Latin Finance - November/December 2012 - 7

COFIDE: Diversifying the Source of Funding
Cofide’s role in reducing the infrastructure gap in Peru
Since 2008 the Corporation began to participate in the co-financing of infrastructure projects throughout the country in order to contribute to the reduction of the US$ 38 billion gap in infrastructure that Peru has1.

Corporación Financiera de Desarrollo S.A. (COFIDE) is the Peruvian state – owned development and investment bank established in 1971.
longer tenors and more competitive conditions, through the international capital markets, to continue its participation in the financing of infrastructure projects. In February 2012, COFIDE issued its first US$ 400 million 10-year senior unsecured notes. The transaction had an orderbook of nearly US$ 3.0 billion and a yield of 4.95%. With respect to market conditions at the time, it was considered a successful transaction, and it helped change the way the Corporation accessed funds.

Infrastructure Gap (US$ MM)
Telecomunications (14%)

Funding Breakdown
Natural Gas (10%) Transportation (37%)

December 2011 (US$ 1.038 MM)

Electricity (22%)

International commercial banks (29%)

Multilateral organizations (30%)

Water and Sewerage (17%)

Source: Peruvian Institute of Economics

Investment grade and new sources of funding
In February 2010, Standard & Poor’s and Fitch Ratings granted COFIDE with an Investment Grade (BBB-) credit rating, the same level as the Republic of Peru. Additionally, during 2011, as a result of the upgrade given to the Republic of Peru’s credit rating, the rating agencies improved COFIDE’s credit rating to BBB, one notch above Investment Grade. The obtaining of Investment Grade status was a milestone that allowed COFIDE to prepare for the accessing of funds from international capital markets. This would provide the Corporation with access to more competitive funding conditions, and longer tenors. Both of these factors are crucial for the continual financing of infrastructure projects in Peru.

Local capital markets (8%) Peruvian commercial banks (33%)

September 2012 (US$ 1.527 MM)
International commercial banks (20%) Multilateral organizations (18%)

Local capital markets (12%) Peruvian commercial banks (24%)

First International senior unsecured notes issuance
Traditionally, COFIDE has had access to multilateral organizations, local commercial banks, international commercial banks, and the local capital markets. Unfortunately these options are still not as sophisticated as those in developed markets, and therefore do not provide the necessary funds for investment projects in Peru. The growth of the Peruvian banking sector’s loan portfolio during the period of 2007-2011 was 18.3%, while COFIDE’s was 16.7%. In order to maintain this level of growth it was necessary for the Corporation to access funding with
1

International capital markets (26%)
Source: COFIDE

With the constant growth of the Peruvian economy (expected 6.0% GDP growth 2012), the need for additional financing, and the favorable market rate levels, COFIDE plans to make additional debt issuances during 2013. These issuances will allow COFIDE to continue to invest in infrastructure projects that will help stimulate GDP growth, and reduce the gap in the country’s infrastructure.

According to a survey made by the Peruvian Institute of Economics.

Corporate Statement

Latin Finance - November/December 2012

Table of Contents for the Digital Edition of Latin Finance - November/December 2012