CAF mulls debut Panda trade

CAF mulls debut Panda trade

China Bonds

CAF is in talks with investors over a debut Panda bond next year, once a change in regulations allows multilateral lenders to issue renminbi-denominated debt, CFO Hugo Sarmiento told LatinFinance.

The Latin American development bank is also negotiating a new credit line from the European Investment Bank (EIB), along with $500m to $600m in loans from other development banks in 2018, Sarmiento said.

Some credit lines under negotiation include the expansion of existing lines with the Japan Bank for International Cooperation (JBIC), Germany's KfW and France's AFD.

CAF's 2018 external borrowing program ranges from $3bn to $4bn, with the bank raising funds for 7% loan growth next year. CAF will likely issue benchmark bonds in dollars and euros but it could also raise funds in Swiss francs and Australian dollars, Sarmiento said.

CAF usually sells $1bn in a single issue in the US bond market and €750m ($887m) in Europe, he said.

The bank has raised all the funds it needs for this year but it could return to the bond market if the conditions are right. 

"The markets are very positive right now for issuers," Sarmiento said. "We can be opportunistic and do some prefunding."

The bank sold $1.25bn in 2020 notes in July, following issues this year in Swiss francsAustralian dollars, euros and a Brazilian real-denominated Uridashi bond.

CAF had $22.2bn in its loan portfolio at the end of June, up from $21.2bn at the same time last year, according to its latest financial results.