Latin Finance - July/August 2010 - 33

caf issuer profile

CAF Turns 40
by Staff Reporters orporación Andina de Fomento (CAF) may be 40 this year, but it is not resting on its laurels. The Caracas-based multilateral in May raised $74 million from what it calls the first ever retail-only placement in the Japanese market by a LatAm issuer. It is also the first sub-AAA rated name to tap that market. “It’s not that big in size, but for us it’s very important given that this market is very exclusive and reserved for Triple A issuers,” says Gabriel Felpeto, the multilateral lender’s director for financial policies and international issues. CAF is rated A1/A+. The 2014 bond sold in the so-called Uridashi market priced at 99.98 with a 3.11% coupon to yield 3.12%. Officials at lead bank Daiwa Securities note that there have been mixed institutional-retail offers in Japan by Latin issuers, but this is the first aimed solely at retail. CAF has been issuing in Japan for more than a decade, most recently in February 2009 with a 10 billion yen 3.4% coupon 2019 private placement. CAF’s funding is 65% in US dollars, but there is an increasing percentage done in other currencies, including Bolívares, Colombian pesos, euros, sterling, Swiss Francs, Mexican pesos and Peruvian soles. Lending is mostly done in floating rate denominated in dollars, so funding is swapped into that basis. CAF has 55% of its debt in bonds, 25% in time deposits, 12% in commercial paper and short-term loans and 8% in long-term loans. “The strategy is to diversify funding sources, not to depend just on one,” says Felpeto. “15% of our funding in bonds now comes from Latin America, and that can grow very quickly as we would choose to,” says CFO Hugo Sarmiento. The focus of CAF’s lending is infrastructure, on which the region needs to invest $120-$150 billion a year, says

C

In its fortieth year, CAF continues to draw interest from new members and innovate in capital markets. Its strength lies in increasing diversification.
by an expanding membership base as the corporation evolves into a regional – from sub-regional – development lending institution. Amid sovereign troubles in Europe, Spain wants to double its equity in CAF to 5.0% from around 2.5% by committing to an extra $327 million of paid in capital through 2015, on top of $100 million already, and another $200 million in callable capital. This, despite the country’s own fiscal constraints and the fact that it is not in the region or a borrower from CAF. “That’s quite a vote of confidence on the part of Spain,” says Sarmiento. CAF has 18 members, 10 of them full members and two, Spain and Portugal, in Europe. Italy also wants to join, alongside some Central American and Caribbean countries. There is another European and an Asian nation that have expressed an interest, adds Sarmiento, who declines to name them. “Prospects for the expansion of CAF’s ownership and role in Europe are growing significantly,” he adds. S&P notes that CAF’s paid-in capital totaled $3.0 billion at year-end 2009, up by $568.0 million during 2009 alone and $1.1 billion higher than in 2005. “CAF projects about $320 million in paid-in capital contributions in 2010, with annual contributions of more than $300 million through 2017,” says S&P. “Our countries have always been very dedicated contributors to CAF in the sense that they have always provided more capital,” says Sarmiento. “Shareholders have also consistently kept all of their obligations to CAF – they’ve never defaulted, they’ve never restructured.” LF

Membership diversifies, says Sarmiento Sarmiento. He adds that CAF is the main source of infrastructure financing for LatAm, allocating $16.7 billion in the 2000-2008 period, versus $13.7 billion by the IDB and $11.6 billion from the World Bank in the same period.

Membership Boost

S&P in early June raised the outlook for multilateral bank CAF’s A+ rating to positive from stable. “The positive outlook reflects CAF’s success in expanding its membership base, increasing its paidin capital, and reducing the country concentration in its loan portfolio,” says S&P analyst Lisa Schineller. CAF has moved to address the issue of capitalization through a $4 billion increase paid in through 2017. It is helped

July/August 2010

LatinFinance 33



Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010

Latin Finance - July/August 2010
Contents
Equity/Debt Fund Performance
European Investors
Brazil Domestic Buyside
Mexican Domestic Buyside
Mexico Venture Capital
CEMEX CFO Interview
Panama Investment
Canadian Miners
Peru Investor Report
Peru is Making Strides to Develop Gas and Oil
Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - Latin Finance - July/August 2010
Latin Finance - July/August 2010 - Cover2
Latin Finance - July/August 2010 - Contents
Latin Finance - July/August 2010 - 2
Latin Finance - July/August 2010 - 3
Latin Finance - July/August 2010 - 4
Latin Finance - July/August 2010 - 5
Latin Finance - July/August 2010 - 6
Latin Finance - July/August 2010 - 7
Latin Finance - July/August 2010 - 8
Latin Finance - July/August 2010 - 9
Latin Finance - July/August 2010 - Equity/Debt Fund Performance
Latin Finance - July/August 2010 - 11
Latin Finance - July/August 2010 - 12
Latin Finance - July/August 2010 - 13
Latin Finance - July/August 2010 - 14
Latin Finance - July/August 2010 - 15
Latin Finance - July/August 2010 - 16
Latin Finance - July/August 2010 - European Investors
Latin Finance - July/August 2010 - 18
Latin Finance - July/August 2010 - Brazil Domestic Buyside
Latin Finance - July/August 2010 - 20
Latin Finance - July/August 2010 - 21
Latin Finance - July/August 2010 - 22
Latin Finance - July/August 2010 - 23
Latin Finance - July/August 2010 - 24
Latin Finance - July/August 2010 - 25
Latin Finance - July/August 2010 - Mexican Domestic Buyside
Latin Finance - July/August 2010 - 27
Latin Finance - July/August 2010 - 28
Latin Finance - July/August 2010 - Mexico Venture Capital
Latin Finance - July/August 2010 - 30
Latin Finance - July/August 2010 - CEMEX CFO Interview
Latin Finance - July/August 2010 - 32
Latin Finance - July/August 2010 - 33
Latin Finance - July/August 2010 - Panama Investment
Latin Finance - July/August 2010 - 35
Latin Finance - July/August 2010 - 36
Latin Finance - July/August 2010 - 37
Latin Finance - July/August 2010 - 38
Latin Finance - July/August 2010 - Canadian Miners
Latin Finance - July/August 2010 - 40
Latin Finance - July/August 2010 - 41
Latin Finance - July/August 2010 - Peru Investor Report
Latin Finance - July/August 2010 - 43
Latin Finance - July/August 2010 - 44
Latin Finance - July/August 2010 - Peru is Making Strides to Develop Gas and Oil
Latin Finance - July/August 2010 - Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - 47
Latin Finance - July/August 2010 - 48
Latin Finance - July/August 2010 - Cover3
Latin Finance - July/August 2010 - Cover4
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