Thursday, 18 December 2008

CAF Sells Peso-Denominated Debt in Colombia

CAF (Corporacion Andina de Fomento), Latin America's largest multilateral lender, yesterday sold 245 billion pesos ($110 million) in five- and ten-year bonds. The corporation didn't give additional information on yields. Investors bid for more than twice the amount offered by the CAF.   

I suppose that the yield offered was probably one or two percentage point above the DTF benchmark rate. Investors have been reluctant to buy new issues, yields on goverment debt (TES) have fallen dramatically these days (flight-to-safety effect) and borrowers are shy to tap the markets amid Colombia's worst credit dryout since the 1998-1999 recession. Nonetheless, December is always a good month to place debt because there is excess cash in the market due to the holiday season (I am not really sure that that is the case this year, but probably for an investor in the fixed-income market, buying CAF paper, apart from its relative safety to other instruments, can turn into a good deal.) CAF is a AAA rated issuer. Unfortunately the CAF didn't give enough information on the transaction. BBVA was the lead manager for the transaction. 

1 comment:

  1. I would like to read some about Peru in your blog! Thanks

    Fernanda

    ReplyDelete