CAF Pouches Kangaroo Funds

Corporacion Andina de Fomento (CAF) has raised AUD275m ($249m) in Australia’s bond market, becoming the first Kangaroo bond issuer from LatAm, and the second in AUD. The development bank drew AUD320m in demand, allowing it to upsize from AUD150m expectations. “We are very satisfied with the debut transaction which represents diversification and opening of a new market, and at a good cost,” CFO Hugo Sarmiento tells LatinFinance. The official calculates the new deal priced 30bp inside CAF’s dollar curve. He says the institution plans a regular presence in the Kangaroo bond market, with a second AUD transaction likely in 2014. The AA minus/Aa3/A+ rated supranational priced the 2016 bond at 99.387 with a 4.25% coupon to yield 4.47% or mid-swaps plus 135bp, in line with MS+135bp area guidance. Pricing was an exercise in price discovery for the AA minus/Aa3/A+ rated supranational, as high-grade Australian investors have mostly invested in AAA supranational paper, Sarmiento notes. Of 30 total orders, Australian investors represented 33%, Japanese 27%, ex-Japan Asians 26%, Europeans 9%, and Americas buyers 6%. The deal follows investor meetings in Sydney and Melbourne and separate meetings with Japanese investors in Tokyo. Pemex opened the AUD-denominated market last year, though its AUD150m 2017 was done under a general Euro program. CAF’s transaction is considered a true Kangaroo bond as it falls under a AUD2bn Australian medium-term program. Deutsche Bank and Westpac Institutional Bank managed the deal. CAF previously raised CHF250m ($265m) in new 2020 bonds in Switzerland, at a 1.557% yield, which followed a HKD940m ($121m) 2028 private placement in Hong Kong at a 4.27% yield.