CAF steps up private lending

The Andean Development Corporation (CAF) will deploy its $2.5 billion capital boost to extend more credit to the private sector, its president Enrique Garcia has said

  • By Sid Verma
  • 21 Mar 2010
Email a colleague
Request a PDF

The Andean Development Corporation (CAF) will deploy its $2.5 billion capital boost to raise the volume of private sector loans and credit lines to up to 30% of total lending, Enrique Garcia, its president, has said.

The institution will prioritize trade and project finance, Garcia told Emerging Markets.

It will return to concentrating on “small and medium-sized companies, by providing credit lines for trade finance via commercial banks”, and ramp up long-term project financing to private companies directly – in addition to co-financing infrastructure projects with the public sector.

As the economic slump hit Andean economies last year, CAF’s ambitions to become a private sector financier were undermined. The public sector accounted for 81% of its loans as of September 2009. Now, CAF aims to increase private sector loan exposures while preserving its AA-/A+ credit rating.

Franklin Santarelli, credit analyst at Fitch, said: “A 10% hike in private sector lending would be a big increase, so [CAF] would have to cherry-pick the best borrowers, [or] else risk undermining their creditworthiness.”

In August 2009, CAF’s shareholders agreed on a $2.5 billion paid-in capital boost by 2017, which would bring its total paid-in capitalization to more than $6 billion, three times that of 2007. Panama became a full member of CAF earlier this month, following Brazil and Uruguay last year.

Garcia hopes that a capital boost and diversified country lending could provide a buffer to absorb any losses triggered by private sector loan defaults or impairments.

Santarelli said that CAF could lend to more highly-rated firms and banks in Brazil and Panama than the Andean region – but that loan demands from the Brazilian public sector, and chronic balance-of-payment dramas in the Andes, may derail CAF’s private-sector focus. Total loan approvals were $9.2 billion in 2009 and Garcia is eyeing $10 billion this year and a 10% year-on-year increase in lending over the next five years.

Garcia said Argentina would complete its bid to become a full member in the coming months. CAF is also in talks with El Salvador and Guatemala to join CAF as category “C” (i.e. non-shareholding) members.

Garcia said Italy will this year join CAF as the third shareholder outside Latin America, after Spain and Portugal, after Congress approved a $75 million paid-in capital commitment.

Garcia is mandated to restrict shareholding by non Latin American countries – and hence, capital from international donors – to 15%, in order to preserve CAF’s regional autonomy.

  • By Sid Verma
  • 21 Mar 2010

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 251,626.64 1022 8.71%
2 Citi 228,902.22 815 7.92%
3 Barclays 215,320.23 669 7.45%
4 Bank of America Merrill Lynch 204,666.75 711 7.08%
5 HSBC 176,315.42 712 6.10%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 23 Aug 2016
1 BNP Paribas 23,543.21 101 6.75%
2 UniCredit 23,360.96 107 6.69%
3 JPMorgan 23,076.45 41 6.61%
4 HSBC 19,192.10 94 5.50%
5 ING 16,697.84 101 4.78%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 23 Aug 2016
1 JPMorgan 9,747.52 55 9.59%
2 Goldman Sachs 8,816.07 50 8.67%
3 Citi 6,911.91 36 6.80%
4 Morgan Stanley 6,504.18 35 6.40%
5 UBS 6,126.84 31 6.03%