Fitch Rates CAF's TRY & ZAR Senior Notes 'AA-'
OREANDA-NEWS. Fitch Ratings has as assigned an 'AA-' rating to Corporacion Andina de Fomento's (CAF) four-year Turkish lira (TRY) and South African Rand (ZAR) senior unsecured notes. Repayment of principal and interest is in the currency of issuance. A full list of CAF's current ratings follows at the end of this press release.
Based on the documentation provided, CAF issued TRY192 million and ZAR 590 million of fixed-rate senior unsecured notes under its medium term note programme. The notes carry fixed-rate coupons of 10.73% and 9.0%, respectively, and will mature on Jan. 22, 2020. Interest payments will be paid semi-annually commencing on July 22, 2016 up to and including the maturity date. Similar to previous issuances in these currencies, these notes have been issued for secondary distribution (Uridashi) in Japan.
The net proceeds will be used to finance a pool of water sector projects, with any portion of unused proceeds applied toward general business purposes. Considering the multilateral bank's financial profile, the impact on CAF's leverage of this issuance is not deemed significant by Fitch.
KEY RATING DRIVERS
CAF's solid financial profile and the privileges and immunities conferred on it by its member countries drive its ratings. However, the member countries' creditworthiness relative to higher rated multilateral development banks (MDB) as well as still relevant loan concentrations, weigh on the entity's IDRs.
RATING SENSITIVITIES
Factors that could, individually or collectively, affect CAF's ratings are:
--Though not likely in the near term, CAF's ratings could benefit from a sustained reduction of loan concentrations, as well as material improvements in its borrowers' creditworthiness or in capitalization ratios.
--A stress situation in a member country that significantly affects asset quality or results in the invalidation of CAF's preferred creditor status or transfer and convertibility restrictions for private sector borrowers would be negative for creditworthiness.
--Additionally, a prolonged decline in capitalization related to asset losses, rapid operations growth or increased earnings volatility as well as a structural weakening of liquidity in the context of reduced capital market access could also be negative for CAF's ratings.
KEY ASSUMPTIONS
The ratings and Outlook are sensitive to the assumption below:
--Member countries, even if experiencing severe difficulties (such as Argentina, rated 'RD', or Venezuela, rated 'CCC'), will continue to honor CAF's preferred creditor status and exempt its private sector borrowers from any measures that may impact the transfer and/or convertibility of their debt service payments, should any member country decide to default selectively to their creditors.
Fitch currently rates CAF as follows:
--Long-term Issuer Default Rating (IDR) 'AA-'; Outlook Stable;
--Short-term IDR 'F1+';
--Senior unsecured debt 'AA-';
--Commercial paper 'F1+';
--Long-term National Rating in Venezuela 'AAA(ven)'*; Outlook Stable);
--Short-term National Rating in Venezuela 'F1+(ven)';
--Long-term National Debt Rating in Mexico 'AAA(mex)';
--Long-term National Debt Rating in Panama 'AAA(pan)'.
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