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
  • 13 Mar 2017
1 JPMorgan 94,925.33 384 8.39%
2 Citi 87,531.58 331 7.74%
3 Bank of America Merrill Lynch 84,341.49 288 7.46%
4 Barclays 75,288.19 241 6.66%
5 Goldman Sachs 68,504.71 208 6.06%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 16 May 2017
1 Deutsche Bank 19,381.65 47 8.82%
2 Bank of America Merrill Lynch 18,968.25 36 8.63%
3 HSBC 18,103.95 50 8.24%
4 BNP Paribas 8,911.57 55 4.05%
5 SG Corporate & Investment Banking 8,885.00 54 4.04%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 23 May 2017
1 JPMorgan 8,714.26 35 8.36%
2 UBS 8,283.47 33 7.95%
3 Goldman Sachs 7,736.57 37 7.42%
4 Citi 6,897.11 46 6.62%
5 Bank of America Merrill Lynch 6,215.31 24 5.96%