CAF places USD 1 billion in bonds to boost social and economic revival in Latin America

CAF, Development Bank of Latin America, continues to channel funds to support social and economic revival plans of its 19 member countries with a new bond placement totaling USD 1 billion. This 3-year issue pays a 1.25% coupon rate. Investor demand reached USD 2 billion, a 5-year high for CAF.  

“Latin America and the Caribbean needs us more than ever, and here we are, attracting fresh funds at favorable rates to continue supporting governments in their plans for address and mitigate the pandemic, and for social and economic revival, which we have set as a priority for the first 100 days in office,” said CAF executive president Sergio Díaz-Granados.

This issue in the US market is noteworthy due to its favorable price level, driven by the interest of investors, mainly fund managers, public institutions, pension funds, central banks, commercial banks, distributed across Europe, the Middle East, Africa, Asia and the Americas. Underwriters were Barclays, BNP, Daiwa, J.P. Morgan.

"CAF's first USD benchmark in 2021 has been a remarkable success. By intelligently using currency diversification with the EUR deal at the start of the year, the CAF team has created rarity value for USD buyers and successfully managed to exceed its size target with minimal concession. The high quality of the final orderbook, the biggest since 2016, confirms the continued support that the issuer enjoys from its investor base” noted Lee Cumbes, head of DCM at Barclays.

Jamie Stirling, head of SSA DCM at BNP Paribas, said: “This is CAF’s largest USD benchmark in almost three years. The CAF funding team should be congratulated for successfully navigating the recent macro volatility yet delivering their largest ever USD orderbook whilst pricing at only a marginal concession to the secondary curve.”

CAF supports the region in an agile and timely manner through a series of financial and technical instruments that complement government measures. The comprehensive strategy includes fast-disbursing countercyclical emergency financing for USD 4.1 billion, a Regional Contingent Credit Line for epidemics for USD 300 million to support directly public health systems; non-reimbursable technical cooperation funds for USD 5 million for priority pandemic-related initiatives; a Financial Credit Line for USD 1.6 billion for national development banks; and two liquidity facilities to support health systems and utilities of shareholder countries, for an aggregate amount of USD 1.7 billion.

In 2021, CAF has issued nearly USD 4.5 billion in various markets. In this period, a public benchmark-size operation has been completed, a record for the European market. Different transactions have also been made in the Asian and Mexican market and the first SOFR (Secured Overnight Financing Rate) bond made by a Latin American issuer.

CAF has been engaged in a diversification strategy for its financing sources for the past three decades, through an uninterrupted presence in global capital markets, which has given it a privileged position internationally. The bank promotes sustainable development and regional integration through efficient funds mobilization for the timely provision of high-value-added multiple financial services to clients in the public and private sectors of shareholder countries.