CABEI issues its 50th bond in the International Capital Markets through its MTN Program
On Friday July 25th, the Central American Bank for Economic Integration (CABEI) placed a bond in the Mexican capital markers under its Medium Term Note Program.
CABEI placed MXN 2 billion (approx. USD 154.6 million); through the issuance of 4 year bonds with a floating rate of 5 basis points below the TIIE-28 benchmark. Investor demand reached an oversubscription of 3.65 times (MXN 7.3 billion) the issued amount, which allowed for an improvement of 10 basis points with respect to the initial guidance (TIIE+5 bps) provided by the sole bookrunner, HSBC. The auction had the participation of 35 institutional accounts, including banks, mutual funds, insurance companies, and private banks. This reflects recognition of CABEI’s credit quality and the good reception amongst investors in this market. The bond had the highest local ratings through Aaa.mx and mxAAA investment grade ratings by Moody’s and Standard & Poor’s respectively.
CABEI’s CEO, Hernán Danery Alvarado, commented that “this transaction represents the Bank’s thirteenth foray in the Mexican market since its first issuance in 2007. To date, CABEI has issued approximately MXN 13 billion with tenors ranging from two to twelve years at both fixed and floating coupons referenced to several benchmarks such as UDI, CETES, and TIEE”. Mr. Alvarado added that “due to the depth of the Mexican market and its wide institutional investor base, CABEI has been able to construct a Mexican peso curve which has allowed it to consolidate its presence as a recurring issuer in this market”. The result of this issuance reaffirms the good perception that Mexican investors have of the solid credit and financial standing of CABEI, as it further strengthens the bonds of friendship between Central America and Mexico. Mexico has been an extra-regional member of CABEI since 1992 and recently increased its equity participation to USD 306.25 million from USD 122.5 million, as a sign of its support to the Bank’s undertaking in the region.
CABEI’s CEO, Dr. Nick Rischbieth, commented: “the establishment of the MTN Program in 2002 has allowed the Bank to geographically diversify its funding resources, achieving an aggregate of USD 4.2 billion to date through this instrument. These bond issuances have taken place in more than sixteen currencies and nineteen markets, such as USA, Colombia, Switzerland, Taiwan, Japan, Hong Kong, amongst others. The funding through the international capital markets has allowed CABEI to consolidate its role as the important development institution in Central America as evidenced by the Bank’s 52% participation in the loan disbursements amongst multilaterals to the region; and by a historical aggregate of USD 21 billion disbursed ever since the Bank was established in 1960”. Dr. Rischbieth added that “the success of CABEI’s 50th issuance under the MTN Program is a milestone in the institution’s history and a product of the Bank’s credit and financial consolidation”. CABEI’s CEO also emphasized on the Bank’s evolution since its first bond issuance in the international capital markets, when it place a bond on Taiwan in 1997 for an amount of NTD 6.8 billion, a then equivalent of USD 246 million.
CABEI is the most important supplier of capital to finance the development of the Central American region. In 2013 it continued channeling resources to the region, reaching a loan portfolio of USD 5.4 billion, and amount that reflects the institution’s commitment to the development and integration of its member countries.
Currently, CABEI’s international long term ratings are: A by Standard and Poor’s, A1 by Moody’s, A by Fitch Ratings, and AA- by Japan Credit Rating (JCR).
