Moody’s Sees CAF Resilience to Ecuador

Moody’s sees resilience at CAF, despite exposure to Ecuador, which has defaulted. “The recent and historical experience, both in Ecuador and other CAF member countries, supports the view that CAF is unlikely to be caught up in any government default,” said Moody’s VP Gabriel Torres. The agency cites comments from the president suggesting it will pay back many of its loans despite the default. Correa also apparently wants to seek new financing from multilateral lenders, including CAF. Ecuador is one of CAF’s biggest borrowers, and S&P last week changed its outlook to negative on the multilateral because of exposure to the sovereign. “While the government stance could change in the future we see no evidence of such change today,” says Torres. CAF’s status as lender of last resort in times of crisis continues to support its A1 rating, despite the low ratings of its member countries, adds the analyst. “Ecuador, and other member nations, have repeatedly shown throughout CAF’s history that they place debt payable to CAF as senior to almost all its other external obligations,” says Torres, adding that examples are numerous and span several major crises. Ecuador made a $7.35m payment to CAF Monday for a social investment loan, says Dow Jones, which cites a presidential palace statement.