UNDER SCHEDULE B
OF
THE SECURITIES ACT OF 1933
Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19711
Robert S. Risoleo, Esq. | Hugo Sarmiento | |
Sullivan & Cromwell LLP | Chief Financial Officer | |
1701 Pennsylvania Avenue, N.W. | Corporación Andina de Fomento | |
Washington, D.C. 20006 | Torre CAF | |
United States of America | Avenida Luis Roche, Altamira | |
Caracas, Venezuela |
Proposed Maximum | Amount of | |||||||
Title of Each Class of Securities to be Registered | Aggregate Offering Price | Registration Fee(2) | ||||||
Debt Securities | (1) | — | ||||||
Guarantees | (1) | — | ||||||
Total | $250,000,000(3) | $9,825 | ||||||
(1) | The securities registered hereunder and under the additional registration statement noted in note (2) below shall not have an aggregate offering price which exceeds $1,000,000,000 in United States dollars or the equivalent in any other currency. | |
(2) | Pursuant to Rule 429(b), the prospectus filed as part of this Registration Statement also relates to the remaining unsold $500,000,000 principal amount of securities registered on the Registrant’s previously filed Registration Statement under Schedule B (File No. 333-148354), originally filed on December 27, 2007, and the remaining unsold $250,000,000 principal amount of securities registered on the Registrant’s previously filed Registration Statement under Schedule B (File No. 333-123224), originally filed on March 9, 2005. The Registrant paid filing fees of $59,600 with respect to those previously registered securities. | |
(3) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). |
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell and does not seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS DATED JUNE 27, 2008.
PAGE | ||||
ABOUT THIS PROSPECTUS | 1 | |||
FORWARD-LOOKING INFORMATION | 2 | |||
CORPORACIÓN ANDINA DE FOMENTO | 3 | |||
LEGAL STATUS OF CAF | 3 | |||
USE OF PROCEEDS | 4 | |||
CAPITALIZATION AND INDEBTEDNESS | 4 | |||
CAPITAL STRUCTURE | 5 | |||
SELECTED FINANCIAL INFORMATION | 8 | |||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 9 | |||
OPERATIONS OF CAF | 15 | |||
FUNDED DEBT | 25 | |||
DEBT RECORD | 27 | |||
ASSET AND LIABILITY MANAGEMENT | 27 | |||
ADMINISTRATION | 28 | |||
THE REGIONAL SHAREHOLDER COUNTRIES | 32 | |||
DESCRIPTION OF THE DEBT SECURITIES | 34 | |||
DESCRIPTION OF THE GUARANTEES | 38 | |||
TAXATION | 39 | |||
PLAN OF DISTRIBUTION | 43 | |||
VALIDITY OF THE DEBT SECURITIES | 44 | |||
VALIDITY OF THE GUARANTEES | 44 | |||
INDEPENDENT AUDITORS | 44 | |||
AUTHORIZED REPRESENTATIVE | 44 | |||
WHERE YOU CAN FIND MORE INFORMATION | 44 | |||
INDEX TO FINANCIAL STATEMENTS | F-1 | |||
SUPPLEMENTARY INFORMATION | S-1 |
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At March 31, 2008 | ||||
(in U.S.$ millions) | ||||
Short-term debt(1) | $ | 3,540.3 | ||
Long-term debt (maturities over one year) | $ | 5,587.6 | ||
Shareholders’ Equity | ||||
Capital | ||||
Subscribed capital, paid-in and receivable (authorized capital $10.0 billion)(2) | 2,177.6 | |||
Less: Capital receivable | (71.2 | ) | ||
Paid-in capital | 2,106.4 | |||
Additional paid-in capital | 169.1 | |||
Total Capital | 2,275.4 | |||
Reserves | ||||
Mandatory reserve | 327.6 | |||
General reserve | 1,458.2 | |||
Total reserves | 1,785.8 | |||
Retained earnings | 150.0 | |||
Total shareholders’ equity | 4,211.2 | |||
Total long-term debt and shareholders’ equity | $ | 9,798.8 | ||
(1) | Includes deposits, commercial paper, advances and short-term borrowings, the current portion of bonds, borrowings and other obligations, accrued interest and commissions payable. | |
(2) | In addition to subscribed capital shown in the table, CAF’s subscribed capital included callable capital of $1.1 billion at March 31, 2008. |
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Shareholders | Paid-in Capital | Capital Receivable | ||||||
(in U.S.$ thousands) | ||||||||
Series “A” Shares: | ||||||||
Bolivia | $ | 1,200 | $ | — | ||||
Colombia | 1,200 | — | ||||||
Ecuador | 1,200 | — | ||||||
Peru | 1,200 | — | ||||||
Venezuela | 1,200 | — | ||||||
Series “B” Shares: | ||||||||
Bolivia | 135,745 | 3,110 | ||||||
Colombia | 492,365 | — | ||||||
Ecuador | 139,875 | — | ||||||
Peru | 494,195 | — | ||||||
Venezuela | 494,185 | — | ||||||
Private sector financial institutions | 1,365 | — | ||||||
Series “C” Shares: | ||||||||
Argentina | 35,935 | 10,270 | ||||||
Brazil | 62,600 | 0 | ||||||
Chile | 20,560 | 0 | ||||||
Costa Rica | 12,210 | 0 | ||||||
Dominican Republic | 11,285 | 11,015 | ||||||
Jamaica | 680 | 0 | ||||||
Mexico | 17,495 | 0 | ||||||
Panama | 8,730 | 2,530 | ||||||
Paraguay | 6,780 | 0 | ||||||
Spain | 57,930 | 0 | ||||||
Trinidad and Tobago | 770 | 0 | ||||||
Uruguay | 16,045 | 3,525 | ||||||
Total | $ | 2,014,750 | $ | 30,450 | ||||
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Three Months Ended | ||||||||||||||||||||
Year Ended December 31, | March 31, | |||||||||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | ||||||||||||||||
(in U.S. $ thousands, except ratios) | ||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Interest income | $ | 823,413 | $ | 735,506 | $ | 547,572 | $ | 200,198 | $ | 202,491 | ||||||||||
Interest expense | (413,929 | ) | (364,073 | ) | (255,585 | ) | (96,360 | ) | (96,321 | ) | ||||||||||
Net interest income | 409,484 | 371,433 | 291,987 | 103,838 | 106,170 | |||||||||||||||
Provision (credit) for loan losses | (23,133 | ) | 19,000 | (14,500 | ) | (54,373 | ) | 13,000 | ||||||||||||
Net interest income after provision (credit) | 432,617 | 352,433 | 306,487 | 158,211 | 93,170 | |||||||||||||||
Non-interest income | 31,768 | 14,987 | 20,893 | 2,639 | 1,879 | |||||||||||||||
Non-interest expenses | (63,586 | ) | (46,767 | ) | (44,142 | ) | (10,842 | ) | (20,937 | ) | ||||||||||
Net income | $ | 400,799 | $ | 320,653 | $ | 283,238 | $ | 150,008 | $ | 74,112 | ||||||||||
Balance Sheet Data (end of period) | ||||||||||||||||||||
Current assets (net of allowance) | $ | 4,811,311 | $ | 3,367,055 | $ | 5,278,330 | ||||||||||||||
Non-current assets | 7,785,876 | 7,072,438 | 8,060,726 | |||||||||||||||||
Total assets | $ | 12,597,187 | $ | 10,439,493 | $ | 13,339,056 | ||||||||||||||
Current liabilities | $ | 3,290,578 | $ | 2,303,758 | $ | 3,540,299 | ||||||||||||||
Long-term liabilities | 5,179,300 | 4,443,008 | 5,587,557 | |||||||||||||||||
Total liabilities | 8,469,878 | 6,746,766 | 9,127,856 | |||||||||||||||||
Total shareholders’ equity | 4,127,309 | 3,692,727 | 4,211,200 | |||||||||||||||||
Total liabilities and shareholders’ equity | $ | 12,597,187 | $ | 10,439,493 | $ | 13,339,056 | ||||||||||||||
Loan Portfolio and Equity Investments | ||||||||||||||||||||
Total loans | $ | 9,547,987 | $ | 8,097,472 | $ | 7,346,978 | $ | 9,262,684 | $ | 8,572,564 | ||||||||||
Allowance for loan losses | 168,257 | 188,608 | 161,629 | 115,730 | 203,762 | |||||||||||||||
Equity investments | 74,317 | 93,426 | 114,646 | 73,531 | 91,657 | |||||||||||||||
Selected Financial Ratios | ||||||||||||||||||||
Return on average total shareholders’ equity(1) | 10.5 | % | 9.4 | % | 9.6 | % | 14.2 | % | 8.1 | % | ||||||||||
Return on average paid-in capital(2) | 20.4 | % | 18.0 | % | 17.7 | % | 29.4 | % | 15.1 | % | ||||||||||
Return on average assets(3) | 3.6 | % | 3.3 | % | 3.0 | % | 4.6 | % | 2.7 | % | ||||||||||
Administrative expenses divided by average assets* | 0.5 | % | 0.5 | % | 0.5 | % | 0.3 | % | 0.4 | % | ||||||||||
Overdue loan principal as a percentage of loan portfolio (excluding non-accrual loans) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||
Non-accrual loans as a percentage of loan portfolio | 0.00 | % | 0.00 | % | 0.02 | % | 0.00 | % | 0.00 | % | ||||||||||
Allowance for losses as a percentage of loan portfolio | 1.8 | % | 2.3 | % | 2.2 | % | 1.2 | % | 2.4 | % |
(1) | Net income divided by average total shareholders’ equity.* | |
(2) | Net income divided by average subscribed and paid-in capital.* | |
(3) | Net income divided by average total assets.* | |
* | For the three month periods, the amounts have been annualized. |
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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2007 | 2006 | 2005 | ||||||||||
(In U.S.$ thousands) | ||||||||||||
Single companies | $ | — | $ | — | $ | 24 | ||||||
Investment funds | $ | 82 | $ | 190 | $ | — | ||||||
Total | $ | 82 | $ | 190 | $ | 24 | ||||||
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• | Country Programs, which is responsible for our relationships with governments, public sector corporations and financial institutions and for the development of a global approach to business activities in each of the member countries; | ||
• | Infrastructure, which is responsible for the financing of public infrastructure projects and the analysis of public policies within the different development sectors; | ||
• | Corporate Finance and Investment Banking, which is responsible for our relationships with private sector corporations, while simultaneously furnishing advisory services to our clients; | ||
• | Social and Environmental Development, which is responsible for investments in social and environmental areas and in micro, small and medium size enterprises; and | ||
• | Financial Systems, which is responsible for our relationships with financial institutions and regional capital markets, as well as seeking new ways to strengthen the financial systems in the region through effective structures and regulations. |
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At December 31, | ||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||
(in U.S. $ millions) | ||||||||||||||||
Public Sector | 77.7 | % | 7,423.0 | 6,992.7 | 6,522.5 | |||||||||||
Private Sector | 22.3 | % | 2,124.9 | 1,104.7 | 824.1 | |||||||||||
100.0 | % | 9,547.9 | 8,097.4 | 7,346.6 | ||||||||||||
Fair value adjustments on hedging activities | 0.0 | 0.0 | 0.3 | |||||||||||||
Total | 9,547.9 | 8,097.4 | 7,347.0 | |||||||||||||
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At December 31, | ||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||
(in U.S. $ millions) | ||||||||||||||||
Bolivia | 10.9 | % | 1,040.0 | 1,024.3 | 981.6 | |||||||||||
Colombia | 17.1 | % | 1,633.0 | 1,619.5 | 1,899.5 | |||||||||||
Ecuador | 22.5 | % | 2,149.4 | 1,370.8 | 1,230.5 | |||||||||||
Peru | 18.9 | % | 1,804.9 | 1,801.7 | 1,712.3 | |||||||||||
Venezuela | 15.4 | % | 1,469.8 | 1,723.5 | 1,134.7 | |||||||||||
Other(1) | 15.2 | % | 1,450.8 | 557.6 | 388.0 | |||||||||||
100.0 | % | 9,547.9 | 8,097.4 | 7,346.6 | ||||||||||||
Fair value adjustments on hedging activities | 0.0 | 0.0 | 0.3 | |||||||||||||
Total | 9,547.9 | 8,097.4 | 7,347.0 | |||||||||||||
(1) | Principally loans outside the regional shareholder countries. |
Approved | Disbursed(1) | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | |||||||||||||||||||
(in U.S.$ millions) | ||||||||||||||||||||||||
Bolivia | 275.3 | 396.3 | 523.2 | 196.6 | 175.0 | 198.5 | ||||||||||||||||||
Colombia | 1,213.1 | 1,001.0 | 1,236.6 | 968.2 | 653.5 | 687.9 | ||||||||||||||||||
Ecuador | 1,088.9 | 1,024.2 | 815.4 | 1,416.2 | 504.0 | 339.9 | ||||||||||||||||||
Peru | 1,179.9 | 941.4 | 416.8 | 1,730.2 | 483.2 | 255.0 | ||||||||||||||||||
Venezuela | 816.2 | 841.6 | 627.1 | 127.0 | 845.1 | 208.4 | ||||||||||||||||||
Other(2) | 2,033.6 | 1,315.8 | 1,127.3 | 1,406.0 | 261.7 | 170.2 | ||||||||||||||||||
Total | 6,607.0 | 5,520.9 | 4,746.3 | 5,844.3 | 2,922.5 | 1,859.9 | ||||||||||||||||||
(1) | Includes short-term loans in the amounts of $3,096.7 million, $933.2 million and $478.3 million, respectively, for each of the years in the three-year period ended December 31, 2007. | |
(2) | Loans outside the regional shareholder countries, of which $1,518.1 million was approved and $879.5 million was disbursed to entities in Brazil in 2007. |
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Total by | % of | |||||||||||||||||||||||||||||||
Bolivia | Colombia | Ecuador | Peru | Venezuela | Others | Sector | Total | |||||||||||||||||||||||||
(in U.S.$ millions) | ||||||||||||||||||||||||||||||||
Agriculture, hunting and forestry | 3.0 | 42.1 | 0.0 | 68.3 | 0.0 | 0.0 | 113.4 | 1.2 | % | |||||||||||||||||||||||
Exploitation of mines and quarries | 50.0 | 0.0 | 0.0 | 0.0 | 0.0 | 20.0 | 70.0 | 0.7 | % | |||||||||||||||||||||||
Manufacturing industry | 16.7 | 43.5 | 127.6 | 10.8 | 0.0 | 80.0 | 278.6 | 2.9 | % | |||||||||||||||||||||||
Supply of electricity, gas and water | 101.1 | 24.2 | 92.8 | 107.5 | 420.7 | 332.8 | 1,079.1 | 11.3 | % | |||||||||||||||||||||||
Transport, warehousing and communications | 521.7 | 436.9 | 549.7 | 344.7 | 812.2 | 388.6 | 3,053.8 | 32.0 | % | |||||||||||||||||||||||
Financial intermediaries(1) | 37.6 | 484.7 | 106.9 | 457.2 | 30.9 | 625.9 | 1,743.2 | 18.3 | % | |||||||||||||||||||||||
Social and other infrastructure programs | 307.4 | 601.6 | 1,272.4 | 806.0 | 206.0 | 3.5 | 3,196.9 | 33.5 | % | |||||||||||||||||||||||
Other activities | 2.5 | 0.0 | 0.0 | 10.3 | 0.0 | 0.0 | 12.8 | 0.1 | % | |||||||||||||||||||||||
Total | 1,040.0 | 1,633.0 | 2,149.5 | 1,804.8 | 1,469.8 | 1,450.8 | 9,547.9 | 100.0 | % | |||||||||||||||||||||||
(1) | Multisectoral credit lines to public sector development banks, private banks and other institutions. |
2008 | 2009 | 2010 | 2011 | 2012 | 2013-2022 | |||||||||||||||||||
(in U.S.$ millions) | ||||||||||||||||||||||||
Principal amount | 2,290.5 | 964.8 | 827.6 | 884.6 | 868.7 | 3,711.7 |
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As a Percentage of | ||||||||
Borrower | Amount | Total Loan Portfolio | ||||||
(in U.S.$ millions) | ||||||||
Republic of Ecuador | 1,680.7 | 17.6 | % | |||||
Republic of Venezuela | 1,466.3 | 15.4 | % | |||||
Republic of Peru | 1,271.9 | 13.3 | % | |||||
Republic of Colombia | 1,055.3 | 11.1 | % | |||||
Republic of Bolivia | 856.1 | 9.0 | % | |||||
Republic of Argentina | 416.1 | 4.3 | % | |||||
Itau Bank (Brazil)(1) | 175.0 | 1.8 | % | |||||
Banco Bradesco, S.A. (Brazil)(2) | 170.8 | 1.7 | % | |||||
Banco de Credito del Peru (Peru)(3) | 150.0 | 1.6 | % | |||||
Banco de Comercio Exterior (Colombia)(4) | 134.4 | 1.4 | % | |||||
Total | 7,376.6 | 77.2 | % | |||||
(1) | Privately owned financial intermediary. | |
(2) | Privately owned financial intermediary. | |
(3) | Privately owned financial intermediary. | |
(4) | Privately owned financial intermediary. |
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Year ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(in U.S.$ millions) | ||||||||||||
Total loan portfolio | 9,548.0 | 8,097.5 | 7,347.0 | |||||||||
Overdue loan principal | 0.0 | 0.0 | 0.0 | |||||||||
Loans in non-accrual status | 0.0 | 0.0 | 1.3 | |||||||||
Loans written-off during period | 0.2 | 1.1 | 10.4 | |||||||||
Allowance for loan losses | 168.3 | 188.6 | 161.6 | |||||||||
Overdue principal payment as a percentage of loan portfolio (excluding non-accrual loans) | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
Non-accrual loans as a percentage of loan portfolio | 0.00 | % | 0.00 | % | 0.02 | % | ||||||
Allowance for loan losses as a percentage of loan portfolio | 1.76 | % | 2.33 | % | 2.20 | % |
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At December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(in U.S.$ millions) | ||||||||||||
Within the regional shareholder countries: | ||||||||||||
Term deposits | 1,521.0 | 449.8 | 386.4 | |||||||||
Bonds | 603.9 | 425.7 | 320.0 | |||||||||
2,124.9 | 875.5 | 706.4 | ||||||||||
Outside the regional shareholder countries: | ||||||||||||
Deposits, acceptances and advances, commercial paper, and repurchase agreements | 1,287.2 | 1,112.6 | 1,154.0 | |||||||||
Loans and lines of credit | 808.3 | 558.6 | 488.4 | |||||||||
Bonds | 3,595.7 | 3,726.7 | 3,526.9 | |||||||||
5,691.1 | 5,398.0 | 5,169.3 | ||||||||||
7,816.0 | 6,273.5 | 5,875.7 | ||||||||||
Variation effect between spot and original FX rate | 318.4 | 213.4 | 139.3 | |||||||||
Fair value adjustments on hedging activities | 119.4 | (3.2 | ) | 76.5 | ||||||||
Total | 8,253.9 | 6,483.7 | 6,091.5 | |||||||||
At December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(in U.S.$ millions) | ||||||||||||
Term deposits: | ||||||||||||
Up to 1 year | 1,521.0 | 449.8 | 386.4 | |||||||||
Acceptances, advances and commercial paper and repurchase agreements: | ||||||||||||
Up to 1 year | 1,287.2 | 1,112.6 | 1,154.0 | |||||||||
Loans and lines of credit: | ||||||||||||
Up to 1 year | 191.3 | 104.9 | 76.8 | |||||||||
Between 1 and 3 years | 258.8 | 201.8 | 165.1 | |||||||||
Between 3 and 5 years | 163.3 | 134.9 | 173.4 | |||||||||
More than 5 years | 194.9 | 117.1 | 73.0 | |||||||||
808.3 | 558.6 | 488.4 | ||||||||||
Bonds: | ||||||||||||
Up to 1 year | 137.1 | 499.6 | 294.4 | |||||||||
Between 1 and 3 years | 947.7 | 872.4 | 787.4 | |||||||||
Between 3 and 5 years | 1,545.3 | 946.6 | 956.7 | |||||||||
More than 5 years | 1,569.5 | 1,833.9 | 1,808.5 | |||||||||
4,199.5 | 4,152.5 | 3,846.9 | ||||||||||
Totals: | ||||||||||||
Up to 1 year | 3,136.6 | 2,166.9 | 1,911.6 | |||||||||
Between 1 and 3 years | 1,206.4 | 1,074.1 | 952.5 | |||||||||
Between 3 and 5 years | 1,708.6 | 1,081.5 | 1,130.1 | |||||||||
More than 5 years | 1,764.4 | 1,951.1 | 1,881.5 | |||||||||
7,816.0 | 6,273.5 | 5,875.7 | ||||||||||
Variation effect between spot and original FX rate | 318.4 | 213.4 | 139.3 | |||||||||
Fair value adjustments on hedging activities | 119.4 | (3.2 | ) | 76.5 | ||||||||
Total | 8,253.9 | 6,483.7 | 6,091.5 | |||||||||
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(1) | considers the Board of Directors’ annual report and our financial statements, receives the independent auditors’ report and allocates our net income; | ||
(2) | elects the Board of Directors according to the Constitutive Agreement; | ||
(3) | appoints external auditors; | ||
(4) | determines compensation for the Board of Directors and the external auditors; and | ||
(5) | may consider any other matter expressly submitted to it which is not within the purview of any other body of CAF. |
(1) | increase, reduce or replenish our capital in accordance with the Constitutive Agreement; | ||
(2) | dissolve CAF; | ||
(3) | change the headquarters of CAF when the Board of Directors so proposes; and | ||
(4) | consider any other matter that has been expressly submitted to it that is not within the purview of any other body of CAF. |
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(1) | establishing and directing our credit and economic policies; | ||
(2) | approving our budget; | ||
(3) | approving our borrowing limits; | ||
(4) | approving credits granted by us in excess of a specified limit; | ||
(5) | establishing or modifying internal regulations; and | ||
(6) | appointing the Executive President. |
Bolivia | Graciela Toro | Minister of Development Planning | ||
(Beatriz Roxana Alcoba Arias) | (Vice Minister of Public Investment and External Financing) | |||
Colombia | Oscar Iván Zuloaga | Minister of Treasury and Public Credit | ||
(Luis Guillermo Plata) | (Minister of Foreign Trade) | |||
Ecuador | Camilo Samá Salem | President of the Board of Corporación Financiera Nacional | ||
(Raúl Sagasti L.) | (Ministry of Industries and Competitiveness) | |||
Peru | Mercedes Rosalba Aráoz F. | Minister of Foreign Trade and Tourism | ||
(Luis Carranza U.) | (Minister of Economy and Finance) | |||
Venezuela | Rafael Isea | Minister of the Popular Power for Finance | ||
(Haiman El Troudi) | (Minister of the Popular Power for Planning and Development) |
Bolivia | Luis Alberto Arce | Minister of Treasury | ||
(Oscar Navarro) | (Vice Minister of Treasury and Public Credit) | |||
Colombia | José Dario Uribe | General Manager of Banco de la República | ||
(Carolina Rentaría R.) | (Director of the National Planning Department) | |||
Ecuador | Fausto Ortiz | Minister of Economy and Finance | ||
(Miguel Ruiz M.) | (Board Member of Banco Central del Ecuador) | |||
Peru | Luis Rebolledo S. | Chairman of the Board of Corporación Financiera de Desarrollo (COFIDE) | ||
(José Berley Arista Arbildo) | (Vice Minister of Treasury) | |||
Venezuela | William A. Contreras | Minister of the Popular Power of Light Industries and Commerce | ||
(Eyilde Margarita Gracias) | (General Manager of Banco de Desarrollo Económico y Social of Venezuela) | |||
Private Financial Institutions | Juan Emilio Unzueta | Chairman of the Board of Directors of Banco Mercantil — Santa Cruz S.A. of Bolivia | ||
(José Elías Melo Acosta) | (President of CORFICOLOMBIA, S.A. of Colombia) |
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L. Enrique García | Executive President | |
Luis Enrique Berrizbeitia | Executive Vice President | |
Lilliana Canale | Vice President of Country Programs | |
Antonio Juan Sosa | Vice President of Infrastructure | |
Peter Vonk | Vice President of Corporate Finance and Investment Banking | |
Mauricio Yepez | Vice President of Financial Systems | |
Hugo Sarmiento | Vice President of Finance | |
Bernardo Requena (acting) | Vice President of Social and Environmental Development | |
Ricardo Sigwald | General Legal Counsel | |
Marcello Zalles | Corporate Comptroller |
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Bolivia | Colombia | Ecuador | Peru | Venezuela | ||||||||||||||||
Population (in millions) | ||||||||||||||||||||
2007 | 9.8 | 46.1 | 13.6 | 27.9 | 27.5 | |||||||||||||||
2006 | 9.6 | 45.5 | 13.4 | 27.6 | 27.0 | |||||||||||||||
2005 | 9.4 | 44.9 | 13.2 | 27.3 | 26.6 | |||||||||||||||
2004 | 9.2 | 44.3 | 13.0 | 26.9 | 26.1 | |||||||||||||||
2003 | 9.0 | 43.6 | 12.8 | 26.6 | 25.7 | |||||||||||||||
Life expectancy at birth (years) (1) | ||||||||||||||||||||
2005 | 64.7 | 72.3 | 74.7 | 70.7 | 73.2 | |||||||||||||||
2004 | 64.4 | 72.6 | 74.5 | 70.2 | 73.0 | |||||||||||||||
2003 | 64.0 | 72.0 | 72.0 | 70.0 | 74.0 | |||||||||||||||
2002 | 64.0 | 72.0 | 71.0 | 70.0 | 74.0 | |||||||||||||||
GDP (U.S.$ in millions) (2) | ||||||||||||||||||||
2007 | 13,273 | 176,634 | 42,446 | 109,217 | 201,280 | |||||||||||||||
2006 | 11,241 | 136,156 | 41,402 | 93,108 | 181,608 | |||||||||||||||
2005 | 9,358 | 122,900 | 37,187 | 79,427 | 143,297 | |||||||||||||||
2004 | 8,702 | 98,059 | 32,642 | 69,698 | 107,253 | |||||||||||||||
2003 | 8,082 | 79,459 | 28,636 | 61,494 | 82,704 | |||||||||||||||
GDP per capita (U.S.$) (2) | ||||||||||||||||||||
2007 | 1,351 | 3,696 | 3,120 | 3,918 | 7,324 | |||||||||||||||
2006 | 1,167 | 2,911 | 3,050 | 3,394 | 6,719 | |||||||||||||||
2005 | 993 | 2,669 | 2,761 | 2,918 | 5,392 | |||||||||||||||
2004 | 943 | 2,163 | 2,325 | 2,591 | 4,147 | |||||||||||||||
2003 | 895 | 1,782 | 2,230 | 2,314 | 3,267 | |||||||||||||||
Gross reserves (excluding gold) (U.S.$ in millions)(3) | ||||||||||||||||||||
2007 | 5,308 | 20,949 | 3,520 | 27,689 | 33,500 | |||||||||||||||
2006 | 3,178 | 15,436 | 2,203 | 17,275 | 36,606 | |||||||||||||||
2005 | 1,714 | 14,947 | 2,147 | 14,097 | 30,368 | |||||||||||||||
2004 | 1,123 | 13,536 | 1,437 | 12,631 | 24,208 | |||||||||||||||
2003 | 976 | 10,916 | 1,160 | 10,194 | 21,366 |
32
Bolivia | Colombia | Ecuador | Peru | Venezuela | ||||||||||||||||
Consumer price index growth (4) | ||||||||||||||||||||
2007 | 11.7 | % | 5.7 | % | 3.3 | % | 3.9 | % | 22.5 | % | ||||||||||
2006 | 5.0 | % | 4.5 | % | 2.9 | % | 1.1 | % | 17.0 | % | ||||||||||
2005 | 4.9 | % | 4.9 | % | 3.1 | % | 1.5 | % | 14.4 | % | ||||||||||
2004 | 4.6 | % | 5.5 | % | 1.9 | % | 3.5 | % | 19.2 | % | ||||||||||
2003 | 3.9 | % | 6.5 | % | 6.2 | % | 2.5 | % | 27.1 | % | ||||||||||
Exports of Goods (f.o.b.) (U.S.$ in millions) | ||||||||||||||||||||
2007 | 4,481 | 28,745 | 14,283 | 27,953 | 69,165 | |||||||||||||||
2006 | 3,863 | 25,181 | 13,153 | 23,799 | 65,210 | |||||||||||||||
2005 | 2,791 | 21,729 | 10,487 | 17,368 | 55,473 | |||||||||||||||
2004 | 2,146 | 17,224 | 7,528 | 12,809 | 39,668 | |||||||||||||||
2003 | 1,598 | 13,812 | 6,197 | 9,091 | 27,230 | |||||||||||||||
Imports of Goods (f.o.b.) (U.S.$ in millions) | ||||||||||||||||||||
2007 | 3,430 | 31,399 | 12,322 | 19,598 | 45,463 | |||||||||||||||
2006 | 2,809 | 24,859 | 11,948 | 14,866 | 32,226 | |||||||||||||||
2005 | 2,334 | 20,134 | 10,286 | 12,082 | 23,955 | |||||||||||||||
2004 | 1,844 | 15,878 | 8,266 | 9,805 | 17,318 | |||||||||||||||
2003 | 1,616 | 13,258 | 6,702 | 8,205 | 10,687 |
* | Sources: Official government sources (including but not limited to the ministries of finance of the regional shareholder countries) and estimates from Business Monitor International. | |
(1) | This information is extracted from the United Nations Human Development Indicators produced by the Human Development Report office of the United Nations. | |
(2) | Expressed in current U.S. dollars. | |
(3) | At December 31. | |
(4) | Average annual growth rates. |
33
(1) | the title; | ||
(2) | the price or prices at which we will issue the debt securities; | ||
(3) | any limit on the aggregate principal amount of the debt securities or the series of which they are a part; | ||
(4) | the currency or currency units for which the debt securities may be purchased and in which payments of principal and interest will be made; | ||
(5) | the date or dates on which principal and interest will be payable; | ||
(6) | the rate or rates at which any of the debt securities will bear interest, the date or dates from which any interest will accrue, and the record dates and interest payment dates; | ||
(7) | the place or places where principal and interest payments will be made; | ||
(8) | the time and price limitations on redemption of the debt securities; | ||
(9) | our obligation, if any, to redeem or purchase the debt securities at the option of the holder; | ||
(10) | the denominations in which any of the debt securities will be issuable, if other than denominations of $1,000; | ||
(11) | if the amount of principal or interest on any of the debt securities is determinable according to an index or a formula, the manner in which such amounts will be determined; | ||
(12) | whether and under what circumstances we will issue the debt securities as global debt securities; and | ||
(13) | any other specific terms of the debt securities. |
34
(1) | registered in the name of a depositary or its nominee identified in the prospectus supplement; | ||
(2) | deposited with the depositary or nominee or the depositary’s custodian; and | ||
(3) | printed with a legend regarding the restrictions on exchanges and registration of transfer of the security, and any other matters required by the fiscal agency agreement and the terms of the debt securities and summarized in the prospectus supplement. |
(1) | through the fiscal agent; | ||
(2) | to the person in whose name the debt securities are registered at the close of business on the regular record date for the payments; and | ||
(3) | at the office of the paying agent or agents designated by us; unless |
• | at our option, payment is mailed to the registered holder, or | ||
• | at the request of a registered holder of more than $1,000,000 principal amount of the securities, payment is made by wire transfer. |
35
(1) | a failure to pay any principal of or interest on any debt securities of that series when due and the continuance of the failure for 30 days; | ||
(2) | a failure to perform or observe any material obligation under or in respect of any debt securities of that series or the fiscal agency agreement and the continuance of the failure for a period of 90 days after written notice of the failure has been delivered to CAF and to the fiscal agent by the holder of any debt security of that series; | ||
(3) | a failure to pay any amount in excess of $20,000,000 (or its equivalent in any other currency or currencies) of principal or interest or premium in respect of any indebtedness incurred, assumed or guaranteed by CAF as and when such amount becomes due and payable and the continuance of the failure until the expiration of any applicable grace period or 30 days, whichever is longer; or | ||
(4) | the acceleration of any indebtedness incurred or assumed by CAF with an aggregate principal amount in excess of $20,000,000 (or its equivalent in any other currency or currencies) by any holder or holders thereof. |
36
(1) | to, or to a third party on behalf of, a holder of a debt security of any series who is liable for such taxes, duties, assessments or governmental charges in respect of such debt security by reason of his having some connection with any of the regional shareholder countries other than the mere holding of the debt security; or | ||
(2) | presented for payment more than 30 days after the “Relevant Date” (as defined in the next paragraph), except to the extent that the relevant holder would have been entitled to the additional amounts on presenting the same for payment on the expiry of the period of 30 days. |
(1) | change the due date of the principal of or interest on any series of debt securities; or | ||
(2) | reduce the principal amount, interest rate or amount payable upon acceleration of the due date of the debt securities of a series; or | ||
(3) | change the currency or place of payment of principal of or interest on the debt securities of a series; or | ||
(4) | reduce the proportion of the principal amount of the debt securities of a series that must be held by any of the holders to vote to amend or supplement the terms of the fiscal agency agreement or the debt securities; or | ||
(5) | change our obligation to pay additional amounts. |
(1) | adding to our covenants for the benefit of the holders of the debt securities; or | ||
(2) | surrendering any right or power conferred on CAF; or | ||
(3) | securing the debt securities of that series; or | ||
(4) | curing any ambiguity or correcting or supplementing any defective provision of the fiscal agency agreement or the debt securities; or | ||
(5) | for any purpose that we and the fiscal agent may consider necessary or desirable that does not adversely affect the interests of the holders of the debt securities of that series in any material respect. |
37
• | payment of any accrued and unpaid distributions which are required to be paid under the terms of the securities; | ||
• | payment of the redemption price of the securities, including all accrued and unpaid distributions to the date of the redemption; | ||
• | payment of any accrued and unpaid interest payments, or payment of any premium which are required to be made on the securities; and | ||
• | any obligation of the issuer pursuant to a warrant, option or other rights. |
38
• | a dealer in securities or currencies, | ||
• | a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings, | ||
• | a bank, | ||
• | a life insurance company, | ||
• | a tax-exempt organization, | ||
• | a person that owns debt securities that are a hedge or that are hedged against interest rate risks, | ||
• | a person that owns debt securities as part of a straddle or conversion transaction for tax purposes, or | ||
• | a United States holder (as defined below) whose functional currency for tax purposes is not the U.S. dollar. |
39
• | a citizen or resident of the United States, | ||
• | a domestic corporation or an entity treated as a domestic corporation for purposes of the Internal Revenue Code, | ||
• | an estate whose income is subject to United States federal income tax regardless of its source, or | ||
• | a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. |
40
• | a nonresident alien individual, | ||
• | a foreign corporation, | ||
• | a foreign partnership, or | ||
• | an estate or trust that in either case is not subject to United States federal income tax on a net income basis on income or gain from a debt security. |
• | you are an insurance company carrying on a United States insurance business to which the interest is attributable, within the meaning of the Internal Revenue Code, or | ||
• | you both |
• | have an office or other fixed place of business in the United States to which the interest is attributable and | ||
• | derive the interest in the active conduct of a banking, financing or similar business within the United States. |
• | the gain is effectively connected with your conduct of a trade or business in the United States or | ||
• | you are an individual, you are present in the United States for 183 or more days during the taxable year in which the gain is realized and certain other conditions exist. |
• | payments of principal and interest on a debt security within the United States, including payments made by wire transfer from outside the United States to an account you maintain in the United States, and | ||
• | the payment of the proceeds from the sale of a debt security effected at a United States office of a broker. |
41
• | fails to provide an accurate taxpayer identification number, | ||
• | is notified by the Internal Revenue Service that you have failed to report all interest and dividends required to be shown on your federal income tax returns, or | ||
• | in certain circumstances, fails to comply with applicable certification requirements. |
• | payments of principal and interest made to you outside the United States by us or another non-United States payor and | ||
• | other payments of principal and interest and the payment of the proceeds from the sale of a debt security effected at a United States office of a broker, as long as the income associated with such payments is otherwise exempt from United States federal income tax, and: |
• | the payor or broker does not have actual knowledge or reason to know that you are a United States person and you have furnished to the payor or broker: |
• | an Internal Revenue Service Form W-8BEN or an acceptable substitute form upon which you certify, under penalties of perjury, that you are a non-United States person, or | ||
• | other documentation upon which it may rely to treat the payments as made to a non-United States person in accordance with U.S. Treasury regulations, or |
• | you otherwise establish an exemption. |
• | the proceeds are transferred to an account maintained by you in the United States, | ||
• | the payment of proceeds or the confirmation of the sale is mailed to you at a United States address, or | ||
• | the sale has some other specified connection with the United States as provided in U.S. Treasury regulations, |
42
• | a United States person, | ||
• | a controlled foreign corporation for United States tax purposes, | ||
• | a foreign person 50% or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period, or | ||
• | a foreign partnership, if at any time during its tax year: |
• | one or more of its partners are “U.S. persons”, as defined in U.S. Treasury regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership, or | ||
• | such foreign partnership is engaged in the conduct of a United States trade or business, |
43
100 F Street, N.E.
Washington, D.C. 20549
44
CORPORACIÓN ANDINA DE FOMENTO | ||||
By: | /s/ Hugo Sarmiento Kohlenberger | |||
Hugo Sarmiento Kohlenberger | ||||
Acting Executive President | ||||
45
Management’s Report on the Effectiveness of Internal Control Over Financial Reporting | F-2 | |
Independent Accountants’ Report on Management’s Assertion on Effectiveness of Internal Control Over Financial Reporting | F-3 | |
Independent Auditor’s Report | F-4 | |
Audited Financial Statements | F-5 | |
Unaudited Interim Financial Information | F-31 |
F-1
Over Financial Reporting
L. Enrique García | Hugo Sarmiento K. | |
Executive President | Chief Financial Officer |
Accounting and Budget Director
F-2
Effectiveness of Internal Control Over Financial Reporting
Corporación Andina de Fomento (CAF):
January 28, 2008
Caracas, Venezuela
F-3
Corporación Andina de Fomento (CAF):
January 28, 2008
Caracas, Venezuela
F-4
December 31, 2007 and 2006
(In thousands of U.S. dollars)
Note | 2007 | 2006 | ||||||||||
Assets | ||||||||||||
Cash and due from banks | 3,735 | 8,997 | ||||||||||
Deposits with banks | 2 | 325,025 | 353,442 | |||||||||
Marketable securities | ||||||||||||
Trading | 3 | 882,726 | 1,001,618 | |||||||||
Held-to-maturity | 3 | 1,099,801 | 356,128 | |||||||||
Securities purchased under resale agreements | 36,400 | — | ||||||||||
Other investments | 2 | 109,868 | 210,430 | |||||||||
Loans | 4 | 9,547,987 | 8,097,472 | |||||||||
Less loan commissions, net of origination costs | 46,940 | 59,982 | ||||||||||
Less allowance for losses | 4 | 168,257 | 188,608 | |||||||||
Loans, net | 9,332,790 | 7,848,882 | ||||||||||
Equity investments | 5 | 74,317 | 93,426 | |||||||||
Interest and commissions receivable | 231,510 | 226,530 | ||||||||||
Property and equipment | 6 | 23,816 | 23,931 | |||||||||
Other assets | 7 | 477,199 | 316,109 | |||||||||
Total assets | 12,597,187 | 10,439,493 | ||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Deposits | 8 | 1,521,047 | 449,797 | |||||||||
Commercial paper | 9 | 888,246 | 773,354 | |||||||||
Advances and short-term borrowings | 398,931 | 339,256 | ||||||||||
Bonds | 10 | 4,637,140 | 4,362,161 | |||||||||
Borrowings and other obligations | 11 | 808,487 | 559,135 | |||||||||
Accrued interest and commissions payable | 153,938 | 136,878 | ||||||||||
Accrued expenses and other liabilities | 12 | 62,089 | 126,185 | |||||||||
Total liabilities | 8,469,878 | 6,746,766 | ||||||||||
Subscribed and paid-in capital (authorized capital US$5,000 million) | 2,014,750 | 1,870,615 | ||||||||||
Additional paid-in capital | 234,355 | 256,707 | ||||||||||
Reserves | 1,477,405 | 1,244,752 | ||||||||||
Retained earnings | 400,799 | 320,653 | ||||||||||
Total stockholders’ equity | 14 | 4,127,309 | 3,692,727 | |||||||||
Total liabilities and stockholders’ equity | 12,597,187 | 10,439,493 | ||||||||||
F-5
Years ended December 31, 2007, 2006 and 2005
(In thousands of U.S. dollars)
Note | 2007 | 2006 | 2005 | |||||||||||||
Interest income | ||||||||||||||||
Loans | 1 | (f) | 700,397 | 600,784 | 462,716 | |||||||||||
Investments and deposits with banks | 1 | (e) | 89,588 | 95,830 | 59,433 | |||||||||||
Loan commissions | 1 | (f) | 33,428 | 38,892 | 25,423 | |||||||||||
Total interest income | 823,413 | 735,506 | 547,572 | |||||||||||||
Interest expense | ||||||||||||||||
Deposits | 34,605 | 20,587 | 12,319 | |||||||||||||
Commercial paper | 51,254 | 28,831 | 15,789 | |||||||||||||
Advances and short-term borrowings | 23,469 | 13,804 | 12,986 | |||||||||||||
Bonds | 262,991 | 264,424 | 188,551 | |||||||||||||
Borrowings and other obligations | 36,319 | 31,077 | 21,069 | |||||||||||||
Commissions | 5,291 | 5,350 | 4,871 | |||||||||||||
Total interest expense | 413,929 | 364,073 | 255,585 | |||||||||||||
Net interest income | 409,484 | 371,433 | 291,987 | |||||||||||||
Provision for (credit to) allowance for loan losses | 4 | (23,133 | ) | 19,000 | (14,500 | ) | ||||||||||
Net interest income, after provision for (credit to) allowance for loan losses | 432,617 | 352,433 | 306,487 | |||||||||||||
Non-interest income | ||||||||||||||||
Other commissions | 3,960 | 4,090 | 5,814 | |||||||||||||
Dividends and equity in earnings of investees | 16,937 | 5,126 | 13,358 | |||||||||||||
Gain on sale of equity investments | 8,878 | — | — | |||||||||||||
Ineffectiveness arising from fair value hedges | — | 4,372 | — | |||||||||||||
Other income | 1,993 | 1,399 | 1,721 | |||||||||||||
Total non-interest income | 31,768 | 14,987 | 20,893 | |||||||||||||
Non-interest expenses | ||||||||||||||||
Administrative expenses | 51,195 | 46,414 | 42,640 | |||||||||||||
Ineffectiveness arising from fair value hedges | 12,278 | — | 1,146 | |||||||||||||
Impairment charge for equity investments | 5 | 82 | 190 | 24 | ||||||||||||
Other expenses | 31 | 163 | 332 | |||||||||||||
Total non-interest expenses | 63,586 | 46,767 | 44,142 | |||||||||||||
Net income | 400,799 | 320,653 | 283,238 | |||||||||||||
F-6
Years ended December 31, 2007, 2006 and 2005
(In thousands of U.S. dollars)
Reserve pursuant to | ||||||||||||||||||||||||||||||||
Subscribed and | Additional | Article No. 42 | Retained | |||||||||||||||||||||||||||||
Note | paid-in capital | paid-in capital | General reserve | of by-laws | Total reserves | earnings | Total stockholders equity | |||||||||||||||||||||||||
Balances at December 31, 2004 | 1,498,675 | 220,072 | 660,067 | 206,074 | 866,141 | 207,753 | 2,792,641 | |||||||||||||||||||||||||
Capital increase | 14 | 95,110 | 107,552 | — | — | — | — | 202,662 | ||||||||||||||||||||||||
Stock dividends | 14 | 88,100 | (88,100 | ) | — | — | — | — | — | |||||||||||||||||||||||
Net income | 14 | — | — | — | — | — | 283,238 | 283,238 | ||||||||||||||||||||||||
Appropriated for general reserve | 14 | — | — | 145,573 | — | 145,573 | (145,573 | ) | — | |||||||||||||||||||||||
Appropriated for reserve pursuant to Article No. 42 of by-laws | 14 | — | — | — | 20,800 | 20,800 | (20,800 | ) | — | |||||||||||||||||||||||
Allocations to stockholders’ funds | 15 | — | — | — | — | — | (41,380 | ) | (41,380 | ) | ||||||||||||||||||||||
Balances at December 31, 2005 | 1,681,885 | 239,524 | 805,640 | 226,874 | 1,032,514 | 283,238 | 3,237,161 | |||||||||||||||||||||||||
Capital increase | 14 | 95,355 | 110,558 | — | — | — | — | 205,913 | ||||||||||||||||||||||||
Stock dividends | 14 | 93,375 | (93,375 | ) | — | — | — | — | — | |||||||||||||||||||||||
Net income | 14 | — | — | — | — | — | 320,653 | 320,653 | ||||||||||||||||||||||||
Appropriated for general reserve | 14 | — | — | 183,738 | — | 183,738 | (183,738 | ) | — | |||||||||||||||||||||||
Appropriated for reserve pursuant to Article No. 42 of by-laws | 14 | — | — | — | 28,500 | 28,500 | (28,500 | ) | — | |||||||||||||||||||||||
Allocations to stockholders’ funds | 15 | — | — | — | — | — | (71,000 | ) | (71,000 | ) | ||||||||||||||||||||||
Balances at December 31, 2006 | 1,870,615 | 256,707 | 989,378 | 255,374 | 1,244,752 | 320,653 | 3,692,727 | |||||||||||||||||||||||||
Capital increase | 14 | 50,650 | 71,133 | — | — | — | — | 121,783 | ||||||||||||||||||||||||
Stock dividends | 14 | 93,485 | (93,485 | ) | — | — | — | — | — | |||||||||||||||||||||||
Net income | 14 | — | — | — | — | — | 400,799 | 400,799 | ||||||||||||||||||||||||
Appropriated for general reserve | 14 | — | — | 200,553 | — | 200,553 | (200,553 | ) | — | |||||||||||||||||||||||
Appropriated for reserve pursuant to Article No. 42 of by-laws | 14 | — | — | — | 32,100 | 32,100 | (32,100 | ) | — | |||||||||||||||||||||||
Allocations to stockholders’ funds | 15 | — | — | — | — | — | (88,000 | ) | (88,000 | ) | ||||||||||||||||||||||
Balances at December 31, 2007 | 2,014,750 | 234,355 | 1,189,931 | 287,474 | 1,477,405 | 400,799 | 4,127,309 | |||||||||||||||||||||||||
F-7
Years ended December 31, 2007, 2006 and 2005
(In thousands of U.S. dollars)
Note | 2007 | 2006 | 2005 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | 400,799 | 320,653 | 283,238 | |||||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||||||||||||||||
Loss (gain) on sale of trading securities | 3 | 1,150 | (4 | ) | (56 | ) | ||||||||||
Amoritization of loan commissions, net of origination costs | (21,464 | ) | (13,764 | ) | (13,655 | ) | ||||||||||
Provision for (credit to) allowance for loan losses | 4 | (23,133 | ) | 19,000 | (14,500 | ) | ||||||||||
Impairment charge for equity investments | 5 | 82 | 190 | 24 | ||||||||||||
Equity in earnings of investees | (16,110 | ) | (2,447 | ) | (8,273 | ) | ||||||||||
Gain on sale of equity investments | (8,878 | ) | — | — | ||||||||||||
Amortization of deferred charges | 2,472 | 2,971 | 3,138 | |||||||||||||
Depreciation of property and equipment | 6 | 3,477 | 3,234 | 3,115 | ||||||||||||
Loss on sale of property and equipment | — | — | 37 | |||||||||||||
Provision for employees’ severance indemnities and benefits | 5,928 | 5,476 | 4,544 | |||||||||||||
Provision for employees’ savings plan | 1,465 | 1,491 | 1,497 | |||||||||||||
Net changes in operating assets and liabilities | ||||||||||||||||
Severance indemnities paid or advanced | (2,360 | ) | (3,055 | ) | (2,863 | ) | ||||||||||
Employees’ savings plan paid or advanced | (876 | ) | (606 | ) | (1,532 | ) | ||||||||||
Trading securities, net | 3 | 117,742 | 103,954 | (87,796 | ) | |||||||||||
Interest and commissions receivable | (4,980 | ) | (44,591 | ) | (30,892 | ) | ||||||||||
Other assets | (64 | ) | 5,987 | (11,517 | ) | |||||||||||
Accrued interest and commissions payable | 17,060 | 25,924 | 15,097 | |||||||||||||
Accrued expenses and other liabilities | (5,526 | ) | (46,261 | ) | (61,395 | ) | ||||||||||
Total adjustments and net changes in operating assets and liabilities | 65,985 | 57,499 | (205,027 | ) | ||||||||||||
Net cash provided by operating activities | 466,784 | 378,152 | 78,211 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Purchases of held-to-maturity securities | 3 | (3,825,725 | ) | (1,692,804 | ) | (732,383 | ) | |||||||||
Maturities of held-to-maturity securities | 3 | 3,082,052 | 1,424,561 | 810,860 | ||||||||||||
Securities purchased under resale agreements | (36,400 | ) | — | — | ||||||||||||
Purchase of other investments | 2 | (368,918 | ) | (588,132 | ) | (634,244 | ) | |||||||||
Maturities of other investments | 2 | 469,480 | 636,278 | 546,189 | ||||||||||||
Loan origination and principal collections, net | 4 | (1,439,338 | ) | (669,082 | ) | (175,832 | ) | |||||||||
Sale of equity investments | 5 | 44,015 | 23,477 | 5,738 | ||||||||||||
Purchases of property and equipment | 6 | (3,362 | ) | (16,179 | ) | (1,489 | ) | |||||||||
Net cash used in investing activities | (2,078,196 | ) | (881,881 | ) | (181,161 | ) | ||||||||||
Carried forward | (1,611,412 | ) | (503,729 | ) | (102,950 | ) | ||||||||||
F-8
Years ended December 31, 2007, 2006 and 2005
(In thousands of U.S. dollars)
Note | 2007 | 2006 | 2005 | |||||||||||||
Brought forward | (1,611,412 | ) | (503,729 | ) | (102,950 | ) | ||||||||||
Cash flows from financing activities | ||||||||||||||||
Net increase in deposits | 1,071,250 | 63,378 | 181,073 | |||||||||||||
Net increase in commercial paper | 115,490 | 60,182 | 3,213 | |||||||||||||
Proceeds from advances and short-term borrowings | 1,262,019 | 864,993 | 997,624 | |||||||||||||
Repayments of advances and short-term borrowings | (1,201,502 | ) | (969,444 | ) | (1,056,878 | ) | ||||||||||
Proceeds from issuance of bonds | 10 | 718,428 | 810,228 | 584,332 | ||||||||||||
Repayment of bonds | 10 | (671,396 | ) | (504,678 | ) | (724,624 | ) | |||||||||
Proceeds from borrowings and other obligations | 11 | 374,043 | 154,227 | 20,000 | ||||||||||||
Repayment of borrowings and other obligations | 11 | (124,382 | ) | (83,942 | ) | (99,504 | ) | |||||||||
Distributions to stockholders’ funds | 15 | (88,000 | ) | (71,000 | ) | (41,380 | ) | |||||||||
Proceeds from issuance of shares | 14 | 121,783 | 205,913 | 202,662 | ||||||||||||
Net cash provided by financing activities | 1,577,733 | 529,857 | 66,518 | |||||||||||||
Net increase (decrease) in cash and cash equivalents | (33,679 | ) | 26,128 | (36,432 | ) | |||||||||||
Cash and cash equivalents at beginning of year | 362,439 | 336,311 | 372,743 | |||||||||||||
Cash and cash equivalents at end of year | 328,760 | 362,439 | 336,311 | |||||||||||||
Consisting of: | ||||||||||||||||
Cash and due from banks | 3,735 | 8,997 | 1,740 | |||||||||||||
Deposits with banks | 325,025 | 353,442 | 334,571 | |||||||||||||
328,760 | 362,439 | 336,311 | ||||||||||||||
Supplemental disclosure: | ||||||||||||||||
Interest paid during the year | 386,469 | 327,725 | 235,717 | |||||||||||||
Non-cash financing activities: | ||||||||||||||||
Change in other assets due to fair value hedging relationships | 151,221 | 70,044 | (410,761 | ) | ||||||||||||
Change in other liabilities due to fair value hedging relationships | (62,727 | ) | 68,077 | 2,781 | ||||||||||||
F-9
(1) | Significant Accounting Policies |
(a) | Description of Business | ||
Corporación Andina de Fomento (“CAF” or the “Corporation”) commenced operations on June 8, 1970 and is a multilateral financial institution established under public international law which abides by the provisions of its by-laws. Series “A” and “B” Shareholder countries are: Bolivia, Colombia, Ecuador, Peru and Venezuela. Series “C” Shareholder countries are: Argentina, Brazil, Chile, Costa Rica, Dominican Republic, Jamaica, Mexico, Paraguay, Panama, Spain, Trinidad and Tobago and Uruguay. In addition, there are 15 banks which are Series “B” shareholders. The Corporation has its headquarters in Caracas, Venezuela. | |||
The Corporation’s principal activity is to provide short, medium and long-term loans to finance projects, working capital, trade activities and to undertake feasibility studies for investment opportunities in its member countries. |
(b) | Financial Statements Presentation | ||
The financial statements have been prepared in accordance with U.S. generally accepted accounting principles and the functional currency is the U.S. dollar. | |||
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
(c) | Foreign Currency Transactions | ||
Transactions in currencies other than U.S. dollars are translated at exchange rates prevailing on the international market at the dates of the transactions. Foreign currency balances are translated at year-end exchange rates. Any gains or losses on foreign exchange including related hedge effects are included the statement of income and are not significant. | |||
(d) | Cash Equivalents | ||
Cash equivalents are defined as cash due from banks and short-term deposits with an original maturity of three months or less. | |||
(e) | Marketable Securities | ||
The Corporation classifies its debt securities in one of two categories: trading or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities which the Corporation has the ability and intent to hold until maturity. | |||
Trading securities are recorded at fair value. Unrealized gains and losses on trading securities are included in earnings. | |||
Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. A decline in the market value of any held-to-maturity security below cost that is deemed to be other than temporary results in a reduction in carrying amount. The impairment is charged to income and a new cost basis for the security is established. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective interest method. | |||
Dividend and interest income are recognized when received and earned, respectively. |
F-10
(f) | Loans | ||
The Corporation grants short, medium and long-term loans to finance projects, working capital, trade activities and undertake feasibility studies for investment opportunities in its member countries. Loans are reported at their outstanding unpaid principal balances adjusted for charge-offs, less the allowance for loan losses and loan commissions net of origination costs. Interest income is accrued on the unpaid principal balance. Loan commission fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method and are presented as loan commissions in the statement of income. | |||
The accrual of interest on loans is discontinued at the time a private sector loan is 90 days (180 days for public sector loans) delinquent unless the credit is well-secured and in process of collection. | |||
All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. | |||
The nonaccrual loans are considered impaired. Factors considered by management in determining impairment include payments status, collateral value, and the probability of collecting scheduled principal and interest payments when due. | |||
(g) | Equity Investments | ||
CAF participates with equity investments in companies and investment funds in strategic sectors, with a view to promoting the development of such companies and their participation in the securities markets and to serve as a catalytic agent in attracting resources into the Shareholder countries. | |||
Equity investments are accounted for using the equity method or at cost. If the Corporation has the ability to exercise significant influence over the operating and financial policies of the investee, which is generally presumed to exist at a 20% of equity ownership level, the equity investments are accounted for using the equity method. Under the equity method, the carrying value of the equity investment is adjusted for its proportionate share of earnings or losses, dividends received and certain other transactions of the investee company. | |||
A decline in the market value of any equity investment accounted for at cost, that is deemed to be other than temporary, results in a reduction in carrying amount to fair value. The impairment is charged to income and a new cost basis for the investment is established. | |||
(h) | Allowance for Loan Losses | ||
The allowance for loan losses is maintained at a level the Corporation believes is adequate but not excessive to absorb probable losses inherent in the loan portfolio as of the date of the financial statements. The general allowance for loan losses is established by the Corporation based on the individual risk rating for the long term foreign currency debt of the borrower countries which is assigned by the international risk rating agencies as of the date of the financial statements preparation. This country risk rating considers a default probability. In the case of sovereign loan portfolio a factor of preferred creditor status is also considered. |
F-11
A specific allowance is established by the Corporation for those loans that are considered impaired. A loan is considered as impaired when based on currently available information and events, there exists the probability that CAF will not recover the total amount of principal and interest as agreed in the terms of the original loan contract. The impairment of loans is determined on a loan by loan basis based on the present value of expected future cash flows, discounted at the loans effective interest rate. | |||
Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. | |||
(i) | Property and Equipment | ||
Property and equipment are stated at cost less accumulated depreciation. Depreciation, calculated on the straight-line method, is charged to operations over the estimated useful lives of assets. | |||
(j) | Employees’ Severance Indemnities | ||
The Corporation accrues for employees’ severance indemnities in accordance with the Corporation’s personnel regulations and the Partial Reform of the Organic Labor Law of the Bolivarian Republic of Venezuela, which establish that employees are entitled to an indemnity upon the termination of employment, equivalent to five days remuneration for each month of service, plus two days for each year of service up to a maximum of 30 days, commencing from the second year. Under certain circumstances the reformed law also provides for the payment for unjustified dismissal. The accrual is presented net of advances and interest is paid annually on the outstanding balance. | |||
(k) | Pension Plan | ||
The Corporation established in March 2005 a defined benefit pension plan (the Plan). The Plan is contributory and the benefits are based on years of service and the average employee’s salary for the three consecutive years of service with the highest salary. | |||
(l) | Derivative Instruments and Hedging Activities | ||
All derivatives are recognized on the balance sheet at their fair value. On the date the derivative contract is entered into, the Corporation designates the derivative as either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value” hedge), a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge), or a foreign-currency fair-value or cash-flow hedge (“foreign currency” hedge). The Corporation formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair-value, cash-flow, or foreign-currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Corporation also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Corporation discontinues hedge accounting prospectively. | |||
Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a fair-value hedge, along with the loss or gain on the hedged asset or liability or unrecognized firm commitment of the hedged item that is attributable to the hedged risk, are recorded in income. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income, until income is affected by the variability in cash flows of the designated hedged item. Changes in the fair value of derivatives that are highly effective as hedges and that are designated and qualify as foreign-currency hedges are recorded in either income or other comprehensive income, depending on whether the hedge transaction is a fair-value hedge or a cash-flow hedge. |
F-12
The Corporation discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative expires or is sold, terminated, or exercised, the derivative is de-designated as a hedging instrument, because it is unlikely that a forecasted transaction will occur, a hedged firm commitment no longer meets the definition of a firm commitment, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. | |||
When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair-value hedge, the Corporation continues to carry the derivative on the balance sheet at its fair value, and no longer adjusts the hedged asset or liability for changes in fair value. The adjustment of the carrying amount of the hedged asset or liability is accounted for in the same manner as other components of the carrying amount of that asset or liability. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the Corporation continues to carry the derivative on the balance sheet at its fair value, removes any asset or liability that was recorded pursuant to recognition of the firm commitment from the balance sheet and recognizes any gain or loss in income. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the Corporation continues to carry the derivative on the balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive income are recognized immediately in income. In all situations in which hedge accounting is discontinued, the Corporation continues to carry the derivative at its fair value on the balance sheet, and recognizes any changes in its fair value in income. | |||
(m) | Recent Accounting Pronouncements | ||
In September, 2006 the FASB issued SFAS N° 157, “Fair Value Measurements.” SFAS N° 157 defines fair value, establishes a framework for the measurement of fair value, and enhances disclosures about fair value measurements. SFAS N° 157 applies when other accounting pronouncements require or permit fair value measurements. SFAS N° 157 is effective for fiscal years beginning after November 15, 2007. The application of SFAS N° 157 is not expected to have any material impact on the Corporation’s financial statements. | |||
In February, 2007 the FASB issued SFAS N° 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement N° 115.” SFAS N° 159 permits entities to choose to measure many financial instruments and certain warranty and insurance contracts at fair value on a contract-by-contract basis. SFAS N°159 contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value as a consequence of the election. SFAS N° 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Corporation is evaluating the impact of the possible adoption of SFAS N° 159 on the Corporation’s financial statements. |
(2) | Deposits with Banks and Other Investments | |
Deposits with banks mature in three months or less and include the following: |
December 31 | ||||||||
2007 | 2006 | |||||||
U.S. dollars | 324,549 | 350,820 | ||||||
Other currencies | 476 | 2,622 | ||||||
325,025 | 353,442 | |||||||
F-13
(3) | Marketable Securities | |
Trading Securities | ||
A summary of trading securities follows: |
Average | ||||||||||||
maturity | Average | |||||||||||
Amount | (years) | yield (%) | ||||||||||
At December 31, 2007 - | ||||||||||||
U. S. Treasury Notes | 61,965 | 0.04 | 4.38 | |||||||||
Bonds of non-U.S. governments and government entities | 191,449 | 0.25 | 6.33 | |||||||||
Financial institutions and corporate securities | 629,312 | 1.29 | 2.00 | |||||||||
882,726 | 0.97 | 4.98 | ||||||||||
At December 31, 2006 - | ||||||||||||
U. S. Treasury Notes | 49,904 | 0.42 | 3.24 | |||||||||
Bonds of non-U.S. governments and government entities | 149,648 | 1.61 | 6.07 | |||||||||
Financial institutions and corporate securities | 802,066 | 1.53 | 5.47 | |||||||||
1,001,618 | 1.49 | 5.45 | ||||||||||
Gross | Gross | |||||||||||||||
unrealized | unrealized | |||||||||||||||
Amortized | holding | holding | ||||||||||||||
cost | gains | losses | Fair value | |||||||||||||
At December 31, 2007 - | ||||||||||||||||
Bonds of non-U.S. governments and government entities | 36,205 | 2 | (6 | ) | 36,201 | |||||||||||
Financial institutions and corporate securities | 1,063,596 | — | (309 | ) | 1,063,287 | |||||||||||
1,099,801 | 2 | (315 | ) | 1,099,488 | ||||||||||||
At December 31, 2006 - | ||||||||||||||||
Bonds of non-U.S. governments and government entities | 60,483 | 17 | — | 60,500 | ||||||||||||
Financial institutions and corporate securities | 295,645 | — | — | 295,645 | ||||||||||||
356,128 | 17 | — | 356,145 | |||||||||||||
F-14
December 31 | ||||||||
2007 | 2006 | |||||||
Remaining Maturities - | ||||||||
Less than one year | 1,099,801 | 316,644 | ||||||
Between one and two years | — | 14,996 | ||||||
Between two and three years | — | 10,496 | ||||||
Between three and four years | — | 13,992 | ||||||
1,099,801 | 356,128 | |||||||
(4) | Loans | |
Loans include short, medium and long-term loans to finance projects, working capital and trade activities. The majority of the loan contracts have been subscribed with the Series “A” and “B” Shareholder countries, or with private institutions or companies of these countries. |
F-15
Bolivia | Colombia | Ecuador | Peru | Venezuela | Other | Total | ||||||||||||||||||||||
At December 31, 2007 - | ||||||||||||||||||||||||||||
Loans | 1,040,036 | 1,633,002 | 2,149,450 | 1,804,853 | 1,469,836 | 1,450,810 | 9,547,987 | |||||||||||||||||||||
At December 31, 2006 - | ||||||||||||||||||||||||||||
Loans | 1,024,293 | 1,619,530 | 1,370,785 | 1,801,741 | 1,723,523 | 557,573 | 8,097,445 | |||||||||||||||||||||
Fair value adjustments on hedging activities | 27 | |||||||||||||||||||||||||||
Carrying value of loans | 8,097,472 | |||||||||||||||||||||||||||
F-16
December 31 | ||||||||||||||||
2007 | 2006 | |||||||||||||||
Average | Average | |||||||||||||||
Amount | yield (%) | Amount | yield (%) | |||||||||||||
Loans | 9,547,987 | 7.22 | 8,097,445 | 8.19 |
2007 | % | 2006 | % | |||||||||||||
Agriculture, hunting and forestry | 113,399 | 1 | 142,056 | 2 | ||||||||||||
Exploitation of mines and quarries | 70,000 | 1 | 60,000 | 1 | ||||||||||||
Manufacturing industry | 278,644 | 3 | 193,379 | 2 | ||||||||||||
Supply of electricity, gas and water | 1,079,173 | 11 | 908,160 | 11 | ||||||||||||
Transport, warehousing and communications | 3,053,811 | 32 | 3,189,947 | 39 | ||||||||||||
Commercial banks | 1,636,937 | 17 | 460,089 | 6 | ||||||||||||
Development banks | 106,260 | 1 | 266,468 | 3 | ||||||||||||
Social and other infrastructure programs | 3,196,974 | 33 | 2,850,809 | 35 | ||||||||||||
Other activities | 12,789 | 1 | 26,537 | 1 | ||||||||||||
9,547,987 | 100 | 8,097,445 | 100 | |||||||||||||
December 31 | ||||||||
2007 | 2006 | |||||||
Remaining maturities - | ||||||||
Less than one year | 2,290,503 | 1,438,002 | ||||||
Between one and two years | 964,836 | 997,762 | ||||||
Between two and three years | 827,646 | 991,247 | ||||||
Between three and four years | 884,622 | 848,419 | ||||||
Between four and five years | 868,709 | 839,428 | ||||||
Over five years | 3,711,671 | 2,982,587 | ||||||
9,547,987 | 8,097,445 | |||||||
F-17
December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Balances at beginning of year | 188,608 | 161,629 | 181,801 | |||||||||
Provision for (credit to) results of operations | (23,133 | ) | 19,000 | (14,500 | ) | |||||||
Recoveries | 2,970 | 9,043 | 4,696 | |||||||||
Loans charged-off | (188 | ) | (1,064 | ) | (10,368 | ) | ||||||
Balances at end of year | 168,257 | 188,608 | 161,629 | |||||||||
(5) | Equity Investments | |
A summary of equity investments follows: |
December 31 | ||||||||
2007 | 2006 | |||||||
Direct investments in companies (including investments accounted for using the equity method of US$5,727 and US$5,668, at December 31, 2007 and 2006, respectively) | 14,389 | 10,371 | ||||||
Investment funds (including investments accounted for using the equity method of US$47,458 and US$62,197, at December 31, 2007 and 2006, respectively) | 59,928 | 83,055 | ||||||
74,317 | 93,426 | |||||||
(6) | Property and Equipment | |
A summary of property and equipment follows: |
December 31 | ||||||||
2007 | 2006 | |||||||
Land | 14,069 | 14,069 | ||||||
Buildings | 19,353 | 19,353 | ||||||
Buildings improvements | 13,686 | 10,939 | ||||||
Furniture and equipment | 8,996 | 8,298 | ||||||
Vehicles | 334 | 328 | ||||||
56,438 | 52,987 | |||||||
Less accumulated depreciation | 32,622 | 29,056 | ||||||
23,816 | 23,931 | |||||||
Buildings | 15 years | |||
Buildings improvements | 5 years | |||
Furniture and equipment | 2 to 5 years | |||
Vehicles | 5 years | |||
F-18
(7) | Other Assets | |
A summary of other assets follows: |
December 31 | ||||||||
2007 | 2006 | |||||||
Deferred charges | 31,859 | 27,170 | ||||||
Derivative assets (see Note 17) | 436,585 | 285,364 | ||||||
Other assets | 8,755 | 3,575 | ||||||
477,199 | 316,109 | |||||||
(8) | Deposits | |
The Corporation’s deposits of US$1,521,047 at December 31, 2007 mature in 2008 (US$449,797 at December 31, 2006 — matures in 2007). At December 31, 2007 and 2006, the interest rates on deposits ranged from 4.33% to 5.33% and from 5.18% to 5.44%, respectively. | ||
(9) | Commercial Paper | |
The Corporation’s commercial paper of US$888,246 at December 31, 2007 matures in 2008 (US$773,354 at December 31, 2006 — matures in 2007). At December 31, 2007 and 2006, the interest rates on commercial paper ranged from 4.49% to 7.02% and from 3.62% to 5.43%, respectively. |
F-19
(10) | Bonds | |
An analysis of bonds follows: |
December 31 | ||||||||||||||||||||||||
2007 | 2006 | |||||||||||||||||||||||
Principal outstanding | Weighted | Principal outstanding | Weighted | |||||||||||||||||||||
average | average | |||||||||||||||||||||||
At original | At spot | cost, after | At original | At spot | cost, after | |||||||||||||||||||
exchange | exchange | swaps (%) | exchange | exchange | swaps (%) | |||||||||||||||||||
rate | rate | (Year-end) | rate | rate | (Year-end) | |||||||||||||||||||
U.S. dollars | 2,496,144 | 2,496,144 | 6.20 | 2,630,340 | 2,630,340 | 6.34 | ||||||||||||||||||
Yen | 474,651 | 486,941 | 5.66 | 184,332 | 168,011 | 5.96 | ||||||||||||||||||
Colombian Pesos | 100,000 | 135,298 | 4.96 | 100,000 | 121,500 | 5.43 | ||||||||||||||||||
Pounds Sterling | 63,375 | 81,447 | 7.98 | 63,405 | 79,783 | 7.97 | ||||||||||||||||||
Euros | 711,489 | 956,485 | 5.83 | 998,659 | 1,187,727 | 6.25 | ||||||||||||||||||
Mexican Pesos | 68,807 | 68,897 | 5.33 | — | — | — | ||||||||||||||||||
Peruvian Nuevos Soles | 75,748 | 82,938 | 5.80 | 75,748 | 77,698 | 5.87 | ||||||||||||||||||
Venezuelan Bolivars | 209,302 | 209,302 | 4.94 | 100,000 | 100,000 | 5.28 | ||||||||||||||||||
4,199,516 | 4,517,452 | 4,152,484 | 4,365,059 | |||||||||||||||||||||
Fair value adjustments on hedging activities | 119,688 | (2,898 | ) | |||||||||||||||||||||
Carrying value of bonds | 4,637,140 | 4,362,161 | ||||||||||||||||||||||
F-20
December 31 | ||||||||
2007 | 2006 | |||||||
Remaining maturities - | ||||||||
Less than one year | 137,131 | 499,593 | ||||||
Between one and two years | 576,348 | 137,646 | ||||||
Between two and three years | 371,305 | 734,703 | ||||||
Between three and four years | 783,722 | 162,709 | ||||||
Between four and five years | 761,539 | 783,869 | ||||||
Over five years | 1,569,471 | 1,833,964 | ||||||
4,199,516 | 4,152,484 | |||||||
F-21
(11) | Borrowings and Other Obligations | |
An analysis of borrowings and other obligations and their weighted average cost, follows: |
December 31 | ||||||||||||||||||||||||
2007 | 2006 | |||||||||||||||||||||||
Principal outstanding | Principal outstanding | |||||||||||||||||||||||
Weighted average | Weighted average | |||||||||||||||||||||||
At original | At spot exchange | cost, after swaps | At original exchange | At spot exchange | cost, after swaps | |||||||||||||||||||
exchange rate | rate | (%) (Year-end) | rate | rate | (%) (Year-end) | |||||||||||||||||||
U.S. dollars | 799,352 | 799,352 | 5.39 | 539,092 | 539,092 | 5.84 | ||||||||||||||||||
Yen | 3,922 | 4,427 | 6.56 | 11,766 | 12,601 | 4.18 | ||||||||||||||||||
Euros (at spot rate) | 654 | 654 | 4.80 | 1,899 | 1,899 | 5.41 | ||||||||||||||||||
Peruvian Nuevos Soles | 2,337 | 2,337 | 5.90 | 4,066 | 4,066 | 5.99 | ||||||||||||||||||
Other currencies (at spot rate) | 2,042 | 2,042 | — | 1,823 | 1,823 | — | ||||||||||||||||||
808,307 | 808,812 | 558,646 | 559,481 | |||||||||||||||||||||
Fair value adjustments on hedging activities | (325 | ) | (346 | ) | ||||||||||||||||||||
Carrying value of borrowings and other obligations | 808,487 | 559,135 | ||||||||||||||||||||||
F-22
Fair value adjustments to the carrying value of borrowings and other obligations represent adjustments to the carrying value of transactions in designated fair value hedging relationships. | ||
At December 31, 2007 and 2006, there are fixed interest-bearing borrowings and other obligations amounting to US$14,514 and US$20,322, respectively. | ||
At December 31, 2007, borrowing and other obligations include advances for US$120,000 with maturities over one year. Those advances cause interest between 4.61% and 5.13%. | ||
Borrowings and other obligations, by remaining maturities, are summarized below: |
December 31 | ||||||||
2007 | 2006 | |||||||
Remaining maturities - | ||||||||
Less than one year | 191,285 | 104,880 | ||||||
Between one and two years | 144,244 | 57,072 | ||||||
Between two and three years | 114,516 | 144,703 | ||||||
Between three and four years | 120,910 | 28,996 | ||||||
Between four and five years | 42,424 | 105,889 | ||||||
Over five years | 194,928 | 117,106 | ||||||
808,307 | 558,646 | |||||||
Some borrowing agreements contain covenants conditioning the use of the funds for specific purposes or projects. | ||
At December 31, 2007 and 2006 there were unused term credit facilities amounting to US$223,700 and US$227,700, respectively. |
(12) | Accrued Expenses and Other Liabilities | |
A summary of accrued expenses and other liabilities follows: |
December 31 | ||||||||
2007 | 2006 | |||||||
Employees’ severance indemnities, benefits and savings plan | 48,964 | 42,157 | ||||||
Derivative liabilities (see Note 17) | 8,131 | 70,858 | ||||||
Deferred income | 2,942 | 2,442 | ||||||
Other liabilities | 2,052 | 10,728 | ||||||
62,089 | 126,185 | |||||||
(13) | Pension Plan | |
The Corporation established in March 2005 a defined benefit pension plan (the Plan) which is mandatory for all new employees as of the date of implementation of the Plan and voluntary for all other employees. The Plan is contributory and the benefits are based on years of service and the average employee’s salary for the three consecutive years of service with the highest salary. The employees make monthly contributions to the Plan equal to 7% of their salary. Voluntary participants must contribute to the Plan certain withheld benefits. The Plan has 109 participants. | ||
The measurement date used to determine pension benefit measures for the Plan is December 31. |
F-23
The Plan’s benefit obligation (PBO) and assets as of December 31, 2007 and 2006 follow: |
December 31 | ||||||||
2007 | 2006 | |||||||
Plan’s benefit obligation (PBO) | 577 | 189 | ||||||
Assets | 577 | 189 | ||||||
Weighted-average assumptions used to determine net benefit cost from the origination of the Plan to December 31, 2007 and 2006 follow: |
Discount rate | 4 | % | ||
Expected long-term rate of return on Plan assets | 4 | % | ||
Rate of salary increase | 3 | % | ||
(14) | Stockholders’ Equity | |
Authorized Capital | ||
The authorized capital of the Corporation at December 31, 2007, 2006 and 2005 amounts to US$5,000,000, distributed among Series “A”, “B” and “C” shares. | ||
Subscribed Callable Capital | ||
The payment of subscribed callable capital will be as required, with prior approval of the Board of Directors, in order to meet financial obligations of the Corporation, when internal resources are inadequate. | ||
Shares | ||
The Corporation’s shares are classified as follows: | ||
Series “A” shares: Subscribed by the governments or public-sector institutions, semipublic or private entities with social or public objectives of: Bolivia, Colombia, Ecuador, Peru and Venezuela. These shares grant the right of representation on the Corporation’s board of one principal director and one alternate director per share. Series “A” shares have a par value of US$1,200. | ||
Series “B” shares: Subscribed by the governments or public-sector institutions, semipublic or private entities and commercial banks of: Bolivia, Colombia, Ecuador, Peru and Venezuela. These shares grant the right of representation on the Corporation’s board of one principal director and one alternate director. Also, the commercial banks are entitled to one principal director and one alternate director on the board. Series “B” shares have a par value of US$5. | ||
Series “C” shares: Subscribed by legal entities or individuals belonging to countries other than Bolivia, Colombia, Ecuador, Peru and Venezuela. These shares provide for representation on the board of directors of the Corporation of two principal directors and their respective alternates, who are elected by the holders of these shares. Series “C” shares have a par value of US$5. |
F-24
A summary of the movement in subscribed and paid-in capital for the years ended December 31, 2007, 2006 and 2005, follows: |
Number of Shares | Amounts | |||||||||||||||||||||||||||
Series | Series | Series | Series | Series | Series | |||||||||||||||||||||||
“A” | “B” | “C” | “A” | “B” | “C” | Total | ||||||||||||||||||||||
At December 31, 2004 | 5 | 269,722 | 28,813 | 6,000 | 1,348,610 | 144,065 | 1,498,675 | |||||||||||||||||||||
Dividends in shares | — | 15,931 | 1,689 | — | 79,655 | 8,445 | 88,100 | |||||||||||||||||||||
Issued for cash | — | 14,926 | 4,096 | — | 74,630 | 20,480 | 95,110 | |||||||||||||||||||||
At December 31, 2005 | 5 | 300,579 | 34,598 | 6,000 | 1,502,895 | 172,990 | 1,681,885 | |||||||||||||||||||||
Dividends in shares | — | 16,747 | 1,928 | — | 83,735 | 9,640 | 93,375 | |||||||||||||||||||||
Issued for cash | — | 15,061 | 4,010 | — | 75,305 | 20,050 | 95,355 | |||||||||||||||||||||
At December 31, 2006 | 5 | 332,387 | 40,536 | 6,000 | 1,661,935 | 202,680 | 1,870,615 | |||||||||||||||||||||
Dividends in shares | — | 16,675 | 2,022 | — | 83,375 | 10,110 | 93,485 | |||||||||||||||||||||
Issued for cash | — | 2,484 | 7,646 | — | 12,420 | 38,230 | 50,650 | |||||||||||||||||||||
At December 31, 2007 | 5 | 351,546 | 50,204 | 6,000 | 1,757,730 | 251,020 | 2,014,750 | |||||||||||||||||||||
Subscribed and paid-in capital is held as follows at December 31, 2007: |
Number of Shares | Amounts | |||||||||||||||||||||||||||
Stockholder | Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | |||||||||||||||||||||
Bolivia | 1 | 27,149 | — | 1,200 | 135,745 | — | 136,945 | |||||||||||||||||||||
Colombia | 1 | 98,473 | — | 1,200 | 492,365 | — | 493,565 | |||||||||||||||||||||
Ecuador | 1 | 27,975 | — | 1,200 | 139,875 | — | 141,075 | |||||||||||||||||||||
Peru | 1 | 98,839 | — | 1,200 | 494,195 | — | 495,395 | |||||||||||||||||||||
Venezuela | 1 | 98,837 | — | 1,200 | 494,185 | — | 495,385 | |||||||||||||||||||||
Argentina | — | — | 7,187 | — | — | 35,935 | 35,935 | |||||||||||||||||||||
Brazil | — | — | 12,520 | — | — | 62,600 | 62,600 | |||||||||||||||||||||
Chile | — | — | 4,112 | — | — | 20,560 | 20,560 | |||||||||||||||||||||
Costa Rica | — | — | 2,442 | — | — | 12,210 | 12,210 | |||||||||||||||||||||
Dominican Republic | — | — | 2,257 | — | — | 11,285 | 11,285 | |||||||||||||||||||||
Jamaica | — | — | 136 | — | — | 680 | 680 | |||||||||||||||||||||
Mexico | — | — | 3,499 | — | — | 17,495 | 17,495 | |||||||||||||||||||||
Panama | — | — | 1,746 | — | — | 8,730 | 8,730 | |||||||||||||||||||||
Paraguay | — | — | 1,356 | — | — | 6,780 | 6,780 | |||||||||||||||||||||
Spain | — | — | 11,586 | — | — | 57,930 | 57,930 | |||||||||||||||||||||
Trinidad & Tobago | — | 154 | — | — | 770 | 770 | ||||||||||||||||||||||
Uruguay | — | — | 3,209 | — | — | 16,045 | 16,045 | |||||||||||||||||||||
Commercial banks | — | 273 | — | — | 1,365 | — | 1,365 | |||||||||||||||||||||
5 | 351,546 | 50,204 | 6,000 | 1,757,730 | 251,020 | 2,014,750 | ||||||||||||||||||||||
F-25
At December 31, 2007, the distribution of unpaid subscribed capital and of subscribed callable capital is presented below: |
Unpaid Subscribed Capital | Subscribed Callable Capital | |||||||||||||||||||||||||||||||
Series “B” | Series “C” | Series “B” | Series “C” | |||||||||||||||||||||||||||||
Stockholder | Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | ||||||||||||||||||||||||
Bolivia | 622 | 3,110 | 14,400 | 72,000 | ||||||||||||||||||||||||||||
Colombia | 50,400 | 252,000 | ||||||||||||||||||||||||||||||
Ecuador | 14,400 | 72,000 | ||||||||||||||||||||||||||||||
Peru | 50,400 | 252,000 | ||||||||||||||||||||||||||||||
Venezuela | 50,400 | 252,000 | ||||||||||||||||||||||||||||||
Argentina | 2,054 | 10,270 | ||||||||||||||||||||||||||||||
Chile | 800 | 4,000 | ||||||||||||||||||||||||||||||
Dominican Republic | 2,203 | 11,015 | ||||||||||||||||||||||||||||||
Mexico | 1,600 | 8,000 | ||||||||||||||||||||||||||||||
Panama | 506 | 2,530 | ||||||||||||||||||||||||||||||
Spain | 40,000 | 200,000 | ||||||||||||||||||||||||||||||
Uruguay | 705 | 3,525 | ||||||||||||||||||||||||||||||
622 | 3,110 | 5,468 | 27,340 | 180,000 | 900,000 | 42,400 | 212,000 | |||||||||||||||||||||||||
Subscribed and paid-in capital is held as follows at December 31, 2006: |
Number of Shares | Amounts | |||||||||||||||||||||||||||
Series | Series | |||||||||||||||||||||||||||
Stockholder | Series “A” | “B” | Series “C” | Series “A” | “B” | Series “C” | Total | |||||||||||||||||||||
Bolivia | 1 | 25,055 | — | 1,200 | 125,275 | — | 126,475 | |||||||||||||||||||||
Colombia | 1 | 92,198 | — | 1,200 | 460,990 | — | 462,190 | |||||||||||||||||||||
Ecuador | 1 | 26,632 | — | 1,200 | 133,160 | — | 134,360 | |||||||||||||||||||||
Peru | 1 | 94,121 | — | 1,200 | 470,605 | — | 471,805 | |||||||||||||||||||||
Venezuela | 1 | 94,120 | — | 1,200 | 470,600 | — | 471,800 | |||||||||||||||||||||
Argentina | — | — | 4,890 | — | — | 24,450 | 24,450 | |||||||||||||||||||||
Brazil | — | — | 11,924 | — | — | 59,620 | 59,620 | |||||||||||||||||||||
Chile | — | — | 310 | — | — | 1,550 | 1,550 | |||||||||||||||||||||
Costa Rica | — | — | 2,326 | — | — | 11,630 | 11,630 | |||||||||||||||||||||
Dominican Republic | — | — | 1,101 | — | — | 5,505 | 5,505 | |||||||||||||||||||||
Jamaica | — | — | 130 | — | — | 650 | 650 | |||||||||||||||||||||
Mexico | — | — | 3,333 | — | — | 16,665 | 16,665 | |||||||||||||||||||||
Panama | — | — | 1,663 | — | — | 8,315 | 8,315 | |||||||||||||||||||||
Paraguay | — | — | 1,292 | — | — | 6,460 | 6,460 | |||||||||||||||||||||
Spain | — | — | 11,035 | — | — | 55,175 | 55,175 | |||||||||||||||||||||
Trinidad & Tobago | — | — | 147 | — | — | 735 | 735 | |||||||||||||||||||||
Uruguay | — | — | 2,385 | — | — | 11,925 | 11,925 | |||||||||||||||||||||
Commercial banks | — | 261 | — | — | 1,305 | — | 1,305 | |||||||||||||||||||||
5 | 332,387 | 40,536 | 6,000 | 1,661,935 | 202,680 | 1,870,615 | ||||||||||||||||||||||
At December 31, 2006, the distribution of unpaid subscribed capital and of subscribed callable capital is presented below: |
Unpaid Subscribed Capital | Subscribed Callable Capital | |||||||||||||||||||||||||||||||
Series “B” | Series “C” | Series “B” | Series “C” | |||||||||||||||||||||||||||||
Stockholder | Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | ||||||||||||||||||||||||
Bolivia | 1,452 | 7,260 | 14,400 | 72,000 | ||||||||||||||||||||||||||||
Colombia | 1,654 | 8,270 | 50,400 | 252,000 | ||||||||||||||||||||||||||||
Ecuador | 14,400 | 72,000 | ||||||||||||||||||||||||||||||
Peru | 50,400 | 252,000 | ||||||||||||||||||||||||||||||
Venezuela | 50,400 | 252,000 | ||||||||||||||||||||||||||||||
Argentina | 4,107 | 20,535 | ||||||||||||||||||||||||||||||
Chile | 800 | 4,000 | ||||||||||||||||||||||||||||||
Dominican Republic | 3,304 | 16,520 | ||||||||||||||||||||||||||||||
Mexico | 1,600 | 8,000 | ||||||||||||||||||||||||||||||
Panama | 506 | 2,530 | ||||||||||||||||||||||||||||||
Spain | 40,000 | 200,000 | ||||||||||||||||||||||||||||||
Uruguay | 1,410 | 7,050 | ||||||||||||||||||||||||||||||
3,106 | 15,530 | 9,327 | 46,635 | 180,000 | 900,000 | 42,400 | 212,000 | |||||||||||||||||||||||||
F-26
General Reserve | ||
The general reserve was set-up to cover possible contingencies. The stockholders decided to increase the reserve by US200,553, US$183,738 and US$145,573 during the years ended December 31, 2007, 2006 and 2005, by appropriations from net income for the years ended December 31, 2006, 2005 and 2004, respectively. | ||
Reserve Pursuant to Article No. 42 of the By-laws | ||
The Corporation’s by-laws establish that at least 10% of annual net income is to be allocated to a reserve fund until that fund amounts to 50% of the subscribed capital. Additional allocations may be approved by the stockholders. At the stockholders meetings in March 2007, 2006 and 2005, it was authorized to increase the reserve by US$32,100, US$28,500 and US$20,800, from net income for the years ended December 31, 2007, 2006 and 2005, respectively. | ||
(15) | Distributions to Stockholders’ Funds | |
The Corporation’s board distributes a portion of retained earnings to special funds, created to promote technical cooperation, sustainable human development and management of poverty relief funds. | ||
In March 2007, 2006 and 2005, the stockholders agreed to allocate US$88,000, US$71,000 and US$41,380, from retained earnings at December 31, 2006, 2005 and 2004, respectively, to the stockholders’ funds. | ||
(16) | Tax Exemptions | |
The Corporation is exempt from all taxes on income, properties and other assets. It is also exempt from liability related to the payment, withholding or collection of any tax or other levy. | ||
(17) | Derivative Instruments and Hedging Activities | |
The Corporation seeks to match the maturities of its liabilities to the maturities of its loan portfolio. The Corporation utilizes derivative financial instruments to reduce exposure to interest rate risk and foreign currency risk. The Corporation does not hold or issue derivative financial instruments for trading or speculative purposes. | ||
By using derivative financial instruments to hedge exposures to changes in interest rate and foreign exchange rates, the Corporation exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Corporation, which creates credit risk for the Corporation. When the fair value of a derivative contract is negative, the Corporation owes the counterparty and, therefore, it does not possess credit risk. The Corporation minimizes the credit risk in derivative instruments by entering into transactions with high-quality counterparties whose credit rating is “A” or higher. | ||
The market risk associated with interest rate and currency risk is managed by swapping loans and borrowings subject to fixed interest rates and denominated in foreign currency into floating interest rate instruments denominated in U.S. dollars. The Corporation enters into derivative instruments with market risk characteristics that are expected to change in a manner that will offset the economic change in value of specifically identified loans, bonds or borrowings and other obligations. Derivative contracts held by the Corporation consist of interest rate and cross-currency swaps and are designated as fair value hedges of specifically identified loans, bonds or borrowings and other obligations with fixed interest rates or non U.S. currency exposure. |
F-27
The following table presents the notional amount and fair values of interest rate swaps and cross-currency swaps and the underlying hedged items at December 31, 2007 and 2006: |
Notional amount | Fair value | |||||||||||||||
Cross-currency | Derivative | |||||||||||||||
Interest rate swap | swap | Derivative assets | liabilities | |||||||||||||
At December 31, 2007 - | ||||||||||||||||
Bonds | 2,117,000 | — | 53,527 | — | ||||||||||||
Bonds | — | 1,703,770 | 381,247 | 6,284 | ||||||||||||
Borrowings and other obligations | — | 3,923 | 369 | 213 | ||||||||||||
Commercial paper | — | 149,981 | 1,442 | 871 | ||||||||||||
Advances and short-term borrowings | — | 74,417 | — | 763 | ||||||||||||
2,117,000 | 1,932,091 | 436,585 | 8,131 | |||||||||||||
At December 31, 2006 - | ||||||||||||||||
Loans | 15,000 | — | — | 32 | ||||||||||||
Bonds | 2,200,725 | — | — | 45,902 | ||||||||||||
Bonds | — | 1,521,876 | 282,809 | 23,877 | ||||||||||||
Borrowings and other obligations | — | 11,766 | 641 | 309 | ||||||||||||
Commercial paper | — | 192,263 | 1,914 | 738 | ||||||||||||
2,215,725 | 1,725,905 | 285,364 | 70,858 | |||||||||||||
For the years ended December 31, 2007, 2006 and 2005 all of the Corporation’s derivatives which have been designated in hedging relationships were considered fair value hedges. The change in fair value of such derivative instruments and the change in fair value of hedged items attributable to risk being hedged is included in the statements of income. |
(18) | Fair Value |
The following table presents the carrying amounts and estimated fair values of the Corporation’s financial instruments at December 31, 2007 and 2006. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties: |
December 31 | ||||||||||||||||
2007 | 2006 | |||||||||||||||
Carrying amount | Estimated fair value | Carrying amount | Estimated fair value | |||||||||||||
Financial assets: | ||||||||||||||||
Cash and due from banks | 3,735 | 3,735 | 8,997 | 8,997 | ||||||||||||
Deposits with banks | 325,025 | 325,025 | 353,442 | 353,442 | ||||||||||||
Trading securities | 882,726 | 882,726 | 1,001,618 | 1,001,618 | ||||||||||||
Held-to-maturity securities | 1,099,801 | 1,099,488 | 356,128 | 356,145 | ||||||||||||
Securities purchased under resale agreements | 36,400 | 36,400 | — | — | ||||||||||||
Other investments | 109,868 | 109,868 | 210,430 | 210,430 | ||||||||||||
Loans, net | 9,332,790 | 9,337,914 | 7,848,882 | 7,853,270 | ||||||||||||
Equity investments | 74,317 | 74,317 | 93,426 | 93,426 | ||||||||||||
Interest and commissions receivable | 231,510 | 231,510 | 226,530 | 226,530 | ||||||||||||
Derivative contracts (included in other assets) | 436,585 | 436,585 | 285,364 | 285,364 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Deposits | 1,521,047 | 1,521,047 | 449,797 | 449,797 | ||||||||||||
Commercial paper | 888,246 | 888,246 | 773,354 | 773,354 | ||||||||||||
Advances and short-term borrowings | 398,931 | 398,931 | 339,256 | 339,256 | ||||||||||||
Bonds | 4,637,140 | 4,640,000 | 4,362,161 | 4,366,054 | ||||||||||||
Borrowings and other obligations | 808,487 | 807,933 | 559,135 | 558,280 | ||||||||||||
Derivative contracts (included in accrued expenses and other liabilities) | 8,131 | 8,131 | 70,858 | 70,858 | ||||||||||||
Accrued interest and commissions payable | 153,938 | 153,938 | 136,878 | 136,878 | ||||||||||||
F-28
The following methods and assumptions were used to estimate the fair value of each class of financial instruments: | |
Cash and due from banks, deposits with banks, other assets, deposits, commercial paper, advances and short-term borrowings, accrued interest and commissions, accrued expenses: The carrying amounts approximate fair value because of the short maturity of these instruments. | |
Marketable securities: The fair values of held-to-maturity securities are based on quoted market prices at the reporting date for those or similar securities. Trading securities are carried at fair value based on quoted market prices. | |
Loans: The Corporation is one of the few institutions that offer loans for development in the stockholder countries. A secondary market does not exist for the type of loans granted by the Corporation. As rates on variable rate loans and loan commitments are reset on a semiannual basis, the carrying value, adjusted for credit risk, was determined to be the best estimate of fair value. The fair value of fixed rate loans is determined using the current variable interest rate for similar loans. | |
Equity investments: The fair value of equity investments is determined based on a financial analysis of the investees. | |
Derivative assets and liabilities: Current market prices obtained from third party banks were used to estimate fair values of interest rate and foreign currency swap agreements. | |
Bonds, borrowings and other obligations: The fair value of bonds, borrowings and other obligations is determined using either broker quotes or current rates offered to the Corporation for similar debt of the same remaining maturities. | |
(19) | Commitments and Contingencies |
Commitments and contingencies include the following: |
December 31 | ||||||||
2007 | 2006 | |||||||
Credit agreements subscribed | 1,668,981 | 2,133,410 | ||||||
Lines of credit | 2,248,424 | 1,232,221 | ||||||
Letters of credit | 24,654 | 20,065 | ||||||
Guarantees | 242,888 | 544,630 | ||||||
These commitments and contingencies result from the normal course of the Corporation’s business and are related principally to loans and loan equivalents that have been approved or committed for disbursement. | ||
In the ordinary course of business the Corporation has entered into commitments to extend credit. Such financial instruments are recorded as commitments upon signing the corresponding contract and are reported in the financial statements when disbursements are made. | ||
The contracts to extend credit have fixed expiration dates and in some cases expire without making disbursements. Also based on experience, parts of the disbursements are made up to two years after the signing of the contract. Therefore, the total commitment amounts do not necessarily represent future cash requirements. | ||
In the event the credit lines are not utilized, no additional cost is incurred by the Corporation. |
F-29
Guarantees mature as follows: |
December 31 | ||||||||
2007 | 2006 | |||||||
Less than one year | 88,233 | 273,480 | ||||||
Between one and two years | — | — | ||||||
Between two and three years | — | 109,540 | ||||||
Over five years | 154,655 | 161,610 | ||||||
242,888 | 544,630 | |||||||
Guarantees result from the normal course of the Corporation’s business and usually take the form of partial guarantees to CAF’s clients, as a credit enhancement for their liabilities, as well as guarantees to third parties on behalf of the Corporation’s clients. CAF’s responsibility is usually limited to payment up to the amount of the guarantee upon default by the client. The carrying value of the guarantees at December 31, 2007 and 2006 was nil. |
F-30
(In thousands of U.S. dollars)
March 31, | December 31, | |||||||
2008 | 2007 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Cash and due from banks | 1,241 | 3,735 | ||||||
Deposits with banks | 597,425 | 325,025 | ||||||
Marketable securities | ||||||||
Trading | 1,625,944 | 882,726 | ||||||
Held-to-maturity | 696,312 | 1,099,801 | ||||||
Securities purchased under resale agreements | 26,400 | 36,400 | ||||||
Other investments | 202,615 | 109,868 | ||||||
Loans | 9,262,684 | 9,547,987 | ||||||
Less loan commissions, net of origination costs | 49,989 | 46,940 | ||||||
Less allowance for losses | 115,730 | 168,257 | ||||||
Loans, net of allowance for losses | 9,096,965 | 9,332,790 | ||||||
Equity investments | 73,531 | 74,317 | ||||||
Interest and commissions receivable | 249,977 | 231,510 | ||||||
Property and equipment | 24,074 | 23,816 | ||||||
Other assets | 744,572 | 477,199 | ||||||
Total assets | 13,339,056 | 12,597,187 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Deposits | 1,782,912 | 1,521,047 | ||||||
Commercial paper | 896,901 | 888,246 | ||||||
Advances and short-term borrowings | 301,665 | 398,931 | ||||||
Bonds | 5,138,463 | 4,637,140 | ||||||
Borrowings and other obligations | 798,571 | 808,487 | ||||||
Accrued interest and commissions payable | 152,054 | 153,938 | ||||||
Accrued expenses and other liabilities | 57,290 | 62,089 | ||||||
Total liabilities | 9,127,856 | 8,469,878 | ||||||
Subscribed and paid-in capital (authorized capital US$5,000 million) | 2,106,385 | 2,014,750 | ||||||
Additional paid-in capital | 169,053 | 234,355 | ||||||
Reserves | 1,785,754 | 1,477,405 | ||||||
Retained earnings | 150,008 | 400,799 | ||||||
Total stockholders’ equity | 4,211,200 | 4,127,309 | ||||||
Total liabilities and stockholders’ equity | 13,339,056 | 12,597,187 | ||||||
F-31
the Three-Month Periods Ended March 31, 2008 and 2007
(In thousands of U.S. dollars)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Interest income | ||||||||
Loans | 162,237 | 168,863 | ||||||
Investments and deposits with banks | 25,405 | 24,238 | ||||||
Loan commissions | 12,556 | 9,390 | ||||||
Total interest income | 200,198 | 202,491 | ||||||
Interest expense | ||||||||
Deposits | 17,393 | 5,768 | ||||||
Commercial paper | 9,897 | 11,069 | ||||||
Advances and short-term borrowings | 5,059 | 4,976 | ||||||
Bonds | 53,125 | 64,917 | ||||||
Borrowings and other obligations | 9,444 | 8,481 | ||||||
Commissions | 1,442 | 1,110 | ||||||
Total interest expense | 96,360 | 96,321 | ||||||
Net interest income | 103,838 | 106,170 | ||||||
Provision (credit) for loan losses | -54,373 | 13,000 | ||||||
Net interest income, after provision (credit) for loan losses | 158,211 | 93,170 | ||||||
Non-interest income | ||||||||
Other commissions | 1,168 | 980 | ||||||
Dividends and equity in earnings of investees | 660 | 294 | ||||||
Ineffectiveness arising from fair value hedges | 383 | 0 | ||||||
Other income | 428 | 605 | ||||||
Total non-interest income | 2,639 | 1,879 | ||||||
Non-interest expenses | ||||||||
Administrative expenses | 10,782 | 11,288 | ||||||
Ineffectiveness arising from fair value hedges | 0 | 9,572 | ||||||
Other expenses | 60 | 77 | ||||||
Total non-interest expenses | 10,842 | 20,937 | ||||||
Net income | 150,008 | 74,112 |
F-32
the Three-Month Periods Ended March 31, 2008 and 2007
(In thousands of U.S. dollars)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Cash flows from operating activities | ||||||||
Net income | 150,008 | 74,112 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||||||||
Net gain of trading securities | 61 | -59 | ||||||
Amortization of loan commissions, net of origination costs | -3,375 | -5,875 | ||||||
Provision (credit) for loan losses | -54,373 | 13,000 | ||||||
Depreciation of property and equipment | 718 | 901 | ||||||
Amortization of deferred charges | 434 | 739 | ||||||
Provision for employees’ severance indemnities and benefits | 1,413 | 1,251 | ||||||
Provisions for employees’ savings plan | 354 | 370 | ||||||
Net changes in operating assets and liabilities | ||||||||
Severance indemnities paid or advanced | -722 | -516 | ||||||
Employees’ savings plan paid or advanced | 10 | -220 | ||||||
Trading securities, net | -743,279 | 148,126 | ||||||
Interest and commissions receivable | -18,467 | -35,003 | ||||||
Other assets | 1,938 | -790 | ||||||
Accrued interest and commissions payable | -1,884 | 9,023 | ||||||
Accrued expenses and other liabilities | 1,308 | -7,442 | ||||||
Total adjustments and net changes in operating assets and liabilities | -815,864 | 123,505 | ||||||
Net cash provided by (used in) operating activities | -665,856 | 197,617 | ||||||
Cash flows from investing activities | ||||||||
Purchases of held-to-maturity securities | -3,562,906 | -368,582 | ||||||
Maturities of held-to-maturity securities | 3,966,395 | 398,858 | ||||||
Securities purchased under resale agreements | 10,000 | -35,000 | ||||||
Purchases of other investments | -221,867 | -127,803 | ||||||
Maturities of other investments | 129,120 | 111,001 | ||||||
Loan origination and principal collections, net | 294,630 | -470,646 | ||||||
Equity investments | 786 | 1,769 | ||||||
Purchases of property and equipment | -976 | -241 | ||||||
Net cash provided by investing activities | 615,182 | -490,644 | ||||||
Carried forward | -50,674 | -293,027 |
F-33
the Three-Month Periods Ended March 31, 2008 and 2007
(In thousands of U.S. dollars)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Brought forward | -50,674 | -293,027 | ||||||
Cash flows from financing activities | ||||||||
Net increase (decrease) in deposits | 261,865 | -27,211 | ||||||
Net increase (decrease) in commercial paper | -2,133 | 143,215 | ||||||
Net increase in advances and short-term borrowings | 150,643 | 406,057 | ||||||
Repayment of advances and short-term borrowings | -259,309 | -183,035 | ||||||
Proceeds from issuance of bonds | 250,000 | 359,302 | ||||||
Repayment of bonds | -4,633 | -322,817 | ||||||
Proceeds from borrowings and other obligations | 0 | 90,000 | ||||||
Repayment of borrowings and other obligations | -9,736 | -33,602 | ||||||
Allocations to stockholders’ funds | -92,450 | -88,000 | ||||||
Proceeds from issuance of shares | 26,333 | 0 | ||||||
Net cash provided by (used in) financing activities | 320,580 | 343,909 | ||||||
Net decrease in cash and cash equivalents | 269,906 | 50,882 | ||||||
Cash and cash equivalents at beginning of period | 328,760 | 362,439 | ||||||
Cash and cash equivalents at end of period | 598,666 | 413,321 | ||||||
Consisting of: | ||||||||
Cash and due from banks | 1,241 | 2,621 | ||||||
Deposits with banks | 597,425 | 410,700 | ||||||
598,666 | 413,321 | |||||||
Supplemental disclosure | ||||||||
Interest paid during the period | 93,127 | 79,378 | ||||||
Non-cash financing activities | ||||||||
Change in other assets due to fair value hedging relationships | 270,128 | 29,514 | ||||||
Change in other liabilities due to fair value hedging relationships | -7,162 | -11,977 | ||||||
F-34
March 31, 2008 and 2007
March 31, | ||||||||
2008 | 2007 | |||||||
Credit agreements subscribed | 2,602,927 | 2,262,820 | ||||||
Lines of credit for foreign trade | 2,537,392 | 1,543,305 | ||||||
Letters of credit for foreign trade | 20,215 | 17,190 | ||||||
Guarantees | 154,655 | 551,175 | ||||||
F-35
March 31, 2008 and 2007
March 31, | ||||||||
2008 | 2007 | |||||||
2007 | 0 | 280,248 | ||||||
2009 | 0 | 109,540 | ||||||
2018 | 126,655 | 133,387 | ||||||
2025 | 28,000 | 28,000 | ||||||
154,655 | 551,175 | |||||||
F-36
Principal Amount | ||||||||||||||||||||
Date of | Outstanding at | |||||||||||||||||||
Interest | Agreement of | Year of Final | March 31, 2008 | |||||||||||||||||
Title | Rate | Issue | Maturity | Currency | (in millions) | |||||||||||||||
7.79% Yankee Bonds | Fixed | 1997 | 2017 | US | 50.0 | |||||||||||||||
7 3/8% Yankee Global Bonds | Fixed | 2001 | 2011 | US | 300.0 | |||||||||||||||
6 7/8% Yankee Bonds | Fixed | 2002 | 2012 | US | 350.0 | |||||||||||||||
6 3/8% Euro Bonds | Fixed | 2002 | 2009 | EUR (1) | 250.9 | |||||||||||||||
7 5/8% Euro GBP Bonds | Fixed | 2002 | 2010 | GBP (2) | 40.7 | |||||||||||||||
7 7/8% Yankee Bonds | Fixed | 2002 | 2022 | US | 85.0 | |||||||||||||||
6 7/8% Yankee Bonds | Fixed | 2003 | 2012 | US | 200.0 | |||||||||||||||
6 3/8% Euro Bonds | Fixed | 2003 | 2009 | EUR | 100.0 | |||||||||||||||
5 1/5% Yankee Bonds | Fixed | 2003 | 2013 | US | 500.0 | |||||||||||||||
Extendible Notes | Floating | 2004 | 2008 | US | 100.0 | |||||||||||||||
5.8175% Euro Bonds | Fixed | 2004 | 2014 | US | 29.0 | |||||||||||||||
Colombian Peso Bonds | Floating | 2004 | 2010 | COP (3) | 272,220.0 | |||||||||||||||
0.58% Samurai Bonds | Fixed | 2005 | 2008 | JPY (4) | 15,000.0 | |||||||||||||||
Euro Dollar Bonds | Floating | 2005 | 2009 | USD | 150.0 | |||||||||||||||
1.31% Samurai Bonds | Fixed | 2005 | 2012 | JPY | 5,000.0 | |||||||||||||||
5 1/8% Yankee Bonds | Fixed | 2005 | 2015 | USD | 250.0 | |||||||||||||||
7.53125% Peruvian Soles Bonds | Fixed | 2006 | 2018 | PEN (5) | 248.4 | |||||||||||||||
Venezuelan Bolivares Bonds | Floating | 2006 | 2011 | VEB (6) | 215,000.0 | |||||||||||||||
5.75% Yankee Bonds | Fixed | 2006 | 2017 | USD | 250.0 | |||||||||||||||
Euro Dollar Bonds | Floating | 2006 | 2011 | EUR | 300.0 | |||||||||||||||
5.75% Yankee Bonds | Fixed | 2007 | 2017 | USD | 250.0 | |||||||||||||||
Venezuelan Bolivares Bonds | Floating | 2007 | 2012 | VEB | 107,500.0 | |||||||||||||||
Venezuelan Bolivares Bonds | Floating | 2007 | 2012 | VEB | 127,500.0 | |||||||||||||||
1.67% Samurai Bonds | Fixed | 2007 | 2010 | JPY | 20,000.0 | |||||||||||||||
2.32% Samurai Bonds | Fixed | 2007 | 2014 | JPY | 10,000.0 | |||||||||||||||
1.47% Samurai Bonds | Fixed | 2007 | 2010 | JPY | 5,000.0 | |||||||||||||||
Mexican Pesos Bonds | Floating | 2007 | 2012 | MXN (7) | 750.0 | |||||||||||||||
5.75% Yankee Bonds | Fixed | 2008 | 2017 | USD | 250.0 |
(1) | Euro. | |
(2) | Sterling Pounds. | |
(3) | Colombian Pesos. | |
(4) | Yen. | |
(5) | Peruvian Soles. | |
(6) | Venezuelan Bolivares. | |
(7) | Mexican Pesos. |
S-1
COMMERCIAL PAPER AND REPURCHASE AGREEMENTS
Principal Amount | ||||||||||||||||||||
Date of | Year of | Outstanding at | ||||||||||||||||||
Interest | Agreement of | Final | March 31, 2008 | |||||||||||||||||
Title | Rate | Issue | Maturity | Currency | (in US$ millions) | |||||||||||||||
Medium and Long-term Loans | Various | Various | Various | Various | 798.6 | |||||||||||||||
Advances and Short-term Loans | Floating | Various | Various | US | 301.7 | |||||||||||||||
Deposits | Floating | Various | Various | US | 1,782.9 | |||||||||||||||
Commercial Paper | Floating | Various | Various | Various | 896.9 |
Principal Amount | ||||||||||||||||||||
Outstanding at | ||||||||||||||||||||
Date of Agreement of | Year of Final | March 31, 2008 | ||||||||||||||||||
Title | Interest Rate | Issue | Maturity | Currency | (in millions) | |||||||||||||||
IADB | Variable | Various | Various | US | 46.3 | |||||||||||||||
ACDI (Canada) | 0 | % | 3/29/1974 | 9/30/2023 | CAN (1) | 2.0 | ||||||||||||||
KfW (Germany) | Variable | 3/22/2003 | 12/28/2012 | US | 71.4 | |||||||||||||||
AID (U.S.A.) | 3 | % | 10/10/1972 | 11/27/2014 | US | 3.1 | ||||||||||||||
Nordic Investment Bank | Variable | Various | 7/17/2021 | US | 38.0 | |||||||||||||||
European Investment Bank | Various | 10/16/1997 | 12/15/2013 | US | 18.6 | |||||||||||||||
China Development Bank — CDB | Variable | 11/20/2007 | 11/29/2019 | US | 150.0 | |||||||||||||||
Instituto de Crédito Oficial — ICO | Variable | 5/31/2004 | 9/15/2014 | US | 14.0 |
(1) | Canadian dollars. |
S-2
Principal Amount | ||||||||
Date of | Year of Final | Outstanding at | ||||||
Borrower | Issue | Maturity | March 31, 2008 | |||||
(in U.S. $ millions) | ||||||||
Republic of Bolivia | 10/3/2001 | 4/3/2018 | 44.9 | |||||
Republic of Bolivia | 5/22/2004 | 5/22/2018 | 81.8 | |||||
Republic of Peru | 4/17/2006 | 2/13/2025 | 28.0 |
S-3
![(CAF LOGO)](https://capedge.com/proxy/S-B/0000950133-08-002323/w61590w6159000.gif)
Securities and Exchange Commission Registration Fee | $ | 9,825 | ||
Fiscal and Paying Agent Fees | $ | 10,000 | ||
Fees of rating agencies | $ | 400,000 | ||
Legal fees | $ | 150,000 | ||
Printing of registration statement, prospectus and other documents | $ | 75,000 | ||
Blue Sky expenses (including counsel fees) | $ | 15,000 | ||
Other | $ | 25,000 | ||
Total | $ | 684,825 | ||
II-1
II-2
(1) | The facing sheet. | ||
(2) | The prospectus. | ||
(3) | Part II consisting of pages II-1 to II-6. | ||
(4) | The following exhibits: |
1.1 | Form of Underwriting Agreement for Debt Securities (incorporated by reference to our registration statement No. 333-11970) | ||
1.2 | Form of Underwriting Agreement Pertaining to Guarantees(1) | ||
4.1 | Form of Fiscal Agency Agreement, including form of certain Debt Securities (incorporated by reference to our registration statement No. 333-11970) | ||
4.2 | Form of Guarantee Agreement, including the form of Guarantee(1) | ||
5.1 | Opinion and consent of Ricardo Sigwald, General Legal Counsel to CAF | ||
8.1 | Opinion and consent of Sullivan & Cromwell LLP | ||
23.1 | Consent of KPMG | ||
23.2 | Consent of CAF’s General Legal Counsel (included in Exhibit 5.1) | ||
23.3 | Consent of Sullivan & Cromwell LLP (included in Exhibit 8.1) | ||
99.1 | List of names and addresses of the underwriters for Debt Securities (incorporated by reference to Exhibit (v) to our registration statement No. 333-88404) | ||
99.2 | List of names and addresses of the underwriters for Guarantees(1) |
(1) | To be filed by post-effective amendment. |
II-3
CORPORACIÓN ANDINA DE FOMENTO | ||||
By: | /s/ Hugo Sarmiento Kohlenberger | |||
Name: | Hugo Sarmiento Kohlenberger | |||
Title: | Acting Executive President |
II-4
PUGLISI & ASSOCIATES | ||||
By: | /s/ Donald J. Puglisi | |||
Name: | Donald J. Puglisi | |||
Title: | Managing Director |
II-5
Sequentially | ||||
Exhibit | Numbered | |||
Number | Exhibits | Page | ||
1.1 | Form of Underwriting Agreement for Debt Securities (incorporated by reference to our registration statement No. 333-11970) | |||
1.2 | Form of Underwriting Agreement pertaining to Guarantees | * | ||
4.1 | Form of Fiscal Agency Agreement, including form of certain Debt Securities (incorporated by reference to our registration statement No. 333-11970) | |||
4.2 | Form of Guarantee Agreement, including the form of Guarantee | * | ||
5.1 | Opinion and consent of Ricardo Sigwald, General Legal Counsel to CAF | |||
8.1 | Opinion and consent of Sullivan & Cromwell LLP | |||
23.1 | Consent of KPMG | |||
23.2 | Consent of CAF’s General Legal Counsel | ** | ||
23.3 | Consent of Sullivan & Cromwell LLP | *** | ||
99.1 | List of names and addresses of the underwriters for Debt Securities (incorporated by reference to Exhibit (v) to our registration statement No. 333-88404) | |||
99.2 | List of names and addresses of the underwriters for Guarantees | * |
* | To be filed by post-effective amendment. | |
** | Included in Exhibit 5.1 | |
*** | Included in Exhibit 8.1 |
II-6