Boosting private sector productivity in Paraguay with US$120-million funding to Banco Regional

CAF-development bank of Latin America- and Banco Regional S.A.E.C.A. announced the signing of an A/B loan agreement for US$120 million with the purpose of promoting financing of different links in the productive chain of the agricultural and agroindustrial sector, as well as related sectors such as logistics, transportation, road infrastructure, and investments in energy efficiency in Paraguay.

The loan was structured under an A/B scheme with a contribution from CAF in tranche A for
US$28 million for a 5-year term, and from 7 international financial institutions funding tranche B for US$92 million for 4- and 3-year terms. CAF acted as Mandate Lead Arranger in this operation, with the syndication exceeding expectations by attracting third-party funds for an amount over the expected $100 million, which once again shows the confidence of investors in Banco Regional through this type of structures.

“CAF’s support to Banco Regional is an important contribution to the development of the dynamic agricultural and agroindustrial sector in Paraguay, since Banco Regional focuses on offering financial products to agribusiness, serving mainly corporate customers, export SMEs and other links in global value chains,” said Luis Carranza, CAF executive president.

In addition, the President of Banco Regional, Raul Vera Bogado, explained that “access to financial resources through CAF is vital, and its meaning is twofold: the confidence of international markets in Banco Regional’s business model, and recognition of the economic potential of agribusiness as a strategic sector of our nation, based on its productivity and competitiveness, which have led Paraguay to privileged positions in global food markets.”

This is yet another proof of CAF’s mediator role in Latin America, not only in mobilizing external funds and channeling them to the region, but in linking to other international renowned financial institutions, which in some cases operate for the first time in Paraguay or with Banco Regional. Financial institutions participating in the financing include: Banco Latinoamericano de Comercio Exterior S.A. (Bladex), Banco Aliado S.A. (Panama), Banco de Crédito del Perú (BCP), BHD International Bank (Panamá), S.A., Banco de Crédito e Inversiones S.A. Miami Branch, Banco de Occidente Panamá S.A. and Cargill Financial Services International, Inc.

A/B loans are a co-financing mechanism used exclusively by multilateral bodies to fund development projects, along with other international financial institutions, in order to promote the participation of international banks in local funding, with longer-than-usual terms. This form of financing was first implemented by CAF in Paraguay, which reinforces its presence in the local financial system in order to serve various sectors through Banco Regional and to help increase private sector productivity.