Market Intelligence

CABEI eyes dollar benchmark following upgrade to double A

By Paul Kilby

WASHINGTON, April 13 (IFR) - With a recent upgrade to AA, the Central American Bank of Economic Integration (CABEI) wants to expand its reach among a new group of investors, say bank officials.

The bank is now eyeing a new dollar benchmark bond which will be targeted at accounts such as the central banks and sovereign wealth funds that typically buy top-rung supranational credits.

The bank has funding needs of around US$1.2bn this year, and has only raised US$250m so far in 2019 after tapping the Swiss franc and Uruguayan local markets.

CABEI, which is now one of a handful of Latin American issuers with a double A rating, hopes to come to the US dollar market for between US$300m-US$500m with a tenor of between three to seven years.

"We are looking for different types of investors including central banks, sovereign wealth funds and bank treasuries that can only invest in double A ratings," Hernan Danery Alvarado, the bank's CFO.

With CABEI's move up the ratings spectrum, bank officials expect funding costs to drop around 50bp depending on market conditions.

Korea's recent decision to join the development bank as a shareholder has been seen as credit positive for the bank, which in the past been penalized for operating in a volatile region.

In March, S&P upgraded the bank to AA from A+, citing its broadening group of shareholders, its improved governance structure and its ability to tap a diverse group of investors.

Moody's rates CABEI at A1, but changed its outlook from stable to positive in June last year, also citing the diversity of the bank's capital base following Korea's move toward membership.

"We have Taiwan and Korean as shareholders and that makes us a good risk," said Mossi.

"We are looking at Asia as way to diversify our member countries, and that has proven to be fruitful a relationship."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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