Institutional Presentation - December 2018 - Central American Bank for Economic Integration April 2019 - BCIE
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Institutional Presentation – December 2018
Central American Bank for Economic Integration
April 2019
Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. ALM Policy
5. Credit Risk Management
6. Comparison with other MDBs - Rating
2
Central American Bank for Economic Integration
Fact Sheet
Key Economic Facts Guatemala
Area: 572,563 km2
El Salvador
Population: 58.9 million
Population density: 102.9 people per km2 Costa Rica
Population Growth (2016-2017): 1.40%
Regional GDP: US$335 billion Honduras
GDP per Capita: US$5,681
Nicaragua
✓ The Central American region consists of eight
countries: Guatemala, El Salvador, Honduras, Belize
Nicaragua, Costa Rica, Belize, Panama and
Dominican Republic. Panama
✓ The establishment of the Central American Dominican Republic
Integration System (SICA) allows the region to
work together on an economic, political and
social level.
3
Central American Bank for Economic Integration
Key Statistics for Central American Region Economic Outlook
Economic Growth Inflation
(Percentage) (Percentage)
Most Relevant Economic Activities
✓ Economic growth for 2019 in Latin America is estimated to be around
2.2%, while Central America’s growth is estimated at 3.2%.
✓ Inflation forecast for 2019 in LATAM is estimated at 4.9%; 1.3% higher
than the 3.6% estimate for CA.
*Excludes Venezuela’s hyperinflation.
4
Central American Bank for Economic Integration
Key Statistics for Central American Region Economic Outlook
Central America Region: CG Debt ✓ During the 2000-2008 period, most of CA countries reported fiscal deficits
(Percentage of GDP) close to LATAM’s regional average (1.9%).
✓ The fiscal position of the CA region as a whole has improved in the recent
past; as governments keep making and implementing important policy
measures. It also compares favorably to the LATAM average for the 2017-
2018 period (2.6% vs 5.8%).
Central America Region: Fiscal Deficit
(Percentage of GDP)
✓ Central Government debt growth is one of the major concerns for LATAM and CA
authorities.
✓ Except for El Salvador and Belize, Central American countries exhibit debt levels
below the LATAM average.
5
Central American Bank for Economic Integration
Vulnerabilities: Central America vs South America
HTG>FTG HTG=FTG HTG
Central American Bank for Economic Integration
Central America: Trade Integration Agreements and Regional Initiatives
✓ Following substantial work towards regional trade integration over the last half century, Central America has emphasized multilateral initiatives that underpin integration:
Initiatives Year approved Benefits
Free trade agreement between Chile Formally signed October Improved hemispheric integration.
and Central America of 1999 Improved rules for the investments promotion.
Created an expanded and secure market for the goods produced.
Free trade agreement between Panama Formally signed March Improved commercial relationship in the region.
and Central America of 2002 Increased the economic and social development.
Central America* – USA Free Trade Formally signed May of Improved commercial relationship in the region.
Agreement 2004 Increased the market access.
(DR-CAFTA) Encouraged a complementary agenda for Central America Region.
Free trade agreement between Mexico Formally signed Improved the competitiveness between Central America and Mexico.
and Central America November of 2011 Increased the economic and social development.
Removed commercial barriers and facilitated the trade between Central America and Mexico.
The European Union - Central America Formally signed June of Improved commercial and cooperative relationship between regions.
Association Agreement (EU-CAAA) 2012 Increased social development in the Central America Region.
Free trade agreement between the Formally signed On June 18th 2015, Central American countries and the Republic of Korea launched negotiations towards a
Republic of Korea and Central February of 2018 (but free trade agreement, which concluded on November 16, 2016 in Managua, Nicaragua. In 2017, Central
America** not yet in effect) America and the Republic of Korea carried out internal processes, including the legal review of the texts of
the free trade agreement. On February 21st 2018 the FTA was signed in Seoul, Korea with Costa Rica, El
Salvador, Honduras, Nicaragua and Panama. The agreement is expected to take effect following its approval
at the National Assembly of Korea.
*Includes Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Dominican Republic.
** Includes Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama.
7
Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. ALM Policy
5. Credit Risk Management
6. Comparison with other MDBs - Rating
8
Central American Bank for Economic Integration
About CABEI
CABEI's Mission*
“The Bank’s objective shall be to promote the economic integration and the balanced
economic and social development of the Central American region, which includes the
founding countries and the non-founding regional countries, attending and aligning itself
with the interests of all of its member countries.”
* Effective as of March 28th 2017 (Resolution DI-25/2017).
9
Central American Bank for Economic Integration
About CABEI: Member Countries
➢ Supranational development bank focused on Central
America, founded in 1960 Cuba Dominican
➢ Headquartered in Tegucigalpa, Honduras Republic
Belize
➢ Founding Members: Honduras
➢ El Salvador Guatemala
➢ Guatemala Nicaragua
➢ Honduras El Salvador
➢ Nicaragua Panama
Costa Rica
➢ Costa Rica
➢ Non-Founding Regional Members:
➢ Dominican Republic (2007)
Mexico
➢ Panama (2007)
➢ Belize (2006) (*)
➢ Non-Regional Members (**):
➢ ROC Taiwan (1992) Founding Members Spain
➢ Mexico (1992) Colombia
Non-Founding Regional Members
➢ Argentina (1995)
Non-Regional Members
➢ Colombia (1997)
➢ Spain (2005)
➢ Cuba (2018)
(*) As of November 9th, 2016, Belize became a non-founding regional member.
(**) On December 28th, 2018, the Republic of Korea signed the Accession Protocol to CABEI’s Constitutive Agreement and the Shares Subscription Agreement,
thus formalizing its incorporation. Argentina ROC (Taiwan)
10Central American Bank for Economic Integration
Organizational Structure
Board of
Governors Board of Directors Composition
CABEI has 318 employees situated at its
headquarters in Tegucigalpa and its 6
regional offices (1 regional office for each Board of Directors
Founding Member Country and 1 office in
Panama). In the short term, the Bank expects
to open an additional regional office in
Dominican Republic.
Executive President
Executive Vice-President
Operations and Financial Credit
Sector and Risk Management
Technology Management Management
Countries Division Division
Division Division Division
11Central American Bank for Economic Integration
CABEI is the dominant MDB in the Central American Region
CABEI, IADB and World Bank participation (%) of total
disbursements to the Region¹ in the last twelve years (2005-2016)
1 Includes Guatemala, El Salvador, Honduras,
Nicaragua and Costa Rica
* Includes CII ,
** Includes IFC & IDA,
Source: www.iadb.org, www.worldbank.org
Total Disbursements 2005-2016: CABEI.
US$35.5 billion
✓ Through the years CABEI has consolidated its role as the Multilateral Development Bank with the most relevant presence in the Central American region.
✓ This consolidation has been mainly derived from the Preferred Creditor Treatment conferred to CABEI by its member countries.
✓ CABEI’s role is not and cannot be readily fulfilled by another private or domestic public institution.
12Central American Bank for Economic Integration
Rising importance of CABEI in the Region
✓ Since its creation, CABEI has disbursed over US$27.9
billion to the Central American region.
✓ More than 57% of those disbursements have taken
place over the past 10 years.
✓ During periods when several multilateral development
banks have frozen disbursements to some Central
American countries (Nicaragua, Honduras and
Guatemala), CABEI continued to fulfill its mandate, thus
strengthening the Preferred Creditor Treatment
conferred to it by its member countries.
✓ CABEI has a track record of more than five (5) decades
of fulfilling its public policy mandate throughout credit
cycles, and will continue to do so in the future.
13Central American Bank for Economic Integration
CABEI as part of the Central American Integration System (SICA by its acronym in Spanish)
CABEI - SICA
SICA’s purpose is to achieve the integration of Central
America for it to become a Region of Peace, Freedom,
Democracy and Development.
CABEI is SICA’s financial arm.
Order of Malta
Republic of Serbia
14Central American Bank for Economic Integration
Amendments to CABEI’s Constitutive Agreement
AA-
✓ On April 24, 2014, the Board of Governors instructed the Board of Directors and the Bank’s Administration to proceed with the formulation of an action plan for eventual
modifications to the Constitutive Agreement and to the internal regulation of the Bank.
✓ On February 12, 2015, the Board of Governors unanimously approved amendments to CABEI’s Constitutive Agreement. Subsequently, on January 25, 2016, the Legislative
Assembly of Costa Rica ratified the aforementioned reforms.
✓ These reforms became effective on June 9, 2016, given that literal d) Article 35 of CABEI’s Constitutive Agreement, states that such reforms shall become effective for all its
members three (3) months after the date of its official communication, which occurred on March 8, 2016; after the publication of the respective law (No.9350) on Costa
Rica’s Official Gazette.
15Central American Bank for Economic Integration
Regional Integration Projects
Energy Interconnectivity
Social Housing
Social Housing Road Network
16Central American Bank for Economic Integration
Loan Portfolio Diversification
Expansion to Six Lanes of Las Playas Corridor, Tranch I La Montegrande Dam Multiple Project
Chorrera-Santa Cruz Project (Dominican Republic)
(Panama)
The main objective of the project is to control the Yaque del
The project aims to expand 32.65 kilometers of Las Playas Sur River avenues to protect the flood zone, provide the
Corridor, improving the cross section to six lanes and region with a supply system for irrigation, treatment and
extending the width of the shoulder, while maintaining the supply of drinking water, as well as renewable energy
existing lane width in each direction. The project is expected generation.
to benefit more than 500 thousand inhabitants of the
Panama Oeste Province, of which 51% are women. It is
estimated that the project will create 1,500 temporary CABEI Investment:
construction jobs.
The amount financed by CABEI is US$249.6 million.
CABEI Investment:
The amount financed by CABEI is US$450.0 million.
AES Colon Project
RANC
(Panama)
The project consists of a natural gas-based electrical
generation plant with an installed capacity of 381 MW and
includes its corresponding regasification terminal with a
storage capacity of 180,000 cubic meters. As the first of its
kind in Central America, the project represents a milestone
in the development of regional energy markets due to its low
investment and operation costs, its economies of scale and
its limited environmental impact.
CABEI Investment:
The amount financed by CABEI is US$100.0 million.
17Central American Bank for Economic Integration
Results of the Amendments to CABEI’s Constitutive Agreement:
Loan Portfolio Diversification
✓ During 2018, CABEI approved operations for US$2,443 million of which US$987 million (40%) correspond to non-founding regional countries
and non-regional countries.
✓ Such level of approvals is aligned with the Bank’s loan portfolio diversification process established as an objective under the amendments to
its Constitutive Agreement.
18Central American Bank for Economic Integration
Results of the Amendments to CABEI’s Constitutive Agreement:
Speed of Loan Portfolio Diversification
1992 - 2003 2004 - 2015 2016
$1,840 $4,579 $6,473
✓ Diversification allows for the
optimization of capital,
enhancing the Bank's
creditworthiness and, in turn,
improving its risk profile.
✓ In 2018, the Bank’s loan
2017 2018 2019P portfolio concentration risk was
$6,835 $7,487 $8,053 mitigated, as its top 5
geographic exposures were
decreased even further to 83%
of the total portfolio.
19Central American Bank for Economic Integration
2015-2019 Institutional Strategy
20Central American Bank for Economic Integration
Operations: 2015-2019 Institutional Strategy
✓ 2015-2019 Institutional Strategy seeks to maximize the impact of CABEI's operations on: Sustainable Economic Development of the Region and
Sustainable Development Goals (SDGs) of the of the 2030 Agenda for Sustainable Development.
✓ CABEI is currently in the process of developing its 2020-2024 Institutional Strategy.
21Central American Bank for Economic Integration
Operations: 2015-2019 Institutional Strategy - Focus Areas
Competitiveness
Services
Human Development
And Social Infrastructure
Focus
Financial
Intermediation and
Development Finance Areas Productive
Infrastructure
Rural Development
Energy
and the Environment
22Central American Bank for Economic Integration
CABEI’s impact on development
I-BCIE SIEMAS
✓ CABEI measures the impact of its operations on the region’s development through the CABEI Development Impact Index (I-BCIE).
✓ The Bank also has a System for Identification, Evaluation and Mitigation of Environmental and Social Risks (SIEMAS), which help establish plans
associated with the prevention or mitigation of environmental or social risks in CABEI operations.
23Central American Bank for Economic Integration
Strategic Objectives of the Institutional Strategy (2015-2019)
24Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. ALM Policy
5. Credit Risk Management
6. Comparison with other MDBs - RatingCentral American Bank for Economic Integration
Balance Sheet
26Central American Bank for Economic Integration
Balance Sheet
Balance Sheet as of December 31, 2018
(US$ Million)
Assets Liabilities and Equity
Total US$10,850 Total US$10,850
27Central American Bank for Economic Integration
Balance Sheet Structure
Total Assets Total Liabilities Total Equity
8.7% 8.8% 8.5%
11.6% 11.1% 13.0%
5.7% 6.5% 4.0%Central American Bank for Economic Integration
Financials: Balance Sheet – Loan Portfolio
Loan Portfolio
As of December 31, 2018
7.6% Loan Portfolio by Country US$7,487 Million
9.5%
5.6%
29Central American Bank for Economic Integration
Financials: Balance Sheet – Loan Portfolio Distribution by Institutional Sector and Focus Area
As of December 31, 2018
Total Loan Portfolio US$7,487 Million
Loan Portfolio by Focus Area
Loan Portfolio by Institutional Sector
(%)
(US$ million)
✓ The Bank’s loan portfolio is mainly in the public sector; which grants CABEI a Preferred Creditor Treatment.
✓ Within the private sector, the portfolio has a greater proportion corresponding to the financial sector (with 59% ), in line with the trend observed over the past 5 years.
30Central American Bank for Economic Integration
Profitability and Capitalization
31Central American Bank for Economic Integration
Consistent Profitability
153.7
(*)
(*) Net Income for year-end 2017 would have reached US$161.1 million if the effect of the additional loan loss
reserves constituted as a result of the deterioration of El Salvador’s credit rating is excluded.
CABEI, in line with the principle of institutional self-sustainability, maintains consistent levels of profitability. 32
All net income is capitalized to the general reserve.Central American Bank for Economic Integration
Sound Capitalization
Capital Adequacy Ratios
Diversification, PCT enhancement,
Paid-in Capital from New
Members, consolidation of FETS
to the Bank's Ordinary Capital.
✓ The capital adequacy ratio is the main pillar to assure CABEI’s financial soundness.
✓ The Bank has a strict capital adequacy requirement (35%).
✓ CABEI, in compliance with its ALM Policy, also monitors the Capital Adequacy Ratio
established by the Basel II and Basel III Accords. As of December 31, 2018 the ratio
reached 34.5%.
33Central American Bank for Economic Integration
Capital Structure
Capital Structure as of April 30, 2019
34Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. ALM Policy
5. Credit Risk Management
6. Comparison with other MDBs - Rating
35Central American Bank for Economic Integration
Funding and Liquidity
36Central American Bank for Economic Integration
Liquidity Risk - Investment Portfolio & Liquidity Levels
✓ Liquidity risk is mitigated by CABEI’s ALM Policy, which requires holding a minimum liquid asset
coverage of 6 months of gross cash requirements which include loan disbursements, debt service
obligations and operating expenses.
✓ CABEI also maintains a high level of liquid assets in relation to its total assets.
✓ In line with international risk management standards and the Bank’s ALM Policy, CABEI monitors both
the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) proposed by Basel III. As of
December 31, 2018, the aforementioned ratios stood at 3.84x and 1.20x, respectively.
✓ At December 2018, the effective duration of the Investment Portfolio was 0.61 years.
✓ Monitor key liquidity indicators used by credit agencies to evaluate MDBs is required by CABEI’s ALM
policy.
37Central American Bank for Economic Integration
Liquidity Risk - Investment Portfolio & Liquidity Levels
Investment Portfolio Credit Quality Evolution Liquidity by Sector
3,399
2,987
2,730
2,370
67.9% 76.5%
53.9% 57.8%
✓ The quality of the Investment Portfolio has improved in recent years, from 90% invested in liquid assets with A or higher in 2015 to 95% in 2018.
✓ Likewise, the investment portfolio composition by sector also reflects an improvement as the sovereign and supranational exposures increase.
38Central American Bank for Economic Integration
Funding Strategy
Objective Pilars
• Bond Issuances
• Loans
Instruments • Comercial Paper Program
• Term Deposits Program
To access money markets and
Markets • International
international capital markets to
• Regional
ensure that the required resources
to fulfill CABEI’s obligations will be
available at the most efficient cost,
to benefit CABEI´s borrowing
member countries • Diversification by tenors
Maturities • Asset/Liability Duration Management
Costs • Cost Efficiency
39Central American Bank for Economic Integration
Evolution of Funding Sources
✓ CABEI's financing structure has been evolving due to an active participation in capital markets, which reflects the good perception international markets have
regarding its credit profile and maturity as an institution.
✓ CABEI's financing structure reflects the institution’s preference for stable funding sources.
40Central American Bank for Economic Integration
Funding Diversification
Bonds Payable/Distribution by Markets and Currencies
December 2006 December 2018
December
US$4,893 MM2018
US$1,200 MM
EUR THB
HKD JPY 1% TRY
NOK 7% 1% 5% 1%
3% CNH
13%
CHF CRC
28% COP
3% 3%
ZAR
2%
UYU
3%
USD-El Salvador
1%
USD-Nicaragua
0.5%
AUD USD-Panama
3% NZD 1%
USD MXN 0.4%
10% 16%
✓ CABEI has a highly diversified funding base and has maintained an uninterrupted access to the international capital markets.
✓ Historically, CABEI has made debt placements in 23 different currencies and 23 different markets.
41Central American Bank for Economic Integration
International Partners
✓ To further its mission, for over 50 years CABEI has partnered with a wide range of institutions including governments, development banks, and
official agencies to channel resources to key sectors such as microfinance, renewable energy, infrastructure, rural development, and education.
42Central American Bank for Economic Integration
CABEI: A Strong Partner for Combating Climate Change in Central America
✓ On December 14, 2016, during the XV Green Climate Fund (GCF) Board meeting held in
Apia, Samoa, CABEI was formally accredited as a regional entity with direct access to
the Green Climate Fund (GCF). As such, CABEI became the first entity in Central
America to obtain accreditation to the GCF and the fourth regional entity for Latin
America and the Caribbean to be accredited under the Fund’s standards.
✓ Accreditation implies that CABEI has the capacity to carry out large-scale projects
(maximum GCF category: over US$250 million), as well as to obtain GCF funding for
Project Portfolio with GCF - Indicative Pipeline micro, small, medium and large projects.
Project Name US$ million Status Financial Instrument
✓ As an accredited entity of the GCF, CABEI will strengthen support for its member
Productive Investment 28.0 Project Approved. Loan, Grant
Initiative for Adaptation countries in order to meet the commitments and goals agreed upon in the different
to Climate Change in climate change conventions and to implement Nationally Determined Contributions
Central America (NDC) through the execution of regional and national projects and programs that
Solid Waste Management 101.3 Proposal Development Grant contribute to increasing the resilience of communities to climate change and climate
in Guatemala variability.
Central America Dry 300.0 Proposal Development Loan, Grant
Corridor Programme ✓ On October 19, 2018, in the city of Manama, Bahrain, GCF’s Board approved a financial
Green Housing TBD Pre-investment studies TBD contribution to the “Productive Investment Initiative for Adaptation to Climate Change
Programme in Central (CAMBio II)” for US$15.5 million (US$12.5 million in reimbursable resources and
America
US$3.0 million in non-reimbursable resources from the GCF).
Sustainable Cities TBD Pre-investment studies TBD
Programme in Central
America
Electric Train in Costa Rica 1,200.5 Pre-investment studies TBD
Dry Corredor Programme 400.0 Pre-investment studies TBD
(FAO)
43Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. ALM Policy
5. Credit Risk Management
6. Comparison with other MDBs - Rating
44Central American Bank for Economic Integration
Financials: Credit Risk - Risk Management Policy
Capital Adequacy and Leverage Policies: Main Credit Policies: Main Credit Policies for Derivatives Exposures:
✓ CABEI´s Capital Adequacy Ratio requires that ✓ CABEI´s participation in project finance loans to ✓ Subscription of Credit Support Annexes (CSAs) with all counterparties
total equity represent at least 35% of total the private sector must not exceed 40% of the in order to mitigate the credit exposure. In that sense, CABEI has
risk weighted assets. total amount of the loan during its life (60% for established thresholds and margin calls (collateral).
projects with amounts lower than US$25 million
✓ CABEI´s total loan portfolio shall not exceed or with public sector participation). ✓ Credit risk in derivatives has been eliminated by requiring daily
3.5 times its total equity (Gearing Ratio). collateral and establish a "threshold" of 0. As part of this initiative,
✓ For corporate private sector loans, the collateral since December 2013, a third party provides collateral management
✓ CABEI´s maximum leverage cannot exceed 3 put forth by the client, must maintain a minimum service to CABEI.
times its total equity (Debt / Equity). coverage of 100% of the total loan.
✓ Calculation of net positions with counterparties under ISDA
✓ By policy, the ALCO Committee should ✓ Single Client Exposure (Private) must not exceed agreements.
monitor the capital adequacy indicator that 5% of the Bank´s equity, and the exposure to a
incorporates the criteria established in the regulated private financial economic group must ✓ All counterparties must be approved by the ALCO Committee.
framework of Basel II and III. not exceed 10%.
✓ Counterparties in derivatives contracts must have an investment
✓ By policy, the ALCO Committee should ✓ State or mixed institutions with majority state grade rating. If an existing counterparty is downgraded below
monitor the leverage ratio established under participation with NSG should not exceed 20% of investment grade, no new derivative contracts can be agreed
Basel III. CABEI’s equity. between such entity and CABEI.
✓ Credit exposure limits with derivative counterparties are defined by
the following conditions:
✓ Financial international counterparties: Up to US$50 million.
✓ For clients (Government, Financial Institutions o Corporates):
ALCO Approval.
45Central American Bank for Economic Integration
Credit Risk - Improving Credit Quality
✓ All Private and Public Sector borrowers are current with their payments.
✓ All overdue and non-accrual loans observed in past years correspond to private
sector operations.
✓ Historically and due to its Preferred Creditor Treatment, CABEI's public sector
loan portfolio does not present overdue loans or non-accrual status.
✓ CABEI’s credit quality has reached historical levels and is under control.
46Central American Bank for Economic Integration
INDEX
1. Macroeconomic Overview
2. CABEI’s Role and Policy Importance
3. Equity and Profitability
4. ALM Policy
5. Credit Risk Management
6. Comparison with other MDBs - Rating
47Central American Bank for Economic Integration
Key Financial Indicators
48Central American Bank for Economic Integration
Peer Comparison
Concept CABEI Peer Comparison
More important than IADB and CAF for its Founding
Relevance Very Important for its Regional Shareholders.
Members.
Allowance for Loan Losses Coverage is higher than its
Loan Portfolio Credit Quality Index has improved
Credit Quality peers. As of December 31, 2017, CABEI has no overdue or
consistently.
non-accrual loans, while IADB and CAF do.
Conservative provisioning policy based on the credit Greater loan loss reserve coverage ratios than IADB and
Provisioning
rating of its borrowing countries. CAF.
Leverage Superior and well diversified funding structure. Lower average leverage ratios than IADB and CAF.
Equity/Total Assets Solid capital ratios without adjustments. Average is higher than IADB and CAF.
Capital payments from its member countries as a result
of the capitalization scheme approved in 2009 are CAF presents higher frequency in capital increases. CABEI
Paid-In Capital
complete. Currently receiving capital installments from has bolstered its track record of capital increases.
Panama and the Dominican Republic.
Solid and stable profitability ratios; all net income is Better cost-income ratios, ROE, ROA and NII than IADB
Profitability
capitalized to the General Reserve. and CAF.
Liquidity Comparable and more stable. Superior than IADB average ratios and lower than CAF.
49Central American Bank for Economic Integration
S&P upgrades CABEI from A+ to AA
Results from the solid preferred creditor treatment that
member countries grant the Institution which supports the
Bank's capital position and the fact that CABEI has managed to
extend its mandate and increase its membership base through
the recent incorporation of the Republic of Korea.
S&P highlighted the fact that CABEI's policy importance is
supported by key developments following the 2016
amendments to it's Constitutive Agreement, which improved
the bank's governance structure, increased its membership
base, and unlocked additional financing through diversification
and capital injections.
S&P factored extraordinary support in the form of callable
capital into the rating from CABEI's highly rated shareholder,
which provides an uplift to our RAC ratio.
Currently, eligible callable capital comes from the Republic of
China, Taiwan, rated 'AA-', for $375 million. Once the Republic
Korea makes its first capital installment, an additional $337.5
million in callable capital will become eligible.
50Central American Bank for Economic Integration
Credit Ratings
Credit Ratings to Date
Key Factors Supporting High Investment Grade Rating
Rating
Last Very strong preferred Very strong mandate and
Agency Long Short Outlook creditor treatment (PCT) policy importance
Reviewed
Term Term Highly rated members Strong capital adequacy
S&P AA A-1+ Stable Mar-19
Extraordinary shareholder Strong liquidity position
Moody’s* A1 P-1 Positive Jun-18 support
JCR AA N/A Stable Mar-19 Diversify funding strategy High quality loan portfolio
*According to Moody’s Supranational Rating Methodology, CABEI’s indicative
Rating Range is: Aa1-Aa3.
CABEI’s Rating History
17 upgrades in 17 years
51Central American Bank for Economic Integration
CABEI’s Risk Rating is the best rated issuer in all Latin America
52Central American Bank for Economic Integration
Central American Bank for
Economic Integration
www.bcie.org
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