CAF ends 1994 with world projection and successful management

(Caracas, December 12, 1994).-- CAF ended the year with the record figure of US$2.15 billion in approvals, which will finance the sustainable development of its five member countries.

"These results point to constant growth of operations and are evidence of the institution’s increasingly important role as a source of financing in the region," CAF President & CEO Enrique García said. He emphasized the notable 54% increase in the long-term portfolio and 25% in total portfolio “as example of the Corporation’s confidence in the region, and a response to the demand for productive and non-speculative finance."

CAF’s growing presence on international capital markets, the expansion of its equity universe, and confirmation of the ratings obtained from internationally recognized risk-rating agencies, are some of the factors which mean we can end of this year with great institutional satisfaction, García said.

In the last 12 months, CAF successfully placed over US$500 million in instruments and generated funds at very competitive rates, especially the bond issue on the Samurai market of Japan and the Dragon market of Southeast Asia, and placement of commercial paper on the US market (USCP). This situation reflects a progressive “independence from the traditional contributions of member countries to financing projects with funds from the industrialized economies," the CAF chief said.

Based on the quality of its financial management, strict compliance with obligations and a guarantee of adequate parameters for protection of investors, Standard & Poor's, Moody’s and IBCA confirmed the investment rates assigned, which position the Corporation as the most successful Latin American issuer.

CAF continued its role as "channel of communication" between member countries and the other nations of Latin America and the Caribbean. Highlights of the year were Trinidad and Tobago’s subscription to CAF capital and the significant progress made in conversations with Brazil and Jamaica with the same objective.

Similarly, in the operating area, last December 5 in the first selective economic operation for Central America, a US$8.6 million line of credit was granted to Compañía Nacional de Fuerza y Luz SA of Costa Rica to finance imports of Andean goods and services for construction of the Daniel Gutiérrez Hydroelectric Plant, in Alajuela province.

OPERATIONS 94 “Of the US$2.15 billion approved for operations, US$1.45 billion went to the private sector, equivalent to 67% of the total and 22% growth in relation to the figure allocated last year," García said. The Corporation serves both public and private sectors; however, in line with the structural reforms initiated in Andean countries, support for the private sector was increased.

CAF is cooperating with a series of public activities which complement private investment and directly benefit the business sector, including support programs for governments to adapt and modernize their productive infrastructure -- especially roads, energy and telecommunications; support for privatization processes, reform of social welfare systems, modernization of the State, development of human capital and social infrastructure; strengthening capital and financial markets in member countries, and productive reconversion of industrial capacity in an effort to raise competitiveness and guarantee a sufficient exportable offer.

In addition, the Corporation played an outstanding role as financial intermediary by granting multi-sector lines of credit to qualified public and private financial institutions, whose purpose is to support productive sectors ranging from agro-industry to tourism. With this system, small- and medium-sized enterprises can access CAF funds resulting in a more efficient allocation. This is the case of credits granted to the Unión and Santa Cruz banks in Bolivia, Wiese and Crédito in Peru and Corficolombiana and Industrial Development Institute in Colombia.

In view of the changing reality of Latin America, which requires innovative financing facilities, CAF has been participating in limited recourse financing and its variants: BOT (build, operate and transfer), BOO (build, operate and own) and similar, being one of the few Latin American financial institution which works with these systems. In 1994 this type of operations was approved for Pisa of Colombia and Maxus of Bolivia.

The Corporation’s activities in 1994 covered aspects such as the action plan for physical and integration infrastructure, notably cross-border (Integration Road Program in Ecuador, Puno-Quillabamba Corridor in Peru, Route of the Liberators in Bolivia), participation in investment funds to promote privatization programs and productive infrastructure (Peru Privatization Fund, and Latin American Energy and Electricity Fund), cofinancing with multilateral organizations (World Bank, IDB, KFW, DEG and FMO) and bilateral (export-import banks of the United States and Japan), technical cooperation operations, social and rural development, and activities related to the environment.

In its capacity as partner institution, CAF cooperates with programs to combat poverty and support indigenous communities promoted by the International Fund for Agricultural Development (IFAD) and other organizations in some Andean countries. The Corporation managers and supervises 11 loans and two grants from IFAD, four OPEC loans and a grant from the Dutch government, for a total of US$134 million.

On the environment, CAF has comparative advantages for promoting Andean business eco-efficiency, transfer of healthy and safe technology, and the possibility of achieving a positioning on environmentally restrictive international markets. The integration infrastructure projects in which the institution participates are based on planned sustainable development. The Corporation is analyzing the creation of financing mechanisms for industrial environmental reconversion, complementary to the application this year of guides for environmental analysis of projects.

In 1994 financing for the first 100% environmental project was approved for a cleanup program for Lake Maracaibo in Venezuela.

Finally, CAF continues to expand its investment banking activities, including equity participation in its clients’ companies (BHN Multibanco of Bolivia, Proyectos de Infraestructura SA of Colombia, AFP Horizonte of Peru, and Sistema Electrónico de Transacciones CA of Venezuela), guaranteeing placement of issues, supporting promotion of finance lease systems (Global Leasing in Bolivia), and helping companies and banks to access local and international capital markets.