Since taking over as CEO, what have been the main objectives for your presidency?
Latin America and the Caribbean is an unequal region, with high levels of poverty, low productivity and serious exposure to the effects of climate change. My goal has been to address these realities and turn CAF into a tool to help countries overcome major development challenges, including the triple transition of energy, digital and environmental. CAF therefore needs to grow, catalyse new resources and adopt new ways of helping the private sector and local governments.
Shortly after I joined CAF, we proposed doubling the size of the bank to address the severe problems caused by the pandemic. The region needed to reactivate its economies and rethink its growth model. One year into my presidency, the board unanimously approved the largest capital increase in the bank’s history — totalling $7bn. This will help drive our strategy to transform CAF into the green bank for sustainable and inclusive growth in Latin America and the Caribbean.
How does the expansion to Central America and the Caribbean fit into CAF’s strategy?
Since 1990, CAF has engaged in a process of geographic expansion. The bank has evolved from its six founding Andean nations to encompass 21 countries across Ibero-America. In 2023, Chile, the Dominican Republic and Honduras joined as full members, followed by El Salvador in 2024. Additionally, The Bahamas, Antigua and Barbuda, Dominica and Grenada are in the process of becoming CAF members. This expansion positions us to become the financial institution with the broadest geographic reach in Latin America and the Caribbean.
This expansion aligns with our overarching strategy to enhance regional integration while preserving the Latin American and Caribbean essence of the institution. The success of CAF over the years can be attributed to its foundation as a development bank owned by developing countries, fostering a strong sense of ownership and alignment with the interests of its members.
How will the recent capital increase and the addition of new shareholders help CAF’s operations?
With the $7bn paid-in capital increase approved in 2022, CAF is on its way to doubling its size. This capital infusion, alongside contributions from new full member shareholder countries such as Chile, the Dominican Republic and Honduras, will enable the institution to expand its loan portfolio by 6%-8% annually over the next decade. This growth will enhance CAF’s relevance in the region, amplifying our development impact while maintaining or improving our capitalisation ratios.
Shifting to the capital markets, what are some of the standout deals from CAF’s capital markets activity so far in 2024?
There are several noteworthy deals to mention, beginning with our $1bn no-grow global note issued in September to wrap our 2024 funding plan. This trade achieved one of the tightest spread differentials between CAF and its AAA peers and a record order book of $10.7bn. We successfully executed our largest euro benchmark to date, a €1.5bn print with an unconventional six year tenor. Our strategic focus on extending tenor, combined with timing the market, significantly contributed to this achievement.
We also made a strong re-entry into the Aussie dollar market with a A$500m trade, the largest by any Latin American issuer in this market. Finally, our £1bn five year issue in April marked CAF’s return to the sterling market after 22 years, and drew the largest order book for any SSA sterling deal in 2024.
Could you outline the bank’s financing plan for 2025?
CAF has established itself as a prominent SSA issuer, boasting robust order books and significant allocations to high quality investors including central banks and official institutions. With a funding plan of approximately $7bn for 2024 and a similar volume scheduled for 2025, we aim to re-enter our core markets with benchmark trades in major currencies such as the US dollar, euro and sterling. Additionally, we plan to target niche strategic markets, including Australia, Japan and Switzerland.
We are committed to exploring new markets as part of our diversification strategy. Over the past four years, we have prioritised the development of local currency debt markets, actively participating in countries such as Colombia, Costa Rica, Mexico, Paraguay, Uruguay and Panama. This initiative will continue as we expand our reach, especially with the addition of new shareholder countries.
Looking at CAF’s 2022-2026 strategy, what have been the main achievements to date, and what are the key priorities for the coming years?
CAF has the best credit rating in its history. New capital contributions from member countries are coming in, we are growing at 7% and we have reactivated our asset management subsidiary CAF-AM.
As part of our mission to become the region’s green bank, we committed to ensuring that 40% of our operations will be green by 2026. We will close this year with 35% of our operations green, so we are on the right track. CAF has made significant progress by increasing the green component of its portfolio, strengthening collaboration with subnational governments, and attracting critical capital from both regional and international partners.
Looking forward to 2026, CAF will focus on
further promoting regional integration, deepening its engagement with the non-sovereign sector and expanding its geographic presence, particularly in the Caribbean and Central America.
Additionally, the bank will continue developing innovative financial instruments to better respond to the evolving challenges facing the region.