Corporacion Andina de Fomento, the Latin American development lender known as CAF, plans to raise $3 billion this year to finance energy and infrastructure projects, according to Chief Financial Officer Hugo Sarmiento.
About $2.5 billion will come from international bond sales and the remainder will come from loans, Sarmiento said today in an interview at Bloomberg’s offices in London. The Caracas-based lender plans to boost its credit portfolio by 10 percent this year from $16.5 billion at the end of 2012, Sarmiento said.
Proceeds will be used to finance projects across the region, which may include part of Rio de Janeiro’s Maracana soccer stadium, according to Sarmiento. CAF is also studying mass transit system projects in Sao Paulo and Rio in anticipation of the 2014 World Cup and 2016 Olympics, he said.
“We’ve seen an increase in demand for Latin American assets” such as the bonds CAF will sell, he said. “When you look at the macroeconomic environment, which is very stable, and you compare that to the developed world, which is in crisis, it makes sense to park your funds there.”
Stronger economic growth than in the developed world helped attract $131 billion of private financial flows to Latin America and the Caribbean in 2012, up from $85.8 billion in 2007, according to IMF data. Gross domestic product in eight Latin American countries rose by an estimated 2.66 percent on average in 2012, compared with an estimated contraction of 0.4 percent for the euro region and growth of 2.2 percent in the U.S., data compiled by Bloomberg show.
CAF expects its next bond issue to be a U.S. dollar-denominated sale in the second quarter, Sarmiento said. The lender also intends to sell about 500 million yuan ($80 million) of bonds later in the year to tap growing demand from Asian investors, he said.
The lender’s 4.375 percent dollar bonds due 2022 have returned 10 percent since they were issued in June. The yield was little changed today at 3.4 percent.
CAF is rated Aa3 by Moody’s Investors Service, the third-highest investment grade, and AA- at Standard & Poor’s, the company’s fourth-highest ranking.