CAF doubles its capital to US$10 billion

(Caracas, March 26, 2007).- The Board of Directors and Shareholders' Meeting of the Andean Development Corporation approved an increase in authorized capital from US$5 billion to US$10 billion as a result of the substantial expansion of operations that the institution has been executing in favor of Latin American development, and in line with increased membership. The president and CEO of the multilateral financial organization, Enrique García, said the objective of the capital increase was to strengthen the Corporation’s financial capacity in order to continue its growing support for the 17 shareholder countries.

During the meeting, CAF´s president presented the 2007 Annual Report, which was unanimously approved. The report highlights a record US$6.6 billion of approvals, a US$9.5 billion portfolio, and a record US$401 million net profit. These results strengthen the institution’s capital and reserves and make possible an important allocation of non-reimbursable funds in favor of institutional strengthening, strategies and policies to stimulate economic growth, social inclusion and promotion of the cultural identity of the region.

"The capital increase was decided - García explained - due to the deepening of the Corporation's Latin American profile and expansion of its country operations, as reflected in the amendment to CAF's Constitutive Agreement, which opens the door for new member countries, as well as an increase in equity investment by countries outside the Andean region." He added, "this strengthens and expands the presence of Latin American countries in the Corporation, contributing to the enrichment and execution of its integrated development agenda."

In 2007, agreements were signed with Argentina, Brazil and Uruguay for contributions to paid-in capital for a combined amount of approximately US$1.2 billion and subscription to callable capital of US$300 million, thus officially starting the transition process of these Series "C" shareholder countries to full members of CAF. In other developments, Chile increased its equity investment by US$50 million, and the process was initated for the prompt entry of Guatemala and Italy as new shareholder countries.

Record approvals in 2007 CAF President, Enrique García, presented the 2007 Annual Report, which reveals that the Corporation approved a record US$6.6 billion for public and private sectors last year, an increase of about 20% from the year before. Of the total approved, 55% was for loans made to the private and public sectors without sovereign guarantee, channeled through financing to contribute to creation of a business base which measures up to the challenges of increased trade integration, since these are funds destined for investment plans, trade, working capital and support for MSMEs.

The most important area was economic infrastructure which took about 40% of total portfolio. CAF is currently the main source of financing for the Andean region countries, and the most important institution for financing integration infrastructure in Latin America.

The second sector to benefit was social and environmental development with 25%. The remainder went to other productive sectors and promotion of micro-, small- and medium-sized enterprise through lines of credit granted to financial institutions in the region.

Although most of the Corporation's loan portfolio is destined to the founding countries (Bolivia, Colombia, Ecuador, Peru and Venezuela), in recent years CAF actions in the Latin American and Caribbean region have intensified, particularly in South America. Currently over 30% of operations approved are destined to non-core countries.

Apart from its credit operations and project finance, CAF operates an integrated support program for countries with approvals of non-reimbursable funds totaling US$48 million in 2007, a 26% increase from the year before, resulting from profits of US$401 million in 2007.

"This growth in CAF’s activity was made possible by important capital contributions from shareholders, reinvestment of profits, and permanent presence on international financial markets. This successful international presence is based on the Corporation’s high credit ratings from the leading international rating agencies," García said. In 2007 Standard & Poor's upgraded the rating for CAF long-term debt from "A" to "A+", Japan Credit Rating (JCR) improved the outlook from "stable" to "positive" with a "AA-" rating, and Fitch Ratings moved the long-term risk rating up from "A" to "A+".

In conclusion the CAF president said, "with their decision to double the authorized capital, the Corporation's shareholders are offering their backing to our institution which, in the last five years, has approved a total of US$24 billion in favor of its member countries."