The Central American Bank for Economic Integration (CABEI) is after $1bn from the debt capital markets this year, and got off the mark with two trades last week.
In addition to its CHF200m ($214m) trade on January 30, the development bank penned a ¥5.6bn ($51m) bond in Japan’s capital markets. Carlos Quijada, of CABEI’s capital markets department, told LatinFinance, the bank placed the five-year bond with a 0.426% coupon. Daiwa Securities coordinated the sale.
“We printed the bond through our MTN [Medium-term note] program and the purpose was to fulfill requirements for Japanese investors,” he said.
On the Swiss trade, Quijada said CABEI initially sought CHF100m. But sufficient demand enabled the bank to obtain a competitive price and bookrunners offered the 2024 paper for 17bp over mid-swaps. Initial price talk had the spread between 17bp and 22bp.
“Momentum in the market was good and so was the reception,” Quijada added. “Since the beginning of this year, there is talk of increasing interest rates.”
BNP Paribas and Credit Suisse conducted the CHF-denominated sale.
CABEI, along with a number of other supranationals, are gearing up to raise cheaper capital in the immediate-term, before rates inevitably increase.
With a quarter of its 2018 requirements met, the A1/A/A+ rated bank will study bond sales in Australia’s Kangaroo market, the Norwegian kroner space and the Uridashi area.
“We have done three deals there since 2015,” Quijada said of the Uridashi market. “It is cost efficient and a good way to get retail investors.”
He also said CABEI’s core markets, in addition to Switzerland, were Taiwan’s CNH investors and Mexico’s peso space.
“The markets where we are frequent, we will definitely be there,” he added. On Mexico and Taiwan, he said CABEI aimed to issue debt there every year.
“After that, it is a case of trying to find the best alternatives for the bank in terms of cost and presence.”
Proceeds go towards CABEI’s “focus areas,” which comprise social, energy-related and economic infrastructure, rural development and development finance, among other areas.
Last August, CABEI raised debt in the Uridashi market, issuing tranches in Australian dollars and South African rand. In the same month, it printed roughly MXN2bn ($112m) in 2020 paper. CABEI also raised debt in the Kangaroo and Formosa bond markets last year, in addition to Hong Kong dollar and Norwegian kroner bonds.
Fitch Ratings upgraded CABEI in September to A+ from A, citing its “excellent capitalization ratio.”
Last year also marked the departure of two members from CABEI’s debt capital markets team – Ricardo Rico and Jorge Cortes. The former departed for the Asian Infrastructure Investment Bank, while Cortes took on a role with the IIC.