28 de mayo de 2015 / 17:39 / en 2 años

Latam CAF eyes euro, US dollar bond markets for benchmark

NEW YORK, May 28 (IFR) - Latin American development bank CAF, rated Aa3/AA-/AA-, is considering a euro or US dollar bond sale following taps in Australian and Norwegian markets this month.

“We have room to raise about a US$1bn more this year,” Aureliano Fernandez, a senior specialist in international bond issues at CAF, told IFR.

“So we will probably be aiming at a benchmark size transaction in the coming month, which could be in euros or dollars.”

CAF recently completed a US$1bn benchmark three-year bond sale in January so it may prefer to hold off on a dollar trade and focus on euros first, he said.

Timing, however, will very much depend on costs and market conditions as there has been “a lot of volatility and that has implications for the swap” back to dollars, he added.

The borrower’s recent NKr1bn (US$128m) 20-year bond sale, which was closed in early May, came inside its dollar curve, after pricing at par to yield 3.05% or about the equivalent of six-month dollar Libor plus 80bp, said Fernandez.

The deal, which was led by HSBC, extended CAF’s curve in a market that it has already tapped twice through Deutsche Bank.

In February 2014, it raised NKr1.5bn through a 12-year priced at par to yield 4.29% and NKr900m with a 10-year that came at par to yield 4.07%.

Deals in this market are usually triggered by reverse enquiry from a handful of Norwegian asset managers or insurance companies.

Just this week, the bank also raised A$150m (US$116m) through 10-year Kangaroo bonds. The 4.5% June 5 2025s priced at par, equivalent to 165.25bp over the April 2025 Australian Commonwealth Government bond.

Deutsche Bank and Westpac were joint lead managers for CAF’s third Kangaroo bond, having also arranged its previous Australian dollar transactions.

Ever since it achieved Double A ratings in 2013, CAF has been developing relationships with top rung SSA investors who were previously unable to buy its bonds.

The Norwegian Krone and Australian dollar sectors are just some of the few supranational stomping grounds that CAF has been targeting.

It is now in preliminary discussions about making a debut bond offering in the Canadian dollar market.

“It is a natural market for supras and it makes sense to have a presence there,” he said.

Between US dollar, Australian dollars, Swiss francs and Norwegian Krones, CAF has raised some US$1.5bn in bond financing this year.

In May last year, it garnered EUR750m through a 1.875% 2021 that was priced at 99.727 to yield 1.917% or mid-swaps plus 75bp through leads BBVA, Credit Agricole, Credit Suisse, Deutsche Bank and HSBC. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)

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