Cabei Jumps a Notch From Fitch

Fitch has upgraded Cabei to A- (stable) from BBB+. The agency notes an improvement in the credit quality of Cabei’s founding members, a strong capital base despite vigorous growth, a return of private sector exposure to historic levels and the enhancement of several self imposed corporate governance rules and control techniques. It also highlights Cabei’s preferred creditor status, strong capital base, good asset quality and established track record in terms of self sustainable profitability. Limitations include the volatility of the economic environments in which the institution operates, significant loan concentration and the member countries’ creditworthiness. “The ratings also factor in relatively high average exposure to the private sector,” says Fitch. “As Cabei is one of the few providers of medium-term financing to the region, Fitch considers that its shareholders have a vested interest in supporting it should it run into difficulties.” The Honduras-based bank is 59% owned by its five founding member states: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. The remainder belongs to Argentina, Colombia, Mexico, Taiwan, Spain, Dominican Republic and Panama. The bank’s usable capital/required capital ratio remains relatively strong at 2.7x at end-June 2007, says Fitch.