Supranationals - non-Europe

246 EuroWeek Financing supranationals and agencies

Corporacion Andina de Fomento (CAF)Rating A1, A, A+

Gabriel Felpeto Director (funding)

Alfonso Machado Director (treasury)

Key oFFiciAls

Corporación Andina de Fomento (CAF) is a multilateral financial institution that provides multiple banking services to public and private clients of its shareholder countries.

Established in 1970, in Caracas, Venezuela, it has country offices in Buenos Aires, La Paz, Brasilia, Bogota, Quito, Madrid, Panama and Lima. Its shareholders are: Argentina, Brazil, Bolivia, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Jamaica, México, Panama, Paraguay, Peru, Spain, Trinidad & Tobago, Uruguay, Venezuela, and 14 private banks in the region.

overview

*Forecast. Source: CAF

$ bn

0

0.5

1

1.5

2

2.5

2006

2005

2007

2008

2009

2010

2011

*

Bond issuAnce

Source: CAF

$bn

Bonds1.99

Long term loans 0.26

Commercial Papers3.953

issuAnce By type (2010)

Source: CAF

Asset management

55%

Bank 7%

Insurance 16%

Hedge fund 14%

Other 8%

investor BAse By type (2010)

Source: CAF

US 55% Europe

26%

Latin America 11%

Asia 8%

investor BAse By reGion (2010)

Data at December 31, 2010. Source: CAF

USD 63%

EUR 15%

JPY 6%

COP 3% VEB

3%

CHF 7%

MXN 1%

PEN 2%

outstAndinG issuAnce By currency

Data at December 31, 2010. Source: CAF

$ m

-

200

400

600

800

1,000

1,200

1,400

2011

2012

2013

2014

2015

2016

2017

2018

2019

>2019

Bond MAturity proFile

Data at December 31, 2010. Source: CAF

Colombia20.7%

Peru20.7%

Venezuela20.7%

Argentina7.9%

Brazil7.1%

Ecuador5.9%

Bolivia5.8%

Spain3.2%

Uruguay2.4%

Panama1.6%

Otros 4.0%

shAreholders

Supranationals - non-Europe

Financing supranationals and agencies EuroWeek 247

Minimum size: $50m

structure: mainly plain vanilla

currency: various

privAte plAceMent policy

Data at December 31, 2010. Source: CAF

Manufacturing industry 1.5%

Electricity, gas & water 29.7%

Transport & communication

31.7%

Financial intermediaries

14.2%

Social & other infrastructure programmes

22.3% Other activities

0.8%

loAns By sectorBonds: $1.5bnlong-term loans: $500m

FundinG proGrAMMe 2011

risk weighting: 20% / 50%Guarantee: none

risK weiGhtinG / GuArAntee rank lead Manager Amount $m no of issues

% share

1 HSBC 738 3 34.79

2 Credit Suisse 693 3 32.68

3 BNP Paribas 440 2 20.73

4 Nomura 88 1 4.16

4 Mizuho 88 1 4.16

6Daiwa Capital Markets

74 1 3.49

subtotal 2,122 7 100

total 2,122 7 100

Source: Dealogic (March 16, 2010 to March 15, 2011)

top BooKrunners

pricing date January 26, 2011

value Eu250m

Maturity date March 29, 2018

coupon 4.625%

spread to swaps 175bp

Bookrunners HSBC, BNP Paribas

pricing date November 22, 2010

value Eu400m

Maturity date March 29, 2018

coupon 4.625%

spread to swaps 200bp

Bookrunners HSBC, BNP Paribas

pricing date July 7, 2010

value $600m

Maturity date January 15, 2016

coupon 3.75%

spread to benchmark 210bp over USTs

Bookrunners Credit Suisse, HSBCc

Source: Dealogic

recent deAls

standard & poor’s

A+, positive outlook

strengths•Unsurpassedshareholdersupport,intermsof

both historical preferred creditor treatment and ongoing capital contributions

•LowriskembeddedinCAF’sloans,equityinvestments, and guarantees (development-related exposure) compared with that of regional commercial institutions

weaknesses•Despiterecentincreases,theratioofreserves

forlossesplusshareholders’equity(narrowrisk-bearingcapacity)toloans,equityinvestments,and guarantees and to embedded credit risk is somewhat weaker than at more highly rated multilateral development finance institutions

•Althoughgraduallydeclining,thegeographicconcentrationinCAF’sloanportfolioremainsrelatively high

ThepositiveoutlookreflectsCAF’ssuccessinexpandingits membership base, increasing its paid-in capital, and reducing the country concentration in its loan portfolio.AsCAF’smembershipcontinuestoexpand,thecorporation is evolving into a regional lending institution, versus a sub-regional institution. S&P could raise the ratings on CAF given continued expansion of its non-borrowing membership base and diversification of its loan portfolio, assuming no deterioration in its financial profile or shortening of the average tenor of its debt from the current level. The ratings could come under pressure ifanyofCAF’ssovereignborrowersrunarrearswiththe bank, or if CAF faces significant delays in receiving payments of paid-in capital from its members.

Key recent rAtinG AGency coMMentAry

Fitch

A+, outlook stable

CAF’sratingsreflecttheprivilegesconferredonitbyits member countries, its strong capital base, and its solidtrackrecordintermsofassetqualityandself-sustainable profitability. The ratings are limited by the volatility of the economic environment in which the institution operates, relevant loan concentrations, and themembercountries’creditworthiness.CAFhasbeenable to operate without difficulty in successive periods of instability in the region due to a conservative operatingpolicyandthemembercountries’support.CAF’sshareholdersaremostlygovernmentsandpublic agencies. The shareholders have demonstrated strong support in the form of capital contributions and privileges and immunities. As CAF is one of the few providers of long- and medium-term financing to the region, Fitch considers that its shareholders have a vested interest in supporting the company should it berequired.However,somedoubtsremainconcerningtheir ability to provide such support.

Key recent rAtinG AGency coMMentAry