Fitch highlights CAF's capitalisation and upgrades rating outlook to positive

The commitment of its shareholder countries to strengthen equity, together with the financial strength and stability of the multilateral organisation highlighted by the rating agency, allowed it to upgrade its outlook to positive
Fitch Ratings logo at its offices in London's Canary Wharf financial district.

REUTERS/REINHARD KRAUSE  -   Fitch Ratings logo at its offices in London's Canary Wharf financial district

The commitment achieved by consensus of the shareholder countries of CAF -development bank of Latin America- to strengthen the institution's equity with a capital increase for a total amount of 7 billion dollars, the largest in its history, was highlighted by the risk rating agency Fitch Rating by improving the outlook of the credit rating to positive, ratifying the long-term rating of A+ and the short-term rating of F1+. 

"The Positive Outlook reflects our expectation of an improvement in CAF's creditworthiness, as a result of the recently approved significant capital increase and favourable loan portfolio dynamics. Despite the recent deterioration in Latin America's sovereign ratings, CAF's shareholder capital contributions will support the bank's credit expansion and portfolio diversification in the coming years, while maintaining "excellent" capitalisation indicators," the rating agency said in its report.

CAF's executive president, Sergio Díaz-Granados, highlighted this good news for Latin America and the Caribbean: "Fitch's recognition of the joint work of CAF's shareholder countries to increase the institution's capital will allow us to offer a more forceful response to boost the well-being of Latin Americans and Caribbean people, promote social and economic reactivation, be the region's green bank and lead the digital transformation that will make us more competitive".

Sergio Díaz-Granados, presidente de CAF
Sergio Díaz-Granados, President of CAF

The process of converting Mexico, Costa Rica and the Dominican Republic to full CAF membership, as well as the incorporation of the Republic of El Salvador, was also highlighted by the rating agency. The high capitalisation and liquidity indicators, as well as the bank's excellent track record as a preferred creditor and its decisive role as a source of financing for its sovereign borrowers to face the effects of the COVID-19 pandemic, were other factors highlighted by Fitch.

For more than three decades, CAF has pursued a strategy of diversifying its sources of financing through an uninterrupted presence in global capital markets, which has placed it in a privileged position internationally. The multilateral promotes sustainable development and regional integration through the efficient mobilisation of resources for the timely provision of multiple, high value-added financial services to public and private sector clients in shareholder countries.