Standard & Poor’s Upgrades CAF Outlook from Stable to Positive
S&P Global Ratings revised the outlook of CAF—development bank of Latin America—to positive, based on improved capitalization indicators and a maintained solid liquidity. The rating agency highlighted the commitment of its shareholders and Mexico’s and Costa Rica’s accession as full members. It also noted CAF’s contribution to addressing the pandemic in the region.
Standard & Poor’s (S&P) Global Ratings revised the outlook of CAF—development bank of Latin America—to positive and affirmed its long- and short-term issuer credit risk ratings of 'A+/A-1', respectively.
“The positive outlook reflects our view that CAF will continue to improve its capital position, underpinned by capital payments from new and existing members that will offset increases in financing and vulnerabilities of sovereign ratings in the region,” the agency said in a statement.
The risk rating agency also stressed that CAF has substantial and established access to markets, as a regular reference issuer in the global capital market. “We believe that CAF will manage balance sheet and capital growth prudently. The institution has made efforts to diversify its portfolio and gradually increase exposure to investment-grade sovereign instruments,” S&P added.
CAF’s acting executive president Renny Lopez noted: “CAF’s upgraded outlook by S&P reflects the financial strength of the institution, bolstered by the continued support of its shareholder countries through capital contributions and the accession of Mexico and Costa Rica as full members. Similarly, we appreciate the recognition made by the risk rating agency to our commitment to helping Latin Americans face the pandemic and promote their well-being and economic revival with more than USD 7 billion.”
The ratification of S&P’s rating and outlook revision to positive strengthens investor confidence in CAF’s debt securities, as it recently became the first Latin American issuer to place bonds linked to the SOFR rate.
CAF closed 2020 with a record USD 14 billion in loan approvals, mostly to address the effects of the pandemic on the economy and healthcare systems, as well as to improve digital, land and energy infrastructures. At the close of its 50th anniversary, the multilateral agency had accumulated a total of more than USD 200 billion in approvals since 1970 to promote sustainable development and regional integration.
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