Chilean business sector offered credit facilities for trade with Andean countries

(Caracas, January 1994).-- CAF has made a line of credit available to Banco Sud Americano to collaborate with Chilean businesses which wish to import products and services from Bolivia, Colombia, Ecuador, Peru and Venezuela. A similar agreement will soon be signed with Banco del Estado de Chile.

On August 18, 1992, Chile reentered CAF as shareholder.

CAF is now a modern prestigious institution in the international financial world, the second largest multilateral bank in Latin America and the Caribbean.

In the new concept of globalized economy, in 1993, the institution was able to compete successfully on international capital markets, placing three public issues for about US$300 million on the Euromarket and in Japan on very advantageous conditions.

The three investment-grade ratings granted to the institution by the most important risk rating firms of Europe and the United States (IBCA, Moody's and standard & Poor's) were a decisive factor in facilitating placement of bonds and promoting CAF at the highest world level.

Flexibility and efficiency During its 24 years of existence, CAF has developed the knowhow needed to adapt with flexibility to changes in the international system and the needs of its member countries.

The Corporation’s successful participation in the international financial world and outstanding performance has generated an increased volume of funds from developed countries which it channels to Latin America.

In 1993, most of the funds were generated outside the subregional area due partly to closer relations with financial institutions in the industrialized countries, at the same time as a considerable increase in bond issues placed in those countries.

For example, the Inter-American Development Bank granted CAF a US$200 million loan to finance activities in areas of complementary action.

With a flexible and modern concept of the role which a financial institution of its category is called on to play, CAF now operates as a multiservice bank, basically development, but with active functions as investment and foreign trade bank.

Its main clients include private businesses from large, medium and small industries, which it serves with global credits channeled through a series of public and private financial institutions.

As part of the objective of expanding its radius of action, CAF has undertaken commercial activities in the rest of the Latin American and Caribbean countries with satisfactory results.

Mexico and Chile have now subscribed to the series "C" shares reserved for extra-subregional countries interested in doing business with the Andean nations, technology exchange, contributing to the creation of new productive companies, stimulating foreign trade operations and facilitating openings to other markets.

CAF President & CEO Enrique García has also taken actions to promote the entry of other countries as shareholders of this series of shares in the near future. Trinidad and Tobago and Brazil are expected to enter in the first quarter of this year.

Productive institutional and commercial contacts have been established with the Caribbean area -- especially Trinidad and Tobago, Barbados and Jamaica -- which have led to joint business between companies established in the two areas.

Trade between Chile and the Andean countries To finance foreign trade operations, CAF provides two mechanisms: the Andean Trade Finance System (SAFICO) and the Letter of Credit Confirmation and Financing Mechanism for Imports from Third Countries (MECOFIN).

SAFICO finances the exports of member countries with each other or with third markets, operating mainly by granting credits to importers and paying directly to the exporter.

In 1992, CAF granted a US$3 million line of credit to Banco Sud Americano of Chile to finance operations included in this mechanism, and collaborate with Chilean companies which wish to import products and services from any of the Andean countries. A similar agreement will soon be signed (US$10 million line of credit) with Banco del Estado de Chile.

Using these credit quotas, companies can finance the FOB value of exported products and services originating in the subregion.

When Andean multinational or national means of transport and insurance companies are used, the finance can cover CIF value.

The minimum amount for each group of operations financed is US$10,000.

By establishing this line of credit, CAF contributes to easing one of the obstacles which often delays commercial transactions, which is access to credit.

Additionally, a detailed up-to-date study is being prepared on investment opportunities, markets, products, clients, availability of transport and distribution channels, and the regulations which govern the export trade of Chile and the Andean countries, as a means of developing closer ties between the business sectors of the six countries.