CAF Contributes to Triple-B Risk Rating granted to US$250-million Syndicated Loan for Colombia

(Caracas, December 22, 2000).- International rating agency Standard & Poor’s awarded today the “Triple B” investment grade sovereign risk rating to a US$250-million, 5-year Syndicated Loan granted to the Republic of Colombia, which has a Partial Rolling Partial Credit Guarantee from CAF, for US$100 million.

In this regard, CAF executive president Enrique García noted that “the fact that this transaction comes with a Partial Credit Guarantee granted by the CAF was decisive for the rating agency to make the decision.” García added that “this new recognition by Standard & Poor’s is vital because it has improved Colombia’s credit risk by raising its sovereign risk rating to the ‘investment grade’ category.”

Enrique García explained that the Partial Credit Guarantee (PCG) is a new financial instrument of CAF that allows its shareholder countries to optimize the use of their funds, while helping to maximize the catalytic potential of the Institution. “The effectiveness of this mechanism is clear in the case of Colombia, because thanks to this guarantee the nation can access international financial markets under much more favorable conditions.”

The guarantee initially covers the first US$100 million in debt service payments; as each payment is made by Colombia, the guarantee is “rolled over” covering the following US$100 million in payments, and so on until completing the loan repayment. Over time, the rolling mechanism of the Guarantee will allow at any given time the rating of future interest and principal payments of the Loan with a “rating” that is equal to CAF’s (A).

As a direct consequence of Colombia’s access to international financial markets, the group of potential creditors will be expanded, to include, in addition to emerging market stakeholders, agents investing in the debt and investment-grade securities market based on ratings granted by risk rating agencies.