D-2010, dated January 27, 2010,delegated to the Investment Commission theimplementation of the exchange risk hedging strategies: i)hedging with forwards; ii) spot sale of dollars; and iii) sale ofcorporate bonds to decrease exposure in dollars.He d g i n g t h ro u g h NDFsFMV S.A. holds a portfolio of credit placements that generateexposure to exchange risk totaling approximately US$213million as of the close of December 2010. Thus, in case of adrop in the relative value of the dollar against the Peruviannuevo sol, the portfolio obtains losses.Since mid-October 2009, FMV S.A. has implemented hedgingmechanisms through Non-Deliverable Forward futurescontracts (NDFs), which protect the exchange position indollars of FMV S.A. against a reduction in the value of theU.S. dollar, helping protect the portfolio of credit placementsin dollars against a drop in the exchange rate.Thus, as of December 2010, the cumulative result forexchange difference earnings generated by NDFs for thesale of dollars was approximately S/. 10.6 million. As a result,the NDFs diminished the loss suffered due to the exchangeposition.The implementation of the hedging NDFs has mitigated theimpact of the revaluation of the nuevo sol in the exchangeposition in dollars of FMV S.A., obtaining, in the last severalmonths, results for the net exchange difference convergentto zero.Sa l e o f Dollars in t h e Sp ot Ma r ke tDuring 2010, dollars were sold in the spot market in aneffort to reduce the position of dollars in the portfolio. Thus,in 2010, a total of US$ 27.3 million was sold.Sa l e o f Bo n d s in DollarsDuring 2009, the Investment Office performed operationsfor the sale of bonds in dollars from the portfolio of FMV S.A.in order to reduce exposure to exchange rate volatility. Thus,the current exchange rate exposure comes solely from thecredit portfolio in dollars.• Fi n a n c i n g Strategies In Th e Ca p i ta l Ma r ke tSa l e o f Cr e d i t Po rtf o l i o in DollarsWith regard to the state of the sale of the credit portfolio indollars, this strategy seeks to eliminate the non-concessionaltranche of the outstanding credit placements, partiallyreducing the exposure from the credit portfolio in dollars, aswas done in 2007.The evaluation of the offers negotiated with the bankswill determine the figures to consider in the cost-benefitevaluation of the operation set forth. Additionally, thesecuritization of this portfolio will contain the value thatthose interested in the possible “sale or assignment offlows” grant to the credit portfolio, and will depend on thecredit placement policies and the portfolio quality indicators,among other factors to be determined by the due diligenceto be carried out by the interested parties.Issuing o f Co r p o r ate Bo n d s in Dollars a n d/o rSecurit i z at i o n o f Cr e d i ts in DollarsThe strategy for the issuing of corporate bonds in dollarsand/or the securitization of credits in dollars seeks todiminish the net exchange position, matching the assetsand liabilities in dollars. On the other hand, the securitizationof the portfolio of credits granted to IFIs would involve thetransfer of the flows from said collection, in trust ownership,against which the bonds would be issued.In both cases, a greater exposure in foreign currency wouldbe generated, with the advantage of being able to liquidateit in the very short term, helping to match the collectionflows in dollars of the credit portfolio with the commitmentsgenerated for the payment of amortizations and coupons forthe bonds issued.The placement rate of the bonds will be a determiningvariable in the financial feasibility of this alternative, inthat the collection of the credit portfolio will be neededto finance the debt service coverage. Both require theprocurement of consultancies and risk classifications, giventhat it is also important that the issue have the critical sizenecessary to compensate for its high cost.In this regard, the contract for the risk classification of FMVS.A. was awarded to Equilibrium and Class y Asociados.These companies awarded the entity the classifications ofA- and A, respectively. The results of these classificationscorrespond to institutions with a solid financial strength inthe Peruvian market.It should be noted that the international economy iscurrently characterized by abundant liquidity and low interestrates as a result of the expansive monetary policies appliedby the major global economies. In terms of the local market,the solid economic fundaments have positioned Peru(investment grade) as one of the countries with the greatestpotential for economic growth, and consequently, one of thepreferred destinations for investors.• Cr e d i t p o rtf o l i oWith regard to the credit portfolio, the general behaviorcorresponds to the strategy being implemented moreintensively by Fondo MIVIVIENDA S.A. with the developmentof social interest housing through its two programs. Nuevo136 Fondo MIVIVIENDA S.A. Memoria Institucional 2010 137