CAF Joins Dim Sum Club

Corporacion Andina de Fomento (CAF) is the latest borrower to tap the growing offshore Chinese renminbi (RMB), or Dim Sum, market, selling a CNH600m ($97m) 3-year bond. In becoming the region’s third issuer to sell a publicly placed Dim Sum bond, the bank continues to diversify funding sources outside of its well-established USD, EUR and JPY and CHF curves. The Aa3/ A+/A+ supranational lender priced at par to yield 3.55%, inside of 3.65% initial guidance. Demand hit approximately CNH1.2bn with 36 accounts participating, according to a source with knowledge of the transaction. Institutions accounted for 46%, insurance companies 20%, banks 12%, private banks 11% and other investor types 11%. Hong Kong represented 44% by geography, Taiwan 27%, Singapore 17%, Europe 9% and other Asian buyers 3%. Bank officials told LatinFinance in October that such a transaction would have to be competitive versus its dollar curve with issuance representing an opportunity for high grade investors looking for EM exposure in the A+ rated space. CAF has seen Dim Sum deals from the World Bank and IFC as pricing reference points. The bank has already finished its $2.5bn financing plan, with Wednesday’s opportunistic deal a means to secure pre-funding for 2013. It is also reaching new investor types that typically gravitate towards supranational paper, according to sources familiar with the deal, such as central banks and government-owned institutions. CAF has issued in six markets this year, including three Swiss Franc deals and private placement transactions in Germany. It is currently evaluating the Australian markets, where only Pemex has planted the LatAm flag, as a new source of funding. HSBC and Standard Chartered managed the transaction, the latest in a series of LatAm Dim Sum deals. Santander Chile, BTG Pactual and Bradesco have brought smaller, privately placed deals in recent weeks, with Bradesco returning Wednesday to raise CNH215m in 2014 bonds, pricing at par with a 3.90% yield,