Creation of Debt Fund for Infrastructure in Uruguay – CAF I

With the objective of channeling resources to finance infrastructure with senior long-term instruments, CAF, Development Bank of Latin America, developed the Financial Trust Debt Fund for Infrastructure in Uruguay- CAF I.

The Fund will have a validity period of thirty (30) years and a maximum amount authorized by the Central Bank of Uruguay (BCU, for its acronym in Spanish) of 2,800 million Indexed Units, equivalent to approximately USD 350 million.

The launching was carried out through the Bolsa Electrónica de Valores S.A. (BEVSA) (Electronic Stock Exchange) and the Bolsa de Valores de Montevideo (Montevideo Stock Exchange). Offers were received for a total of 3,085 million Indexed Units. Investors are the four AFAP and the Banco de Seguros del Estado, who will make their contributions according to the projects' requirements. CAF will co-finance 10 percent of the investment in debt.

The manager of the CAD I Fund will be CAF-AM Administradora de Activos - Uruguay, S.A, (Asset Manager), a Uruguayan company owned by CAF Asset Management Corp. (subsidiary of CAF, Development Bank of Latin America). República AFISA will be the fiduciary administrator of the Trust. CARE and Fix Scr (affiliated to Fitch Ratings) gave the Fund a risk rating of BBB (uy). The public offer is registered at the Central Bank of Uruguay and will trade at the Montevideo Stock Market and BEVSA.

Among the projects to finance, the Fund will grant credits or acquire senior debt of infrastructure projects executed by concessionary or contracting companies with Public-Private Participation (PPP). The total investment need for the five-year period (2015-2019) exceeds USD 2.14 billion in energy, road, education, hospital, ports, and railroad projects.

Enrique Garcia, CAF's Executive President, stated, "Uruguay takes the lead with these types of financing vehicles as, together with Colombia, they are the first countries that have an exclusive debt fund for infrastructure in Latin America.  With this new product, CAF seeks to facilitate the channeling of resources from institutional investors and other actors to complement the financial market aimed at promoting infrastructure in different countries. This initiative will promote the start of new works and, therefore, greater employment generation, contributing to progress, competitiveness, and growth of the country's economy".

Danilo Astori, Minister of Economy and Finance, indicated, "these types of instruments are framed within the government's strategic objectives, as they contribute to establish the bases to start the investment process for the essential infrastructure needed for sustainable development. The objective of the development of the physical infrastructure is to convert Uruguay into a logistic pole, attract foreign investment, strengthen factor productivity, and consolidate the advances in social equity".

At the same time, he added, "the stock market is called to play a key role in the search for private financing for the infrastructure works that the country needs. In this respect, the launching of the Fund, for which we have the contribution of a multilateral organization such as CAF, Development Bank of Latin America, is also in line with a government priority, which is the development of the capital market. This mechanism has a significant role as a coordinator of supply and demand for infrastructure financing".

Credits will have to comply with minimal requirements that ensure an adequate risk profile. This task will have to be attached to an origination, analysis, negotiation, and follow-up scheme of credits, subject to the best credit practices that match those of CAF, including technical, environmental, and social aspects. After the approval of the credits, CAF-AM Administradora de Activos Uruguay S.A. will follow up on each one of the financed projects up to their final amortization, to ensure that the conditions established in the credit contract are being met. In addition, it will participate in the dialogue prior to the launching of PPP projects to ensure the bancarization of the concession contracts.