S&P upgrades CAF’s rating to AA-

Rating agency Standard and Poor’s (S&P Global) upgraded the long-term risk rating of CAF—development bank of Latin America—to AA- from A+, as well as the short-term rating to A-1+, from A-1. The rating outlook remains Positive. This bolsters investor confidence in CAF, and will allow the bank to offer financing on better terms to its member countries.

For CAF, this rating comes as a recognition of the confidence placed by its shareholders in the renewed strategy of becoming the Green Bank, the bank of economic recovery, of the private sector and subnational governments, as reflected in the largest ever capital increase, in the amount of USD 7 billion, approved by the General Meeting of Shareholders in March of this year.

“The importance of CAF’s policy remains strong, with an attractive value proposition as evidenced by the expansion of the number of current shareholders, which are raising their share, and new members joining the institution. The positive outlook reflects our view that CAF’s role and importance for policies, and its capital position can be underpinned by significant capital support from its members,” explained S&P Global in a press release.

CAF Executive President Sergio Díaz-Granados, noted: “We are very happy with this new rating because CAF is one of the main assets of our region, and this news will translate into better conditions to fund projects with an impact on millions of people. This is an achievement of our shareholder countries, which for over 50 years have believed in and supported this institution, as an example of integration and whose ultimate goal is to provide better opportunities for all Latin American and Caribbean people.”

In its report, S&P stressed CAF’s strategy of increasing the share of countries such as Costa Rica, Mexico and the Dominican Republic, which became full members, as well as the accession of new shareholders such as El Salvador. The agency also highlighted the financial soundness of the institution reflected in its liquidity, as well as the robust and diversified financing profile.

Lastly, the risk rating agency referred to CAF’s contribution during the pandemic, in which it fast-tracked the approval of more than USD 16 billion in the last two years to provide funds required by shareholder countries; and the growth of its portfolio, which reached USD 30.2 billion amid a challenging context for the region.

This upgrade in CAF’s rating and positive outlook by S&P adds to the upgraded rating outlook to positive by Fitch Ratings in January of this year.