South American development bank prints $800 mln in three-year notes for an emergency loan program
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South 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.
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.