CAF raises coronavirus relief funds in bond market
May 8, 2020 |
Latin American development bank prints $800 mln in three-year notes for an emergency loan program
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Latin American development bank CAF sold $800 million worth of three-year bonds on Thursday, raising money for its COVID-19 response as it underpins its countercyclical role in Latin America, according to a source involved in the deal.
CAF priced the new 2.375% 2023 notes at 99.779, or 220 basis points over mid-swaps, in line with the initial price talk and guidance, the source said. Barclays, Citi, HSBC and JPMorgan were the joint bookrunners, he added.
CAF said in a securities filing that it will use the money to finance part of a $2.5 billion emergency credit line that it approved in March. Eight member nations – Argentina, Bolivia, Colombia, Ecuador, Panama, Paraguay, Trinidad and Tobago and Uruguay – have accessed financing from the emergency line, according to CAF.
On Wednesday, for example, the bank said it granted a loan to Panama for up to $350 million to go along with a previously approved credit line for $50 million for the national healthcare system. It also said it approved $50 million for coronavirus relief in Uruguay on Tuesday and $50 million in Trinidad and Tobago last month.
CAF CFO Gabriel Felpeto said during a webinar in late April that multilateral institutions like CAF have to strengthen their countercyclical roles as preferred sources of funding for member countries during a crisis like the coronavirus pandemic.
The development bank follows other multilateral lenders, including the IDB, IDB Invest and CABEI, that went to the bond market to raise funds for emergency loan programs since the crisis started.
In February last year, CAF sold $1.25 billion in dollar-denominated bonds with a coupon on 3.25%, following the sale of €750 million ($813 million) in five-year euro-denominated bonds the month before. Since then, however, Fitch Ratings downgraded CAF to A+ due to its exposure to Venezuela, Argentina and Bolivia.