Japan Credit Rating Agency (JCR) upgrades rating on CABEI from AA- to AA

03/04/2019
The credit rating agency noted that CABEI not only retains ample liquidity based on its prudent financial policies but is also strengthening its resilience to stresses by augmenting its capital base and diversifying its funding sources.
The credit rating agency noted that CABEI not only retains ample liquidity based on its prudent financial policies but is also strengthening its resilience to stresses by augmenting its capital base and diversifying its funding sources.

CABEI is the Multilateral Development Bank in Latin America whose credit rating has evolved most rapidly throughout the years, obtaining 17 upgrades on its credit rating.

 

Tegucigalpa, April 3, 2019.- Japan Credit Rating Agency (JCR) upgraded the international long-term issuer credit rating on Central American Bank for Economic Integration (CABEI) in one notch, from AA- to AA; with stable Outlook. 

According to JCR’s official press release, the amendments to CABEI’s Constitutive Agreement, which came into force in 2016, have enabled the Bank to further strengthen its equity base, prompt a new capital increase and diversify its loan portfolio.

The credit rating agency also emphasized that the incorporation of the Republic of Korea as a non-regional member of CABEI will help diversify the Bank’s shareholder composition and boost its capital position and lending capacity.

In that sense, CABEI’s Executive President, Dr. Dante Mossi stressed the importance of incorporating the Republic of Korea to CABEI as a non-regional member through a US$450 million capital subscription, which has had an immediate positive impact on the Bank’s credit rating further consolidating it as the best rated issuer in all Latin America.

He also highlighted the importance of the Bank’s recently approved eighth General Capital Increase in light of the Institution’s strategy to attract new highly rated shareholders to bolster its business and financial profile.

The credit rating agency noted that CABEI not only retains ample liquidity based on its prudent financial policies but is also strengthening its resilience to stresses by augmenting its capital base and diversifying its funding sources.

As such, JCR also highlighted CABEI’s crucial role as an invaluable regional multilateral development bank in Central America, considering: i) its importance to the region as a stable provider of long-term financial resources, ii) its track record of solid operations for over 50 years since its establishment in 1960, iii) the international community’s support to CABEI as an indispensable organization in Central America, iv) its preferred creditor status, and v) conservative financial structure and sufficient liquidity.

In addition, Dr. Mossi indicated that the rating upgrade placed CABEI in a privileged position to an important investor base, noting that since 1997 the Bank has recurrently issued in the Asian market, including markets such as Taiwan, Japan, Singapore, Hong Kong and Thailand.

In that sense, Dr. Mossi highlighted CABEI’s 33 bond issuances in the Asian market, through which the Bank has channeled more than US$3.0 billion in resources towards the Central-American region; 22% of which have come from Japanese investors.

Finally, he emphasized the importance of the Japanese market’s potential appetite for green, social and sustainability bonds aligned with the Banks’s green agenda, highlighting the fact that in 2016 CABEI placed its first ever thematic green bond in such market.

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