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As filed with the Securities and Exchange Commission on , 2013
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT
UNDER SCHEDULE B
OF
THE SECURITIES ACT OF 1933
Corporación Andina de Fomento
(Name of Registrant)
Name and Address of Authorized Agent in the United States:
Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19711
Copies to:
Robert S. Risoleo, Esq. Paul J. McElroy, Esq. Sullivan & Cromwell LLP 1701 Pennsylvania Avenue, N.W. Washington, D.C. 20006 United States of America | Hugo Sarmiento Kohlenberger Chief Financial Officer Corporación Andina de Fomento Torre CAF Avenida Luis Roche, Altamira Caracas, Venezuela |
Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective.
The securities being registered pursuant to this Registration Statement are to be offered on a delayed or continuous basis pursuant to Release Nos. 33-6240 and 33-6424 under the Securities Act of 1933, as amended.
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to be Registered | Proposed Maximum Aggregate Offering Price(1) | Amount of Registration Fee(2) | ||
Debt Securities | (1) | — | ||
Guarantees | (1) | — | ||
Total | $2,000,000,000(3) | $272,800 | ||
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(1) | The securities registered hereunder and under the additional registration statements noted in note (2) below shall not have an aggregate offering price which exceeds $2,000,000,000 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 (i) the remaining unsold $500,000,000 principal amount of securities registered on the Registrant’s previously filed Registration Statement under Schedule B (File No. 333-180499), originally filed on March 30, 2012. The Registrant paid filing fees of $114,600 with respect to those previously registered securities. |
(3) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
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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 to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED , 2013
$2,500,000,000
CORPORACIÓN ANDINADE FOMENTO
Debt Securities
Guarantees
We may from time to time offer up to $2,500,000,000 (or its equivalent in other currencies) aggregate principal amount of the securities described in this prospectus. The securities may be debentures, notes, guarantees or other unsecured evidences of indebtedness. In the case of debt securities sold at an original issue discount, we may issue a higher principal amount up to an initial public offering price of $2,500,000,000 (or its equivalent).
We may offer the securities from time to time as separate issues. In connection with any offering, we will provide a prospectus supplement describing the amounts, prices, maturities, rates and other terms of the securities we are offering in each issue.
We may sell the securities directly to or through underwriters, and may also sell securities directly to other purchasers or through agents.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Prospectus dated , 2013
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S-1 |
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, which we refer to as the Securities Act, using a “shelf” registration process. Under the shelf process, we may from time to time sell any combination of the securities described in this prospectus in one or more offerings up to a total dollar amount of $2,500,000,000 or the equivalent of this amount in foreign currencies or foreign currency units.
This prospectus provides you with a general description of our business and of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of the securities in that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement before purchasing our securities. If the information in any prospectus supplement differs from the information in this prospectus or in the registration statement, you should rely on the information in the prospectus supplement.
The registration statement, any post-effective amendment to the registration statement and their various exhibits contain additional information about Corporación Andina de Fomento (“CAF”), the securities we may issue and other matters. All of these documents may be inspected at the offices of the Securities and Exchange Commission.
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You should rely only on the information in this prospectus or in other documents to which we have referred you in making your investment decision. We have not authorized anyone to provide you with information that is different. This prospectus may only be used where it is legal to sell these securities. The information in this prospectus may only be accurate on the date specified on the cover of this document.
Except as otherwise specified, all amounts in this prospectus are expressed in United States dollars (“dollars,” “$,” “U.S.$” or “U.S. dollars”).
Certain amounts that appear in this prospectus may not sum because of rounding adjustments.
This prospectus may contain forward-looking statements. Statements that are not historical facts are statements about our beliefs and expectations and may include forward-looking statements. These statements are identified by words such as “believe”, “expect”, “anticipate”, “should” and words of similar meaning. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual financial and other results may differ materially from the results discussed in the forward-looking statements. Therefore, you should not place undue reliance on them. Factors that might cause such a difference include, but are not limited to, those discussed in this prospectus, such as the effects of economic or political turmoil in one or more of our shareholder countries.
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CAF was established in 1968 pursuant to the Agreement establishing the Corporación Andina de Fomento (the “Constitutive Agreement”), an international treaty, and seeks to foster and promote economic development within Latin America and the Caribbean. CAF is a multilateral financial institution, the principal shareholders of which are the current contracting parties to the Constitutive Agreement — the Plurinational State of Bolivia, the Republics of Argentina, Colombia, Ecuador, Panama, Paraguay and Peru, the Federative Republic of Brazil, the Oriental Republic of Uruguay and the Bolivarian Republic of Venezuela, each of which we refer to in this prospectus as a full member shareholder country and which we refer to collectively in this prospectus as the full member shareholder countries. At December 31, 2012, the full member shareholder countries of CAF collectively accounted for 91.4% of the nominal value of our paid-in capital. The other shareholder countries of CAF are Chile, Costa Rica, Dominican Republic, Jamaica, Mexico, Portugal, Spain and Trinidad and Tobago1, each of which we refer to in this prospectus as an associated shareholder country and which we refer to collectively in this prospectus as the associated shareholder countries. At December 31, 2012, our associated shareholder countries collectively accounted for 8.5% of the nominal value of our paid-in capital. Our shares are also held by 14 financial institutions based in the full member shareholder countries, which collectively accounted for 0.1% of the nominal value of the paid-in capital at December 31, 2012. We refer to our full member shareholder countries and our associated shareholder countries collectively as our shareholder countries. CAF commenced operations in 1970. Our headquarters are in Caracas, Venezuela, and we have regional offices in Asuncion, Bogota, Brasilia, Buenos Aires, La Paz, Lima, Panama City, Montevideo, Madrid and Quito.
We offer financial and related services to the governments of, and public and private institutions, corporations and joint ventures operating in, our shareholder countries. Primarily, we provide short, medium and long-term loans and guarantees; to a lesser extent, we also participate as a limited equity investor in corporations and investment funds, and provide technical and financial assistance, as well as administrative services for certain regional funds.
The Constitutive Agreement generally delegates to our Board of Directors the power to establish and direct our financial, credit and economic policies. Our Board of Directors has adopted a formal statement of our financial and operational policies, the (Políticas de Gestión). These operational policies provide our management with guidance as to significant financial and operational issues, and they may not be amended by the Board of Directors in any manner inconsistent with the Constitutive Agreement. In 1996, the Constitutive Agreement was amended to include and further increase certain lending and borrowing limitations previously set forth in these operational policies. See “Operations of CAF — Credit Policies”.
We raise funds for operations both within and outside our shareholder countries. Our strategy with respect to funding, to the extent possible under prevailing market conditions, is to match the maturities of our liabilities to the maturities of our loan portfolio.
Our objective is to support sustainable development and economic integration within Latin America and the Caribbean by helping our shareholder countries make their economies diversified, competitive and more responsive to social needs.
As an international treaty organization, we are a legal entity under public international law. We have our own legal personality, which permits us to enter into contracts, acquire and dispose of property and take legal action. The Constitutive Agreement has been ratified by the legislature in each of the full member shareholder countries. We have been granted the following immunities and privileges in each full member shareholder country:
(1) | immunity from expropriation, search, requisition, confiscation, seizure, sequestration, attachment, retention or any other form of forceful seizure by reason of executive or administrative action by any of the full member shareholder countries and immunity from enforcement of judicial proceedings by any party prior to final judgment; |
1 In April 2012 Trinidad and Tobago signed an agreement to become a full member country, subject to the satisfaction of certain conditions.
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(2) | free convertibility and transferability of our assets; |
(3) | exemption from all taxes and tariffs on income, properties or assets, and from any liability involving payment, withholding or collection of any taxes; and |
(4) | exemption from any restrictions, regulations, controls or moratoria with respect to our property or assets. |
In addition, we have entered into agreements with each of our associated shareholder countries, except Portugal (ratification by Portugal is pending as of the date hereof). Pursuant to these agreements, each country has agreed to extend to us, with respect to our activities in and concerning that country, immunities and privileges similar to those we have been granted in the full member shareholder countries.
The governments of some of CAF’s shareholder countries have historically taken actions, such as nationalizations and exchange controls, that would be expected to adversely affect ordinary commercial lenders. In light of the immunities and privileges discussed above, we have not been adversely affected by these actions.
Unless otherwise specified in the accompanying prospectus supplement, we will use the net proceeds of the sale of the securities to fund our lending operations.
CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our capitalization and indebtedness at March 31, 2013 and does not give effect to any transaction since that date.
At March 31, 2013 | ||||
(in U.S.$ millions) | ||||
Short-term debt(1) | $ | 7,905.5 | ||
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Long-term debt (maturities over one year) | $ | 10,319.7 | ||
Stockholders’ Equity | ||||
Capital | ||||
Subscribed capital, paid-in and un-paid (authorized capital $10.0 billion)(2) | 4,821.4 | |||
Less: Un-paid capital | (1,152.8 | ) | ||
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Paid-in capital | 3,668.6 | |||
Additional paid-in capital | 841.2 | |||
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Total Capital | 4,509.8 | |||
Reserves | ||||
Mandatory reserve | 430,2 | |||
General reserve | 1,895.6 | |||
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Total reserves | 2,325.8 | |||
Retained earnings | 25.5 | |||
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Total shareholders’ equity | 6,861.1 | |||
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Total long-term debt and stockholders’ equity | $ | 17,180.8 | ||
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(1) | Includes deposits, commercial paper, short-term borrowings, the current portion of bonds, borrowings and other obligations, accrued interest payable, commissions payable and the current portion of derivative instrument liabilities. |
(2) | In addition to subscribed capital shown in the table, CAF’s subscribed capital included callable capital of $1.5 billion at March 31, 2013. |
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General
As of March 31, 2013:
CAF’s authorized capital is $10.0 billion, of which $6.5 billion will be paid-in capital and $3.5 billion will be callable capital.
Our shares are divided into Series “A” shares, Series “B” shares and Series “C” shares.
Series “A” shares may be owned only by the full member shareholder countries. Each full member shareholder country owns one Series “A” share, which is held by the government, either directly or through a government-designated social or public purpose institution. Each of the full member shareholder countries owning a Series “A” share is entitled to elect one Director and one Alternate Director to our Board of Directors.
Series “B” shares are currently owned by the full member shareholder countries, and are held by the governments either directly or through designated governmental entities, except for certain Series “B” shares currently constituting 0.1% of our outstanding shares, which are owned by 14 private sector financial institutions in the full member shareholder countries at December 31, 2012. We offered and sold Series “B” shares to private sector financial institutions in 1989 in order to obtain the benefit of their views in the deliberations of our Board of Directors. As owners of Series “B” shares, the full member shareholder countries collectively are entitled to elect five additional Directors and five Alternate Directors through cumulative voting, and the 14 private sector financial institutions collectively are entitled to elect one Director and one Alternate Director.
Series “C” shares are currently owned by eight associated shareholder countries: Chile, Costa Rica, Dominican Republic, Jamaica, Mexico, Portugal, Spain and Trinidad and Tobago. We make available Series “C” shares for subscription by countries which are not full member shareholder countries in order to strengthen links between these countries and the full member shareholder countries. Ownership of our Series “C” shares by these countries makes entities in these countries that deal with entities in full member shareholder countries eligible to receive loans from us with respect to these dealings. Holders of Series “C” shares collectively are entitled to elect two Directors and two Alternate Directors.
Under the Constitutive Agreement, Series “A” shares may be held by or transferred only to governments or government-designated social or public purpose institutions. Series “B” shares also may be held by or transferred to such entities and, in addition, may be held by or transferred to private entities or individuals in the full member shareholder countries, except that no more than 49% of the Series “B” shares within any country may be held by private entities or individuals. Series “C” shares may be held by or transferred to public or private entities or individuals outside the full member shareholder countries. Unless a shareholder country withdraws, Series “A” and Series “B” shares may only be transferred within such country.
An amendment to the Constitutive Agreement became effective on July 9, 2008, which (i) allows, under certain circumstances, Latin American and Caribbean countries, including those that are currently associated shareholder countries, to own Series “A” shares and become full member shareholder countries, and (ii) expands CAF’s formal purpose to include supporting sustainable development and economic integration within all of Latin America and the Caribbean, as opposed to within only the Andean region. Consequently, on March 17, 2009, CAF’s Extraordinary Shareholder’s Meeting approved the terms and conditions precedent by which Argentina, Brazil, Panama, Paraguay and Uruguay could become contracting parties to the Constitutive Agreement, could become full member shareholder countries and may own Series “A” shares. As of the date of this prospectus, Argentina, Brazil, Panama, Paraguay and Uruguay have ceased to be Series “C” shareholder countries, have adhered to the Constitutive Agreement and now possess Series “A” shares as full member shareholder countries.
Paid-in Capital and Un-paid Capital
At December 31, 2012, CAF’s subscribed paid-in and un-paid capital was $4.7 billion, of which $3.6 billion was paid-in capital and $1.1 billion was un-paid capital, which is receivable in installments according to the agreements subscribed with the shareholder countries. Over the years, we have had several increases of subscribed capital.
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Since 1990, capital contributions to CAF have included a premium (valor patrimonial) paid on each share purchased. This premium is in addition to the nominal $5,000 per share value established by CAF’s by-laws. The premium is determined at the beginning of each subscription and applies to all payments under that subscription.
A list of selected capital contributions follows:
Argentina
In 2007, Argentina entered into an agreement to subscribe to an additional $543.0 million in Series “C” shares, of which it paid $315.0 million in 2009, $105.0 million in 2010 and $123.0 million in 2011.
In 2009, Argentina subscribed to an additional $190.0 million in Series “C” shares, to be paid in seven installments, of which it paid $10.0 million in 2011 and $15.0 million in 2012.
In 2010, Argentina subscribed to $126.0 million in callable capital.
In February 2011, upon completion of all requirements to become a full member shareholder country, Argentina acquired a $1.2 million Series “A” share and exchanged all of its Series “C” ordinary and callable capital shares for Series “B” shares equivalents.
In March 2012, Argentina subscribed to an additional $228.6 million in Series “B” shares, to be paid in four installments beginning in 2013.
Bolivia
In 2009, Bolivia subscribed to an additional $105.0 million in Series “B” shares, to be paid in eight installments, of which it paid $5.0 million in 2010, $5.0 million in 2011 and $10.0 million in 2012.
In January 2012, Bolivia subscribed to an additional $91.5 million in Series “B” shares, to be paid in four installments beginning in 2013.
Brazil
In 2007, Brazil entered into an agreement to subscribe to an additional $467.0 million in Series “C” shares, which was paid in full in 2013.
In 2009, Brazil subscribed to an additional $190.0 million in Series “C” shares to be paid in seven installments, of which it paid $25.1 million in 2013.
In 2009, Brazil subscribed to $126.0 million in callable capital.
In 2010, upon completion of all requirements to become a full member shareholder country, Brazil acquired a $1.2 million Series “A” share and exchanged all of its Series “C” ordinary and callable capital shares for Series “B” shares equivalents.
In September 2012, Brazil subscribed to an additional $228.6 million in Series “B” shares, to be paid in four installments beginning in 2013.
Chile
In 2007, the Republic of Chile subscribed to an additional $50.0 million in Series “C” shares, which was paid in full in the same year.
Colombia
In 2009, Colombia subscribed to an additional $20.0 million in Series “B” shares, which was paid in full in 2010.
In 2010, Colombia subscribed to an additional $150 million in Series “B” shares to be paid in five installments of which it paid $2.0 million in 2010, $18.0 million in 2011 and $30.0 million in 2012.
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In June 2012, Colombia subscribed to an additional $210 million in Series “B” shares to be paid in three installments beginning in 2015.
In August 2012, Colombia subscribed to an additional $228.6 million in Series “B” shares, to be paid in four installments beginning in 2013.
Ecuador
In 2009, Ecuador subscribed to an additional $105.0 million in Series “B” shares to be paid in eight installments, of which it paid $5.0 million in 2010, $5.0 million in 2011 and $10.0 million in 2012.
In March 2012, Ecuador subscribed to an additional $91.5 million in Series “B” shares, to be paid in four installments beginning in 2013.
Mexico
In June 2012, Mexico entered into an agreement to subscribe to an additional $100.0 million in Series “C” shares of CAF, which was paid in full the same month.
Panama
In 2008, Panama entered into an agreement to subscribe to an additional $170.0 million in Series “C” shares to be paid in five annual installments beginning in 2009. As of the date of this prospectus, Panama has paid $140.0 million, with the balance of one installment to be paid in 2013.
In 2009, Panama subscribed to an additional $55.0 million in Series “C” shares to be paid in seven installments, of which it paid $3.0 million in 2011 and $5.0 million in 2012.
In 2010, Panama subscribed to $36.0 million in callable capital.
In 2010, upon completion of all requirements to become a full member shareholder country, Panama acquired a $1.2 million Series “A” share and exchanged all of its Series “C” ordinary and callable capital shares for Series “B” shares equivalents.
In February 2012, Panama subscribed to an additional $91.5 million in Series “B” shares, to be paid in five installments beginning in 2013.
Paraguay
In 2008, the Republic of Paraguay entered into an agreement to subscribe to an additional $189.0 million in Series “C” shares. As of the date of this prospectus, Paraguay has paid $100.0 million, with the balance to be paid in two annual installments ending in 2014.
In 2009, Paraguay subscribed to an additional $81.0 million in Series “C” shares to be paid in seven installments, of which it paid $3.0 million in 2011 and $5.0 million in 2012.
In December 2011, upon completion of all requirements to become a full member shareholder country, Paraguay acquired a $1.2 million Series “A” share and exchanged all of its Series “C” ordinary and callable capital shares for Series “B” shares equivalents.
In May 2012, Paraguay subscribed to an additional $91.5 million in Series “B” shares, to be paid in five installments beginning in 2013.
Peru
In 2009, Peru subscribed to an additional $380.0 million in Series “B” shares to be paid in eight installments. As of the date of this prospectus, Peru has paid $90 million, with the balance to be paid in six annual installments ending in 2017.
In March 2012, Peru subscribed to an additional $228.6 million in Series “B” shares, to be paid in four installments beginning in 2013.
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Portugal
In 2009, the Republic of Portugal subscribed to EUR 15.0 million in Series “C” shares to be paid in four equal installments and EUR 60.0 million in callable capital. As of the date of this prospectus, Portugal has paid EUR 11.3 million with the balance to be paid in 2013.
Spain
In 2010, Spain subscribed to an additional $327.0 million of paid-in capital to be paid in five installments ending in 2014. The first three payments were received for a total aggregate amount of $196.2 million.
Trinidad and Tobago
In 2009, Trinidad and Tobago entered into an agreement to subscribe to Series “C” shares for a total capital contribution of $6.0 million, of which it paid $2.0 million in 2009 and $2.0 million in 2010, with the balance to be paid in 2013.
In April 2012, Trinidad and Tobago entered into an agreement to subscribe to an additional $323.4 million in Series “C” shares, to be paid in three annual installments, of which it paid $107.8 million in 2012. Additionally, Trinidad and Tobago has formally expressed its intention to become a contracting party to the Constitutive Agreement. Subject to the satisfaction of certain conditions precedent, the subscription agreement contemplates the issuance of one Series “A” share to Trinidad and Tobago, as well as the exchange of Series “C” shares for Series “B” shares.
Uruguay
In 2007, Uruguay entered into an agreement to subscribe to an additional $137.0 million in Series “C” shares, of which it paid $81.0 million in 2009, $27.0 million in 2010 and the balance of $29.0 million in 2011
In 2009, Uruguay subscribed to an additional $55.0 million in Series “C” shares to be paid in seven annual installments ending in 2017; of which it paid $3.0 million in 2011 and $5.0 million in 2012.
In 2009, Uruguay subscribed to $36.0 million in callable capital.
In 2010, upon completion of all requirements to become a full member shareholder country, Uruguay acquired a $1.2 million Series “A” share and exchanged all of its Series “C” ordinary and callable capital shares for Series “B” shares equivalents.
In February 2012, Uruguay subscribed to an additional $91.5 million in Series “B” shares, to be paid in four installments beginning in 2013,
Venezuela
In 2009, Venezuela subscribed to an additional $380.0 million in Series “B” shares to be paid in eight installments, of which it has paid $70.0 million as of the date of this prospectus.
In August 2012, Venezuela subscribed to an additional $228.6 million in Series “B” shares, to be paid in four installments beginning in 2013.
As of the date of this prospectus, all shareholder countries were current in their capital payments, with the exception of Trinidad and Tobago, which has pending balance of $1.0 million, because of operational factors.
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The following table sets out the nominal value of our subscribed paid-in capital and un-paid capital as of December 31, 2012:
Shareholders | Paid-in Capital | Un-paid Capital | ||||||
(in U.S.$ thousands) | ||||||||
Series “A” Shares: | ||||||||
Argentina | $ | 1,200 | $ | — | ||||
Bolivia | 1,200 | — | ||||||
Brazil | 1,200 | — | ||||||
Colombia | 1,200 | — | ||||||
Ecuador | 1,200 | — | ||||||
Panama | 1,200 | — | ||||||
Paraguay | 1,200 | — | ||||||
Peru | 1,200 | — | ||||||
Uruguay | 1,200 | — | ||||||
Venezuela | 1,200 | — | ||||||
Series “B” Shares: | ||||||||
Argentina | 317,615 | 58,100 | ||||||
Bolivia | 194,935 | 62,130 | ||||||
Brazil | 291,860 | 147,430 | ||||||
Colombia | 690,940 | 189,640 | ||||||
Ecuador | 196,455 | 62,130 | ||||||
Panama | 74,875 | 59,355 | ||||||
Paraguay | 62,235 | 37,395 | ||||||
Peru | 700,150 | 102,120 | ||||||
Uruguay | 91,645 | 48,750 | ||||||
Venezuela | 693,105 | 189,640 | ||||||
Private sector financial institutions | 2,025 | 90 | ||||||
Series “C” Shares: | ||||||||
Chile | 27,705 | — | ||||||
Costa Rica | 16,455 | — | ||||||
Dominican Republic | 29,190 | — | ||||||
Jamaica | 910 | — | ||||||
Mexico | 58,785 | — | ||||||
Portugal | 5,545 | 1,730 | ||||||
Spain | 129,615 | 69,080 | ||||||
Trinidad and Tobago | 40,670 | 76,615 | ||||||
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Total | $ | 3,636,715 | $ | 1,104,205 | ||||
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Reserves
Article 42 of the Constitutive Agreement requires that at least 10% of our net income in each year be allocated to a mandatory reserve until that reserve amounts to 50% of subscribed capital. The mandatory reserve can be used only to offset losses. We also maintain a general reserve to cover contingent events and as a source of funding of last resort in the event of temporary illiquidity or when funding in the international markets is not available or is impractical. The general reserve is invested in short-term securities and certificates of deposit that are easily convertible into cash. The mandatory reserve is an accounting reserve.
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At December 31, 2012, our reserves totaled $2.3 billion. At such date, the mandatory reserve amounted to $414.1 million, or 8.7% of subscribed paid-in and un-paid capital, and the general reserve amounted to $1.9 billion.
Callable Capital
In addition to our subscribed paid-in and un-paid capital, our shareholders have subscribed to callable capital totaling $1.5 billion at December 31, 2012. Our callable capital may be called by the Board of Directors to meet our obligations only to the extent that we are unable to meet such obligations with our own resources.
The Constitutive Agreement provides that the obligation of shareholders to pay for the shares of callable capital, upon demand by the Board of Directors, continues until such callable capital is paid in full. Thus, we consider the obligations of shareholder countries to pay for their respective callable capital subscriptions to be binding obligations backed by the full faith and credit of the respective governments. If the callable capital were to be called, the Constitutive Agreement requires that the call be prorated among shareholders in proportion to their shareholdings.
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SELECTED FINANCIAL INFORMATION
The following selected financial information as of and for the years ended December 31, 2012, 2011 and 2010 has been derived from our audited financial statements for those periods, which were audited by Lara Marambio & Asociados, a member firm of Deloitte Touche Tohmatsu Limited. The audit report of Lara Marambio & Asociados, a member firm of Deloitte Touche Tohmatsu Limited, has been included on page F-5 of this document. Our financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The selected financial information should be read in conjunction with our audited financial statements and notes thereto and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus.
Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||
2012 | 2011 | 2010 | 2013 | 2012 | ||||||||||||||||
(in U.S.$ thousands, except ratios) | ||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Interest income | $ | 520,139 | $ | 429,019 | $ | 385,555 | $ | 123,908 | $ | 131,172 | ||||||||||
Interest expense | (281,688 | ) | (213,028 | ) | (173,215 | ) | (74,741 | ) | (62,790 | ) | ||||||||||
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Net interest income | 238,451 | 215,991 | 212,340 | 49,167 | 67,645 | |||||||||||||||
(Credit) Provision to allowance for loan losses | (4,865 | ) | (11,771 | ) | (2,990 | ) | (2,203 | ) | 4,700 | |||||||||||
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Net interest income after (credit) provision to allowance for loan losses | 243,316 | 227,762 | 215,330 | 46,964 | 63,682 | |||||||||||||||
Non-interest income | 9,281 | 4,565 | 7,900 | 3,813 | 1,411 | |||||||||||||||
Non-interest expenses | (91,851 | ) | (84,571 | ) | (70,804 | ) | (24,744 | ) | (21,874 | ) | ||||||||||
Net income before unrealized changes in fair value related financial instruments | 160,746 | 147,756 | 152,426 | 26,033 | 43,219 | |||||||||||||||
Unrealized changes in fair value related to financial instruments | (577 | ) | 4,823 | 13,713 | (593 | ) | 3,400 | |||||||||||||
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Net income | $ | 160,169 | $ | 152,579 | $ | 166,139 | $ | 25,440 | $ | 46,619 | ||||||||||
Balance Sheet Data (end of period) | ||||||||||||||||||||
Current assets (net of allowance)(1) | $ | 10,021,935 | $ | 7,964,836 | $ | 6,496,682 | $ | 10,379,715 | $ | 8,147,165 | ||||||||||
Non-current assets | 14,581,776 | 13,570,514 | 12,050,193 | 14,706,587 | 13,802,759 | |||||||||||||||
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Total assets | $ | 24,603,711 | $ | 21,535,350 | $ | 18,546,875 | $ | 25,086,302 | $ | 21,949,923 | ||||||||||
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Current liabilities(2) | 7,344,134 | 6,750,727 | 5,155,591 | 7,905,476 | 6,794,941 | |||||||||||||||
Long-term liabilities | 10,394,515 | 8,433,370 | 7,638,097 | 10,319,760 | 8,836,464 | |||||||||||||||
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Total liabilities | 17,738,649 | 15,184,097 | 12,793,688 | 18,225,236 | 15,631,405 | |||||||||||||||
Total stockholders’ equity | 6,865,062 | 6,351,253 | 5,753,187 | 6,861,066 | 6,318,518 | |||||||||||||||
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Total liabilities and stockholders’ equity | $ | 24,603,711 | $ | 21,535,350 | $ | 18,546,875 | $ | 25,086,302 | $ | 21,949,923 | ||||||||||
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Loan Portfolio and Equity Investments | ||||||||||||||||||||
Loans before allowance | 16,355,410 | $ | 14,980,744 | $ | 13,783,043 | $ | 17,130,430 | $ | 15,323,031 | |||||||||||
Allowance for loan losses | 125,799 | 130,636 | 141,364 | 128,081 | 135,364 | |||||||||||||||
Equity investments | 146,811 | 111,889 | 94,721 | 157,034 | 114,172 | |||||||||||||||
Selected Financial Ratios | ||||||||||||||||||||
Return on average total stockholders’ equity(3)(4) | 2.5 | % | 2.5 | % | 3.0 | % | 1.5 | % | 2.9 | % | ||||||||||
Return on average paid-in capital(4) | 5.0 | % | 5.0 | % | 6.3 | % | 2.8 | % | 5.4 | % | ||||||||||
Return on average assets(5) | 0.7 | % | 0.8 | % | 1.0 | % | 0.4 | % | 0.9 | % | ||||||||||
Administrative expenses divided by average assets) | 0.4 | % | 0.4 | % | 0.4 | % | 0.4 | % | 0.4 | % | ||||||||||
Overdue loan principal as a percentage of loan portfolio (excluding non-accrual loans) | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||
Non-accrual loans as a percentage of loan portfolio | 0.05 | % | 0.05 | % | 0.0 | % | 0.05 | % | 0.05 | % | ||||||||||
Allowance for losses as a percentage of loan portfolio | 0.8 | % | 0.9 | % | 1.0 | % | 0.75 | % | 0.9 | % |
(1) | Includes cash, deposits, trading, other investments, accrued interest and commissions receivable and loans with remaining maturities less than one year minus allowance for losses. |
(2) | Includes deposits, commercial paper, advances and short term borrowings, accrued interest payable, bonds with remaining maturities less than one year and borrowings and other obligations with remaining maturities less than one year. |
(3) | Net income divided by average total stockholders’ equity. |
(4) | Net income divided by average subscribed and paid-in capital. |
(5) | Net income divided by average total assets. |
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our audited financial statements and notes thereto beginning on page F-6 and the unaudited interim financial information and notes thereto beginning on page S-1 of this prospectus.
Summary of Results
During the three years ended December 31, 2012, our net income decreased at a compound average annual rate of approximately 1.8%. Our net income for the year ended December 31, 2012 was $160.2 million, representing an increase of $7.6 million, or 5%, over net income of $152.6 million for 2011. This increase resulted from growth in our loan portfolio and a slight increase in market interest rates. For the year ended December 31, 2011, our net income was $152.6 million, representing a decrease of $13.5 million, or 8.2%, over net income of $166.1 million for 2010. This decrease resulted principally from a decrease in market interest rates.
CAF’s net income for the three-month period ended March 31, 2013 was $25.4 million, representing a decrease of $21.8 million, or 45.4%, over net income of $46.6 million for the corresponding period in 2012. This decrease resulted principally from a decrease in market interest rates compared to the corresponding period in 2012.
The reported annualized percentage increase in real GDP for 2012 for each of the full member shareholder countries at September 30, 2012 was as follows: Argentina, 8.9 %; Bolivia, 5.2%; Brazil, 2.7%; Colombia, 5.9%; Ecuador, 6.5%; Panama, 10.8%; Paraguay, 4.0%; Peru, 6.9%; Uruguay, 5.7%; and Venezuela, 4.2%.
The recent financial crisis and global economic recession affected our business but have not had a material adverse effect on our results of operations or financial position. Based on our investment strategy and given our investment guidelines, our liquid investment portfolio is of short duration and has no material exposure to structured products such as mortgage-backed or asset-backed securities. Moreover, certain recent developments, such as the European sovereign debt crisis and fluctuations in commodity prices, have not thus far impacted our operations. As of March 31, 2013, we have one outstanding loan in Spain of $50 million in our loan portfolio, and 37.8% of our liquidity portfolio consists of securities of issuers in European Union countries, including France (12.2%), the Netherlands (7.3%), Germany (6.4%), United Kingdom (6%), Sweden (3.5%), Denmark (1.2%), Austria (1%), Norway (0.1%) and Spain (0.1%).
The volatility of credit spreads during the past three years has varied our borrowing costs, the effect of which was partially offset by changing the interest rates we charge our borrowers (after swaps). During 2012, the LIBOR rate, which is the basis for the interest payable on both our external debt and on the loans in our loan portfolio, increased slightly, which resulted in a higher net interest margin for our business.
Both 2012 and 2011 have been characterized by a strong growth in our loan portfolio as a result of our strategy to expand our shareholder base, principally through additional capital subscriptions by several of our existing shareholder countries, as well as the issuance of shares to new shareholder countries. These two main drivers led to loan portfolio growth of 9.2% in 2012 compared to 2011. We do not expect that our loan portfolio will be materially affected by the activities of other development banks in the region, since financing needs by our shareholder countries exceed the current supply of lending resources. We believe that activities of other development banks are complementary to our lending operations.
Critical Accounting Policies
General
Our financial statements are prepared in accordance with U.S. GAAP, which requires us in some cases to use estimates and assumptions that may affect our reported results and disclosures. We describe our significant accounting policies in Note 1 (“Significant Accounting Policies”) to our audited financial statements. We believe that some of the more significant accounting policies we use to present our financial results involve the use of accounting estimates that we consider to be critical because: (1) they require significant management judgment and assumptions about matters that are complex and inherently uncertain; and (2) the use of a different estimate or a change in estimate could have a material impact on our reported results of operations or financial condition. Specifically, the estimates we use to determine the allowance for loan losses are critical accounting estimates.
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Additionally, the fair values for some financial assets and liabilities recorded in CAF’s financial statements are determined according to the procedures established by the accounting pronouncement ASC 820. As of the date of this prospectus, we have not changed or reclassified any transaction from one level to another pursuant to the hierarchy reflected in ASC 820, thereby maintaining consistency in the application of accounting principles in this matter.
Income Statement
Interest Income
Three Months Ended March 31, 2013 and 2012. For the three-month period ended March 31, 2013, interest income was $123.9 million, representing a slight decrease of $7.3 million, or 5.5% over interest income of $131.2 million for the corresponding period in 2012. This decrease resulted principally from the decrease in interest rates compared to the corresponding period in 2012.
2012, 2011 and 2010. For the year ended December 31, 2012, our interest income was $520.1 million, representing an increase of $91.1 million, or 21.2%, compared to interest income of $429.0 million for the year ended December 31, 2011. This increase resulted from growth in the loan portfolio and a slight increase in market interest rates. Interest income for the year ended December 31, 2011 represented an increase of $43.5 million, or 11.3%, compared to interest income of $385.6 million for the year ended December 31, 2010. This increase resulted principally from growth in the loan portfolio.
Interest Expense
Three Months Ended March 31, 2013 and 2012. For the three-month period ended March 31, 2013, interest expense was $74.7 million, representing an increase of $11.9 million, or 19.0%, over interest expense of $62.8 million for the corresponding period in 2012. This increase resulted principally from an increase in liabilities to fulfill higher funding requirements caused by an increase in our loan portfolio compared to the corresponding period in 2012, as well as an increase in funding costs associated with an increase in the average term of financial liabilities.
2012, 2011 and 2010. For the year ended December 31, 2012, our interest expense was $281.7 million, representing an increase of $68.7 million, or 32.2%, from our interest expense of $213.0 million for the year ended December 31, 2011. This increase resulted primarily from an increase in liabilities to fulfill higher funding requirements caused by the increase in our loan portfolio. Interest expense for the year ended December 31, 2011 represented an increase of $39.8 million, or 23.0%, from our interest expense of $173.2 million for the year ended December 31, 2010. This increase is also attributable to an increase in liabilities to fulfill higher funding requirements caused by growth in our loan portfolio.
Net Interest Income
Three Months Ended March 31, 2013 and 2012. For the three-month period ended March 31, 2013, net interest income was $49.2 million, representing an decrease of $19.2 million, or 28.1%, over net interest income of $68.4 million for the corresponding period in 2012. This decrease results from a combination of a decrease in market interest rates and an increase in liabilities to fulfill higher funding requirements.
2012, 2011 and 2010. For the year ended December 31, 2012, our net interest income was $238.4 million, representing an increase of $22.5 million, or 10.4%, over net interest income of $216.0 million for the year ended December 31, 2011. This increase resulted principally from loan portfolio growth and a slight increase in market interest rates. Our net interest income for the year ended December 31, 2011 represented an increase of $3.7 million, or 1.7%, as compared to our net interest income of $212.3 million for the year ended December 31, 2010. This increase resulted principally from growth in the loan portfolio.
Our net interest income margin was 1.1% in 2012, compared to 1.1% in 2011 and 1.3% in 2010. The results of the last two years are similar because the increase, in terms of spread and volume, in total earning assets was slightly lower than the increase in interest bearing liabilities.
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Provision for Loan Losses
Three Months Ended March 31, 2013 and 2012. For the three-month period ended March 31, 2013, provisions for loan losses were $2.2 million, representing a decrease of $2.5 million, or 53.1%, compared to the provisions for loan losses of $4.7 million for the corresponding period in 2012. This decrease resulted from improvements in the credit ratings of some of our shareholder countries.
2012, 2011 and 2010. For the year ended December 31, 2012, we recorded a credit for loan losses of $4.9 million, representing a decrease of $6.9 million, or 41.3%, compared with our credit for loan losses of $11.8 million for the corresponding period in 2011 and $3.0 million for the year ended December 31, 2010. Changes in the provision occurred because of the decrease in the allowance for loan losses as a percentage of the loan portfolio. The allowance for loan losses as a percentage of the loan portfolio was 0.8% for 2012, 0.9% for 2011 and 1.0% for 2010. This decrease over time is due to an improvement in the credit ratings of some of our shareholder countries.
The credits and provisions in the periods described above reflect management’s estimates for both general and specific provisions. The specific provision is related to loans that have been adversely classified. The calculation of the amount set aside as the general provision is based on the sovereign ratings of the shareholder countries and their related probabilities of default, as provided by the major rating agencies, adjusted to take into account the privileges and immunities we enjoy in our shareholder countries. The specific provision is calculated according to the requirements of ASC 310-10-35.
Non-Interest Income
Our non-interest income consists principally of commissions, dividends and equity in earnings of investments and other income.
Three Months Ended March 31, 2013 and 2012. For the three-month period ended March 31, 2013, non-interest income was $3.8 million, representing an increase of $2.4 million, or 170.2%, compared to non-interest income of $1.4 million for the corresponding period in 2012. The increase was primarily the result of the increase in commissions and other income, which in turn was mostly due to movements in exchange rates.
2012, 2011 and 2010. For the year ended December 31, 2012, our total non-interest income was $9.3 million, representing an increase of $4.7 million or 103.3%, from total non-interest income of $4.6 million for the year ended December 31, 2011. This increase resulted principally from an increase in dividends from equity investments. Our total non-interest income for the year ended December 31, 2011 represented a decrease of $3.3 million or 42.0%, as compared to our total non-interest income of $ 7.9 million for the year ended December 31, 2010. The decrease resulted principally from a decrease in dividends from equity investments.
Non-Interest Expenses
Our non-interest expenses consist principally of administrative expenses, representing 99.1% of total non-interest expenses in 2012.
Three Months Ended March 31, 2013 and 2012. For the three-month period ended March 31, 2013, our administrative expenses were $24.7 million, representing 99.6% of total non-interest expenses. Administrative expenses were $3.0 million, or 13.7%, higher than the $21.7 million in administrative expenses for the corresponding period in 2012. This increase was primarily the result of the growth in CAF’s loan portfolio. For the three-month period ended March 31, 2013, our general and administrative expenses were 0.40% of total average assets, the same level as during the corresponding period in 2012. For the three-month period ended March 31, 2013, other non-interest expenses were $89 thousand, representing a decrease of $0.1 million, or 53.6%, over other non-interest expenses of $0.2 million for the corresponding period in 2012.
2012, 2011 and 2010. For the year ended December 31, 2012, our total non-interest expenses were $91.8 million, representing an increase of $7.3 million, or 8.6%, over total non-interest expenses of $84.5 million for the year ended December 31, 2011. The total non-interest expenses for the year ended December 31, 2011 represented an increase of $13.8 million, or 19.4%, over total non-interest expenses of $70.8 million for the year ended December 31, 2010. The increases in 2012 and 2011 resulted principally from an increase in administrative expenses given the expansion of our full member shareholder country base.
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For the year ended December 31, 2012, administrative expenses were $91.0 million, or 0.4% of our total average assets, representing an increase of $10.0 million over administrative expenses for the year ended December 31, 2011. For the year ended December 31, 2011, administrative expenses were $81.0 million, or 0.4% of our total average assets, representing an increase of $11.3 million over administrative expenses of $69.7 million for the year ended December 31, 2010. These increases resulted principally from the impact of local currency expenses and inflation in Venezuela.
Equity investments, which do not have readily determinable fair values and in which we have a participation of less than 20% of the investee’s equity, are required to be recorded at cost according to U.S. GAAP. Also, management is required to assess the value of these investments and determine whether any value impairment is temporary or other than temporary. Impairment charges must be taken once management has determined that the loss of value is other than temporary. As a result of the analysis of these equity investments, management determined impairment charges as follows: $0.0 in 2012, $0.0 in 2011 and $0.0 in 2010. These impairment charges represented 0.0%, 0.0% and 0.0% of our equity investments at December 31, 2012, 2011 and 2010, respectively.
Balance Sheet
Total Assets and Liabilities
March 31, 2013. At March 31, 2013, our total assets were $25.1 billion, representing an increase of $482.6 million, or 2%, over total assets of $24.6 billion as of December 31, 2012. The increase in our total assets principally reflected a 4.7% increase in the loan portfolio. At March 31, 2013, our liabilities were $18.2 billion, representing an increase of $486.6 million, or 2.7%, from total liabilities of $17.7 billion as of December 31, 2012. The increase in liabilities resulted from higher funding requirements to support a higher level of assets.
2012 and 2011. At December 31, 2012, our total assets were $24.6 billion, representing an increase of $3.1 billion, or 14.2%, over total assets of $21.5 billion at December 31, 2011. The increase in our total assets principally reflected a 27% increase in the liquid assets portfolio and a 9.2% increase in the loan portfolio. At December 31, 2012, our total liabilities were $17.7 billion, representing an increase of $2.5 billion, or 16.8%, over total liabilities of $15.2 billion at December 31, 2011. The increase in our total liabilities resulted from higher funding requirements to support a higher level of assets.
Asset Quality
Overdue Loans
March 31, 2013. At March 31, 2013 and at December 31, 2012, the total principal amount of CAF’s overdue loans was $0.0 (not including non-accrual loans in overdue status).
2012 and 2011. There were $0.0 in overdue loans at December 31, 2012. There were $0.0 in overdue loans at December 31, 2011.
Impaired Loans and Non-Accrual Loans
March 31, 2013. At March 31, 2013 and at December 31, 2012, respectively, the total principal amount of CAF’s impaired loans was $7.8 million, or 0.05% of the total loan portfolio, representing one loan to a private sector borrower in Colombia. We consider a loan to be impaired when it is in non-accrual status.
2012 and 2011. There were $7.8 million loans in non-accrual status as of December 31, 2012 and $8.2 million loans in non-accrual status at December 31, 2011. The total amount, for both periods, represents one loan to a private sector borrower in Colombia. We consider a loan to be impaired when it is in non-accrual status.
Restructured Loans
March 31, 2013. At March 31, 2013 the total principal amount of outstanding restructured loans was $3.5 million, or 0.02% of the total loan portfolio, the same as of December 31, 2012. The total principal amount, on each date, represents one loan to a private sector borrower in Bolivia.
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2012 and 2011. At December 31, 2012, the total principal amount of outstanding restructured loans was $3.5 million, or 0.02% of the total loan portfolio, compared to $3.6 million, or 0.02%, at December 31, 2011. The total principal amount, for both periods, represents one loan to a private sector borrower in Bolivia.
Loan Write-offs and Recoveries
March 31, 2013. A total of $0.0 million was written off in the three month period ending March 31, 2013. We booked recoveries of $78.9 thousand and $28.3 thousand during the first three months of 2013 and the year 2012, respectively.
2012 and 2011. There were $0.0 loan write-offs in 2012 and 2011. During 2012 and 2011, respectively, we booked recoveries of $28.3 thousand and $1.0 million.
See “Operations of CAF — Asset Quality” for further information regarding our asset quality. See “Operations of CAF — Loan Portfolio” for details regarding the distribution of our loans by country and economic sector.
Off-Balance Sheet Transactions
We enter into commitments and contingencies in the normal course of our business to facilitate our business objectives and reduce our exposure to interest rate and foreign exchange rate fluctuations. These arrangements, which may involve elements of credit and interest rate risk in excess of amounts recognized on our balance sheet, primarily include (1) credit agreements subscribed and pending disbursement, (2) lines and letters of credit for foreign trade and (3) partial credit guarantees of shareholder country obligations. For further discussion of these arrangements, see Note 20 (“Commitments and Contingencies”) to our audited financial statements.
Liquidity
We seek to ensure adequate liquidity by maintaining liquid assets in an amount exceeding the greater of:
(1) 45% of total undisbursed project loan commitments; and
(2) 35% of the sum of our next 12 months’
(a) estimated debt service, plus
(b) estimated project loan disbursements.
Our investment policy requires that at least 90% of our liquid assets be held in the form of investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization. The remaining portion of our liquid assets may be invested in non-investment grade instruments rated B-/Ba3/B or better by a U.S. nationally-recognized statistical rating organization. Our investment policy emphasizes security and liquidity over yield.
March 31, 2013. At March 31, 2013, our liquid assets consisted of $7.0 billion of cash, time deposits and securities, of which 98% was invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally recognized statistical rating organization, compared to $7.2 billion of cash, time deposits and securities, of which 92.1% was invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally recognized statistical rating organization, at December 31, 2012. At March 31, 2013, 26.6% of our liquid assets were invested in time deposits in financial institutions, 21.1% in commercial paper, 36% in corporate and financial institution bonds, 2.9% in certificates of deposit, 1.7% in bonds of non-U.S. government and government entities and 11.7% in other instruments.
2012 and 2011. At December 31, 2012, our liquid assets consisted of $7.2 billion of cash, time deposits and securities, of which 92.1% were invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization; 22.1% of our liquid assets were invested in time deposits in financial institutions, 26.5% in commercial paper, 37.1% in corporate and financial institution bonds, 4.8% in certificates of deposit, 2.5% in bonds of non-U.S. government and government entities and 7.0% in other instruments. At December 31, 2011, our liquid assets consisted of $5.7 billion of cash, time deposits and securities, of which 96.4% were invested in investment grade instruments rated A-/A3/A- or better by a
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U.S. nationally-recognized statistical rating organization; 29.0% of our liquid assets were invested in time deposits in financial institutions, 25.5% in commercial paper, 11.0% in corporate and financial institution bonds, 7.6% in certificates of deposit, 17.6% in bonds of non-U.S. government and government entities and 9.3% in other instruments.
Strategy and Capital Resources
Our business strategy is to provide financing for projects, trade and investment in the shareholder countries. Management expects our assets to grow in the future, which will increase our need for additional funding; likewise, maturing debt obligations will need to be replaced. In addition to scheduled capital increases, management anticipates a need to increase funds raised in the international capital markets and to maintain funding through borrowings from multilateral and other financial institutions. While the substantial majority of our equity will continue to be held by full member shareholder countries, we intend to continue offering equity participation to associated shareholder countries through the issuances of Series “C” shares to such countries. See “Capital Structure”.
We intend to continue our programs to foster sustainable growth within the shareholder countries and to increase our support for the private sector within our markets, either directly or through financial intermediaries. See “Operations of CAF” below.
CAF’s purpose is to foster and promote economic development, social development and integration within the shareholder countries through the efficient use of financial resources in conjunction with both private sector and public sector entities. To accomplish our objective, we primarily engage in short, medium and long-term loans and guarantees. To a lesser extent, we make limited equity investments in funds and companies, and provide technical and financial assistance, as well as administrative services for certain regional funds.
CAF also provides lending for projects in associated shareholder countries, including but not limited to projects that promote trade or integration with full member shareholder countries.
Business Management of CAF
Our business management is divided into two broad functions: client relationship management and financial management.
Client Relationship Management
Our client relationship management function is conducted by a group of relationship managers and sector and product specialists who are responsible for the development, structuring, appraisal and implementation of our lending activities. Clients are identified through direct contact, referrals from our representative offices and referrals from third parties such as shareholders, multilateral institutions, international financial institutions and other clients.
Our client relationship management function is currently fulfilled by the following five departments, each headed by a Vice President:
• | 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 shareholder countries; |
• | Infrastructure, which is responsible for the financing of public infrastructure projects and the analysis of public policies within the different development sectors; |
• | Corporate and Financial Sector, which is responsible for our relationships with private sector corporations and financial institutions, and for 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; |
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• | Development Strategies and Public Policies, which is responsible for developing strategies, policies and initiatives within CAF’s mission and objectives, as well as coordinating the financing of SMEs (small and medium enterprises); and |
• | Energy, which is responsible for financing energy projects and analysis of public policies and market trends within the energy sector. |
The client relationship management group is also responsible for reviewing and developing lending policies and procedures and for monitoring the quality of the loan portfolio on an ongoing basis. In these duties, the client relationship management group is assisted by our Credit Administration Office and our Corporate Comptroller Office.
Financial Management
Our financial management group is responsible for managing our funded debt, as well as our liquid assets. This group is responsible for developing, structuring, appraising and implementing our borrowing activities. It is also responsible for reviewing and developing policies and procedures for the monitoring of our financial well-being and for the proper management of liquidity. The financial management group is headed by the Vice President of Finance.
The asset distribution group is a part of the financial management group, and it has two basic responsibilities:
(1) structuring “A/B” loan transactions in which we loan a portion of the total amount and other financial institutions loan the remainder; and
(2) selling loans to international banks interested in increasing their exposure in the shareholder countries.
The staff of our financial management group works in close coordination with our client relationship managers. Our client relationship management group and financial management group are supported by the financial control and budget, human resources, information systems and legal departments.
Loan Portfolio
We extend medium-term and long-term loans to finance both public sector and private sector projects in the shareholder countries, either directly to a project or through a financial intermediary in a shareholder country that lends the funds to the appropriate project. To a lesser extent, we also provide loans to finance trade by and among the shareholder countries. Loans may be used for any component of a project, subject to exceptions relating to, among other things, the acquisition of land and the payment of taxes. We endeavor to concentrate our lending activities on national and multinational economic development projects, especially those involving electricity, gas and water supply, transport or communications in two or more shareholder countries and those that generate foreign exchange.
We provide credit lines to financial institutions in the shareholder countries. The purpose of these credit lines is to enable these institutions to finance projects that fall within our overall objectives, but that are not sufficiently large to justify our being directly involved in the project. The relevant financial institutions are thereby provided with funds that enable them to strengthen their financial resources within parameters previously agreed to with us. Under such multisectoral credit lines, we take the credit risk of the financial intermediary and also have recourse to the underlying borrowers. The financial intermediaries are responsible for repayment of their loans from us regardless of whether the underlying borrower repays the financial intermediary.
We endeavor to strengthen trade by and among shareholder countries and to assist companies in the shareholder countries to access world markets. Our trade-financing activities are complementary to those of the export credit agencies of shareholder countries because we finance qualifying import or export operations, whereas those agencies generally are limited to providing financing only for goods exported from the respective countries. Through trade-financing, we finance the movement of merchandise. We also provide credit support to trade activities through the confirmation of letters of credit in situations where the issuing local bank would not be perceived as sufficiently creditworthy by financial institutions in the beneficiary’s country.
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In 1997, we began making a portion of our loans through an “A/B” loan program, where CAF acts as lender of record for the entire loan and sells non-recourse participations in the “B” portion of the loan to commercial banks. The “A” portion of the loan is made directly to the borrower by us. Under the “B” portion, banks provide the funding and assume the credit risk; CAF does not provide funding under the “B” portion and, therefore, does not assume any credit risk. Because we act as the lender of record for the entire loan, thereby operating as the one official lender in the transaction, commercial banks are exempted from country risk provisions and, therefore, the borrower receives an interest rate that is generally lower than the rate available in the commercial markets. The lower interest rate is a result, among other factors, of the reduced inherent risk resulting from our status as a multilateral financial institution.
Our loan pricing is typically based on our cost of funds plus a spread to cover operational costs and credit risks. All sovereign-risk loans are made at the same spread for comparable maturities. Generally, our loans are made on a floating interest rate basis. Under certain exceptional circumstances, loans may be made at fixed interest rates, provided that the corresponding funding is obtained at fixed interest rates. We generally charge a loan origination fee up to 0.85% of the total loan amount and a commitment fee equal to 0.35% per annum on undisbursed loan balances. Substantially all loans are denominated in U.S. dollars.
Our policies generally require that loans to public sector entities have the benefit of sovereign guarantees. Exceptions have been made for a few highly-capitalized entities. Loans to private sector entities other than banks generally must have the benefit of bank or other guarantees, or other collateral acceptable to us.
During the two-year period ended December 31, 2012, our total assets grew at a compound average annual rate of 15.2%, in part reflecting economic growth in our full member shareholder countries. At December 31, 2012, our total assets were $24.6 billion, of which $16.4 billion, or 66.5%, were disbursed and outstanding loans. At December 31, 2012, the “B” loan portion of our “A/B” loan transactions totaled $1.3 billion. The tables on loan exposure that follow reflect only the “A” portion of the respective “A/B” loan transactions since we only assume the credit risk of the “A” loan portion. During this two-year period, our lending portfolio grew at a compound average annual rate of 8.9%. Our management expects further loan growth to be funded by additional borrowings and deposits, retained earnings and planned capital increases.
Loans to Public and Private Sector Borrowers
Our total loan portfolio outstanding, classified by public sector and private sector borrowers, was as follows:
At December 31, | ||||||||||||||||
2012 | 2011 | 2010 | ||||||||||||||
(in U.S.$ millions) | ||||||||||||||||
Public Sector | 84.5 | % | 13,823.6 | 12,613.7 | 11,050.4 | |||||||||||
Private Sector | 15.5 | % | 2,530.3 | 2,362.7 | 2,727.6 | |||||||||||
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100.0 | % | 16,353.9 | 14,976.4 | 13,778.0 | ||||||||||||
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Fair value adjustments on hedging activities | 1.5 | 4.3 | 5.1 | |||||||||||||
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Total | 16,355.4 | 14,980.7 | 13,783.0 | |||||||||||||
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Loans by Borrowing Country
Our total loan portfolio outstanding, classified on a country-by-country basis, according to the location of the borrower, was as follows:
At December 31, | ||||||||||||||||
2012 | 2011 | 2010 | ||||||||||||||
(in U.S.$ millions) | ||||||||||||||||
Argentina | 12.9 | % | 2,114.7 | 1,913.30 | 1,395.1 | |||||||||||
Bolivia | 9.8 | % | 1,598.8 | 1,417.60 | 1,301.1 | |||||||||||
Brazil | 7.7 | % | 1,252.8 | 989.5 | 1,116.0 | |||||||||||
Colombia | 11.2 | % | 1,832.3 | 1,816.50 | 1,965.9 | |||||||||||
Ecuador | 16.2 | % | 2,648.2 | 2,508.70 | 2,436.6 | |||||||||||
Panama | 3.6 | % | 586.94 | 321.5 | 139.6 | |||||||||||
Paraguay | 0.8 | % | 134.5 | 100.5 | 66.0 | |||||||||||
Peru | 16.3 | % | 2,660.3 | 2,573.2 | 2,181.7 | |||||||||||
Uruguay | 2.0 | % | 331.8 | 351.7 | 656.7 | |||||||||||
Venezuela | 17.2 | % | 2,816.1 | 2,652.1 | 2,227.6 | |||||||||||
Other(1) | 2.3 | % | 377.5 | 331.9 | 291.6 | |||||||||||
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100.0 | % | 16,353.9 | 14,976.5 | 13,777.9 | ||||||||||||
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Total | 16,355.4 | 14,980.7 | 13,783.0 | |||||||||||||
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(1) Principally | loans outside the full member shareholder countries at December 31, 2012. |
Loans Approved and Disbursed by Country
Our loan approval process is described under “— Credit Policies”. After approval, disbursements of a loan proceed in accordance with the contractual conditions of the loan agreement.
Set forth below is a table of the amount of loans approved and loans disbursed, classified by country, for each of the years indicated:
Approved | Disbursed(1) | |||||||||||||||||||||||
2012 | 2011 | 2010 | 2012 | 2011 | 2010 | |||||||||||||||||||
(in U.S.$ millions) | ||||||||||||||||||||||||
Argentina | 839.3 | 1345.7 | 1,606.8 | 464.0 | 662.9 | 282.6 | ||||||||||||||||||
Bolivia | 485.1 | 407.5 | 426.0 | 338.1 | 266.1 | 253.0 | ||||||||||||||||||
Brazil | 1,903.3 | 1797.4 | 1,980.1 | 1,028.1 | 963.4 | 1,225.7 | ||||||||||||||||||
Colombia | 840.6 | 1456.4 | 992.1 | 855.0 | 1836.0 | 1601.5 | ||||||||||||||||||
Ecuador | 766.0 | 771.9 | 900.6 | 736.4 | 566.4 | 721.4 | ||||||||||||||||||
Panama | 328.2 | 483.9 | 312.4 | 255.9 | 177.2 | 23.4 | ||||||||||||||||||
Paraguay | 188.6 | 120.0 | 35.6 | 46.9 | 43.1 | 50.9 | ||||||||||||||||||
Peru | 1,749.1 | 2184.3 | 1693.2 | 617.5 | 1303.4 | 2494.2 | ||||||||||||||||||
Uruguay | 728.6 | 647.6 | 120.3 | 9.4 | 52.1 | 95.3 | ||||||||||||||||||
Venezuela | 327.0 | 531.4 | 1637.8 | 358.8 | 905.2 | 684.7 | ||||||||||||||||||
Others(2) | 1,118.9 | 319.9 | 828.1 | 258.6 | 392.6 | 261.1 | ||||||||||||||||||
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Total | 9,274.7 | 10,065.9 | 10,533.00 | 4,969.6 | 7,168.4 | 7,693.70 | ||||||||||||||||||
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(1) | Includes short-term loans in the amounts of $2,630 million, $3,530 million, and $4,057.2 million, respectively, for the years ended December 31, 2012, 2011 and 2010, respectively. |
(2) | Loans outside the full member shareholder countries at December 31, 2012. |
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During the three years ended December 31, 2012, the rate of growth (decrease) of loan portfolio by country was as follows: Argentina, 23.1%; Bolivia, 10.9%; Brazil, 6.0%; Colombia, (3.5)%; Ecuador, 4.3%; Panama, 105.0%; Paraguay, 42.8%; Peru, 10.4%; Uruguay, (28.9)%; and Venezuela, 12.4%. The growth of the loan portfolio during the 2-year period ended December 31, 2012 reflects loan approvals as a result of the region’s economic growth during the period and our increased share of infrastructure financings in the region.
Loans to associated shareholder countries holding Series “C” shares (as described under “Capital Structure — General”) totaled $377.4 million in 2012, compared to loans to associated shareholder countries holding Series “C” shares totaling $331.3 million and $1,752.7 million in 2011 and 2010, respectively. Management expects to increase loans to Trinidad and Tobago as a percentage of the portfolio when Trinidad and Tobago fulfills the requirements to become a full member shareholder country.
Management anticipates that our loan portfolio will continue to grow as a result of our strategy to expand our shareholder base, both by issuing shares to new shareholder countries and by additional capital subscriptions by existing shareholder countries, which may result in increased loan demand for projects in such countries.
Distribution of Loans by Industry
At December 31, 2012, our loan portfolio outstanding was distributed by industry as follows:
Total by | % of | |||||||||||||||||||||||||||||||||||||||||||||||||||
Argentina | Bolivia | Brazil | Colombia | Ecuador | Panama | Paraguay | Peru | Uruguay | Venezuela | Others(2) | Sector | Total | ||||||||||||||||||||||||||||||||||||||||
Agriculture, hunting and forestry | — | 21.3 | 35.0 | 6.4 | — | — | — | — | — | — | — | 62.7 | 0.4 | % | ||||||||||||||||||||||||||||||||||||||
Exploitation of mines and quarries | — | — | — | — | — | — | — | — | — | — | — | — | 0.0 | % | ||||||||||||||||||||||||||||||||||||||
Manufacturing industry | 120.0 | 5.8 | 37.5 | 6.2 | 36.3 | — | — | — | — | — | — | 205.8 | 1.3 | % | ||||||||||||||||||||||||||||||||||||||
Supply of electricity, gas and water | 1,348.8 | 287.6 | 278.7 | 247.6 | 276.7 | 96.7 | — | 258.8 | 192.0 | 2,364.6 | 178.8 | 5,530.5 | 33.8 | % | ||||||||||||||||||||||||||||||||||||||
Transport, warehousing and communications | 469.3 | 1,057.2 | 474.6 | 577.9 | 544.5 | 346.0 | 75.0 | 1,686.1 | 139.8 | 335.6 | 119.8 | 5,825.8 | 35.6 | % | ||||||||||||||||||||||||||||||||||||||
Financial intermediaries(1) | 11.3 | 41.7 | 345.0 | 471.1 | 172.7 | 23.2 | 13.2 | 432.1 | — | 10.7 | 119.5 | 1,640.4 | 10.0 | % | ||||||||||||||||||||||||||||||||||||||
Social and other infrastructure programs | 165.4 | 183.8 | 40.0 | 523.0 | 1,604.7 | 13.0 | 46.3 | 283.3 | — | 105.2 | 68.8 | 3,033.5 | 18.5 | % | ||||||||||||||||||||||||||||||||||||||
Other activities | — | — | 42.0 | — | 13.2 | — | — | — | — | — | — | 55.3 | 0.3 | % | ||||||||||||||||||||||||||||||||||||||
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Total | 2,114.7 | 1,598.8 | 1,252.8 | 1,832.3 | 2,648.2 | 586.9 | 134.5 | 2,660.3 | 331.8 | 2,816.1 | 377.5 | 16,353.9 | 100.0 | % | ||||||||||||||||||||||||||||||||||||||
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(1) | Multisectoral credit lines to public sector development banks, private banks and other financial institutions. |
(2) | This column includes loans outside the full member shareholder countries at December 31, 2012. |
Maturity of Loans
At December 31, 2012, our outstanding loans were scheduled to mature as follows:
2013 | 2014 | 2015 | 2016 | 2017 | 2018-2029 | |||||||||||||||||||
(in U.S.$ millions) | ||||||||||||||||||||||||
Principal amount | 2,683.5 | 1,481.6 | 1,598.4 | 1,530.8 | 1,274.4 | 7,785.2 | ||||||||||||||||||
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Ten Largest Borrowers
The following table sets forth the aggregate principal amount of loans to our ten largest borrowers, and the percentage such loans represented of the total loan portfolio, at December 31, 2012:
As a Percentage | ||||||||
of Total Loan | ||||||||
Borrower | Amount | Portfolio | ||||||
(in U.S.$ millions) | ||||||||
Bolivarian Republic of Venezuela | 2,816.1 | 17.2 | % | |||||
Republic of Ecuador | 2,327.7 | 14.2 | % | |||||
Republic of Peru | 1,894.6 | 11.6 | % | |||||
Republic of Argentina | 1,851.0 | 11.3 | % | |||||
Plurinational State of Bolivia | 1,511.0 | 9.2 | % | |||||
Republic of Colombia | 1,022.0 | 6.2 | % | |||||
Republic of Panama | 430.7 | 2.6 | % | |||||
Centrais Eletricas Brasileiras | 277.7 | 1.7 | % | |||||
Estado de Rio de Janeiro | 209.0 | 1.3 | % | |||||
Banco de Comercio Exterior S.A. (Colombia)(1) | 156.8 | 1.0 | % | |||||
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Total | 12,496.7 | 76.4 | % | |||||
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(1) | Privately owned financial intermediary. |
Selected Projects
Set out below are examples of projects approved by CAF during 2012 and the respective loan approval amounts.
Argentina
Republic of Argentina/Regional Road Development Program Phase II — $250 million loan to finance the strengthening of the road infrastructure of the country.
Bolivia
Plurinational State of Bolivia/Program “More Investments for Water II (MIAGUA II)” — $115.0 million loan to finance the investments in the water sector and sanitation in order to reduce poverty.
Brazil
Different Commercial Banks/Financial Lines for total amount of $900.0 million to finance foreign trade operations, working capital and investments in capital goods.
Estado de Sao Paulo/Program of Transportation, Logistics and Environment — $200 million loan to finance the improvement and expansion of the road system in order to contribute to the economic and social development of the state.
Colombia
Different Commercial Banks/Financial Lines for total amount of $800.0 million to finance foreign trade operations, working capital and investments in capital goods.
Ecuador
Republic of Ecuador/Quito Subway — $150 million loan to finance the construction of the first line of the future massive transportation network in the metropolitan area of the city.
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Panama
Republic of Panama/Project of sanitation of the Panama City and Bay Phase II — $176 million loan to finance the reduction of pollution in the urban rivers in the Panama City metropolitan area.
Paraguay
Republic of Paraguay/Support Program to the Economic and Social Strategy 2008/2013 — $75 million to finance the strengthening of macroeconomic and financial management.
Peru
Different Commercial Banks/Financial Lines for total amount of $600.0 million to finance foreign trade operations, working capital and investments in capital goods.
Republic of Peru/Contingent Credit Line — $400 million loan to support the national government’s strategy for management of its public debt, to be used as a preventive instrument in the event it cannot access the international debt markets in conditions consistent with its strategy.
Uruguay
Oriental Republic of Uruguay/Non-revolving contingent line of credit — $400 million loan to support the national government’s strategy for management of its public debt, to be used as a preventive instrument in the event it cannot access the international debt markets in conditions consistent with its strategy.
Venezuela
Bolivarian Republic of Venezuela/Project Complex for Social Action for Music “Simon Bolivar” Phase II — $210 million to finance the construction and equipment of the complex to improve the living conditions of Venezuelan youth.
Other Activities
Treasury Operations
Our investment policy requires that at least 90% of our liquid assets be held in the form of investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization. The remaining portion may be invested in unrated or non-investment grade instruments rated B-/Ba3/B- or better by a U.S. nationally-recognized statistical rating organization. At December 31, 2012, our liquid assets amounted to $7.2 billion of which 22.1% were invested in time deposits in financial institutions, 26.5% in commercial paper, 37.1% in corporate and financial institution bonds, 4.8% in certificates of deposit, 2.5% in bonds of non-U.S. government and government entities and 7.0% in other instruments.
Equity Shareholdings
We may acquire equity shareholdings in new or existing companies within the shareholder countries, either directly or through investment funds focused on Latin America. Our equity participation in any one company is limited to 1% of our shareholders’ equity. Our policies do not permit us to be a company’s largest individual shareholder. In addition, the aggregate amount of our equity investments cannot exceed 10% of our shareholders’ equity. At December 31, 2012, the carrying value of our equity investments totaled $146.8 million, representing 2.1% of our shareholders’ equity. At December 31, 2012, 73.7% of our equity portfolio was held through investment funds.
Credit Guarantees
We have developed our credit guarantee product as part of our role of attracting international financing for our shareholder countries. As such, we may offer guarantees of private credit agreements or we may offer public guarantees of obligations of the securities of third party issuers. We generally offer only partial credit guarantees with the intention that private lenders or holders of securities share the risk along with us.
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The emphasis of the credit guarantees is to aid in the financing of public sector projects, though we do not have any internal policies limiting our credit guarantees to public sector projects. Also, although we generally intend to guarantee approximately 25% of the financing for a given project, we may guarantee up to the full amount of the financing, subject to our other credit policies. Our internal policies limit the aggregate outstanding amount of our credit guarantees to a maximum amount equivalent to 20% of our net worth. The amount of credit guarantees outstanding was $331.6 million at December 31, 2012. Those credit guarantees represent 4.83% of our total net worth and were issued for 2 public sector projects in Bolivia, public sector projects in Peru and Mexico, as well as several private sector companies that are operating in Argentina, Peru and Uruguay.
Promotion of Regional Development
As part of our role in advancing regional integration, we evaluate on an ongoing basis new investment opportunities intended to benefit the shareholder countries. We also provide technical and financial assistance for the planning and implementation of binational and multinational projects, help obtain capital and technology for these projects and assist companies in developing and implementing modernization, expansion and organizational development programs.
Fund Administration
In 2012, we acted as fund administrator for several funds funded by third parties and by our shareholders, the net assets of which totaled $498.1 million at December 31, 2012.
Each year, these funds are usually recapitalized by our shareholders through contributions made from CAF’s prior year’s net income. In 2012, 2011 and 2010, such contributions to these funds were $120.0 million, $96.5 million and $93.5 million from the net income of 2012, 2011 and 2010, respectively. These funds are not part of CAF’s accounts.
At December 31, 2012, the principal funds were the Technical Co-operation Fund, the Fund for Human Development, the Compensatory Financing Fund, the Fund for the Development of Small and Medium Enterprises, the Latin American Carbon Program, the Fund for the Promotion of Sustainable Infrastructure Projects, and the Fund for Border Integration and Cooperation.
Technical Co-operation Fund
At December 31, 2012, the Technical Co-operation Fund had a balance of $22.9 million. The purpose of this fund is to finance research and development studies that may lead to the identification of project investment opportunities and also, on occasion, to provide grants that are typically less than $100,000 each to facilitate the implementation of those projects.
Fund for Human Development
At December 31, 2012, the Fund for Human Development had a balance of $16.9 million. This fund is devoted to assist projects intended to promote sustainable development in socially excluded communities, as well as to support micro-enterprises through the financing of intermediary institutions that offer direct loans to rural and urban micro-entrepreneurs.
Compensatory Financing Fund
At December 31, 2012, the Compensatory Financing Fund had a balance of $324.3 million. This fund was created to provide interest rate compensation when a project providing social or developmental benefits is otherwise unable to sustain market interest rates.
Fund for the Development of Small and Medium Enterprises
At December 31, 2012, the Fund for the Development of Small and Medium Enterprises had a balance of $43.6 million. The purpose of this fund is to finance and, in general, support initiatives that aid the development of an entrepreneurial class in our shareholder countries.
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Latin American Carbon Program
At December 31, 2012, the Latin American Carbon Program had a balance of $7.7 million. This program is dedicated to the implementation of market mechanisms that allow developing countries to participate in the environmental services market. The program is engaged in the emerging greenhouse gas reductions market in Latin America and the Caribbean through several mechanisms, including those allowed by the Kyoto Protocol.
Fund for the Promotion of Sustainable Infrastructure Projects
At December 31, 2012, the Fund for the Promotion of Sustainable Infrastructure Projects had a balance of $24.5 million. The purpose of this fund is to finance infrastructure projects and the study thereof, in order to support regional integration.
Fund for Border Integration and Cooperation
At December 31, 2012, the Fund for Border Integration and Cooperation had a balance of $3.5 million. The fund seeks to strengthen cooperation and border integration at the bilateral and multilateral levels by supporting and financing the identification, preparation and execution of high-impact projects that promote sustainable human development in the border regions of CAF’s shareholder countries.
Credit Policies
The Constitutive Agreement limits the total amount of disbursed and outstanding loans, guarantees and equity investments to 4.0 times stockholders’ equity. Our actual ratio on December 31, 2012 was 2.4 times stockholders’ equity.
We apply commercial banking standards for credit approvals and maintain policies and procedures regarding risk assessment and credit policy. Relationship managers perform an initial screening of each potential client and transaction to ensure that the proposed extension of credit falls within our policies. Proposed project loans are evaluated in accordance with our Operational Policies, which set out detailed eligibility and evaluation guidelines. Loans to a private sector borrower are approved taking into consideration both the individual loan and the total exposure to the borrower.
The Loans and Investments Committee recommends approvals of loans and investments. The members of this Committee are the Vice Presidents, the General Counsel and the Head of Credit Administration. The committee is chaired by the Executive Vice President. The Secretary of the Committee is an officer from the Credit Administration Office. The Executive President, upon the recommendation of the Loans and Investments Committee, may approve (a) loans of up to $75.0 million for sovereign credits, (b) loans of up to $50.0 million for private credits, (c) investments of up to $25.0 million in the case of equity investments, (d) investments of up to 1% of total liquid assets of any issuer (unless the issuer is: (i) at least investment grade, in which case the investment may be up to 5% of the issuer’s total liquid assets, (ii) a government or governmental institution with an investment grade rating of at least AA+, in which case the investment may be up to 7% of the issuer’s total liquid assets, or (iii) the US Treasury or the Bank for International Settlements, in which case CAF’s investment in notes, bills or bonds may be up to 50% of total liquid assets for each issuer), and (d) technical cooperation credits of up to $1.0 million. The Executive Committee of our Board of Directors or the Board of Directors itself may approve (a) loans of up to $150.0 million for sovereign credits, (b) loans of up to $80.0 million for private credits, (c) investments of up to $50.0 million for equity investments, (d) investments of up to 2.5% of the total liquid assets for any issuer (unless the issuer is: (i) at least investment grade, in which case the investment may be up to 10% of the issuer’s total liquid assets, or (ii) a government or governmental institution with an investment grade rating of at least AA+, in which case the investment may be up to 12% of the issuer’s total liquid assets), and (d) technical cooperation credits of up to $2.0 million. Loans and investments in excess of the aforementioned Executive Committee’s limits require the approval of our Board of Directors.
Our policies also impose limitations on loan concentration by country and by type of risk. Loans to entities in any one full member shareholder country may not exceed either 25% of our loan portfolio or 100% of our shareholders’ equity. Aggregate loans to entities in any associated shareholder country currently may not exceed eight times the total of such country’s paid-in capital contribution to us plus any assets entrusted by the country
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to us under a fiduciary relationship. This limit does not apply to trade loan financing with full member shareholder countries. Additionally, no more than four times the country’s paid-in capital contribution to us plus any assets entrusted to us under a fiduciary relationship may be committed to operations essentially national in character. The same limitation applies to our total loan portfolio in relation to our shareholders’ equity. Loans to a public sector or mixed-capital entity not considered a sovereign risk are limited in the aggregate to 15% of our shareholders’ equity. Additionally, the exposure to any individual private sector entity or to an economic group is limited to 2.35% and 3.5%, respectively, of our total loan portfolio.
Operations in which we extend credit to entities in Series “C” shareholder countries must generally be related to activities of such entities in, or related to, the full member shareholder countries. The aggregate total of outstanding loans to entities in such countries for purely local activities may not exceed 15% of CAF’s total loan portfolio.
Our policies permit us to provide up to 100% of the total project costs with respect to short-term loans. For medium-and long-term loans, we determine the appropriate level of financing on a case-by-case basis; however, limited-recourse financing in such loans may not exceed 50% of project costs. In practice, however, we typically limit our loans to a smaller percentage of total project costs and generally require a larger percentage of financial support by the borrower than required by our credit policies.
Asset Quality
We classify a loan as overdue whenever payment is not made on its due date. We charge additional interest on the overdue payment from the due date and immediately suspend disbursements on all loans to the borrower and to any other borrowers of which the overdue borrower is a guarantor. The entire principal amount of a loan is placed in non-accrual status when collection or recovery is doubtful or when any payment, including principal, interest, fees or other charges in respect of the loan, is more than 90 days overdue in the case of a private sector loan or more than 180 days overdue in the case of a public sector loan. Interest and other charges on non-accruing loans are included in income only to the extent that payments have actually been received by us.
At December 31, 2012, there were $0.0 loans overdue and $7.6 million in non-accrual status. At December 31, 2011, there were $0.0 in overdue loans and $8.2 loans in non-accrual status. For the years ended December 31, 2012 and 2011, there were $0.0 and $0.0, respectively, overdue interest or other charges in respect of non-accrual status loans excluded from net income.
At December 31, 2012, there were $0.0 loan write-offs. We have not suffered any individually significant losses on our loan portfolio. Although our loans do not enjoy any legal preference over those of other creditors, we do enjoy a de facto preferred creditor status arising from our status as a multilateral financial institution and from the interest of our borrowers in maintaining their credit standing with us. Although some of our shareholder countries have restructured their sovereign debt obligations, none of them have ever defaulted on their debt obligations to CAF.
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Quality of Loan Portfolio
The following table shows our overdue loan principal, loans in non-accrual status, and the total allowance for loan losses and their percentages of our total loan portfolio at the respective dates indicated, as well as loans written-off during each period:
At December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
(in U.S.$ millions) | ||||||||||||
Total loan portfolio | 16,353.4 | 14,976.4 | 13,777.9 | |||||||||
Overdue loan principal | — | — | — | |||||||||
Loans in non-accrual status | 7.9 | 8.2 | — | |||||||||
Loans written-off during period | — | — | — | |||||||||
Allowance for loan losses | 125.8 | 130.6 | 141.4 | |||||||||
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 | 0.05 | % | 0.05 | % | 0.0 | % | ||||||
Allowance for loan losses as a percentage of loan portfolio | 0.8 | % | 0.9 | % | 1.0 | % |
Funding Strategy
We raise funds for operations primarily in the international financial markets, although a relatively small part is raised within our shareholder countries. Our strategy with respect to funding, to the extent possible under prevailing market conditions, is to match the maturities of our liabilities to the maturities of our loan portfolio. In order to diversify our funding sources and to offer potential borrowers a wide range of credit facilities, we raise funds through bond issues in both the shareholder countries and the international capital markets. We also take deposits and obtain loans and credit lines from central banks, commercial banks and, to the extent of imports related to projects funded by us, export credit agencies.
Within the shareholder countries, we raise funds from central banks and financial institutions and by means of regional bond issues. Outside Latin America and the Caribbean, we obtain funding from public sector development and credit agencies, from development banks, from various North American, European and Asian commercial banks, from capital markets and from the U.S. and European commercial paper markets.
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Sources of Funded Debt
The breakdown of our outstanding funded debt, both within and outside the shareholder countries, at each of the dates indicated below was as follows:
At December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
(in U.S.$ millions) | ||||||||||||
Within the shareholder countries: | ||||||||||||
Term deposits | 3,121.8 | 3,672.1 | 2,739.5 | |||||||||
Loans and lines of credit | 23.1 | 10.8 | 12.0 | |||||||||
Bonds | 450.6 | 641.1 | 709.2 | |||||||||
|
|
|
|
|
| |||||||
3,595.5 | 4,284.0 | 3,460.7 | ||||||||||
Outside the shareholder countries: | ||||||||||||
Deposits, acceptances and advances, commercial paper and repurchase agreements | 3,174.9 | 1,977.1 | 1,524.3 | |||||||||
Loans and lines of credit | 1,349.7 | 1,110.8 | 978.8 | |||||||||
Bonds | 8,601.7 | 6,882.1 | 6,116.6 | |||||||||
|
|
|
|
|
| |||||||
13,126.3 | 9,930.0 | 8,619.7 | ||||||||||
|
|
|
|
|
| |||||||
16,721.8 | 14,254.0 | 12.080.4 | ||||||||||
Variation effect between spot and original FX rate | 111.6 | 18.9 | 30.4 | |||||||||
|
|
|
|
|
| |||||||
Fair value adjustments on hedging activities | 597.4 | 587.0 | 363.9 | |||||||||
|
|
|
|
|
| |||||||
Total | 17,430.7 | 14,859.9 | 12,474.7 | |||||||||
|
|
|
|
|
|
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Maturity of Funded Debt
The breakdown of our outstanding funded debt, by instrument and maturity, at each of the dates indicated below was as follows:
At December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
(in U.S.$ millions) | ||||||||||||
Term deposits: | ||||||||||||
Up to 1 year | 3,121.8 | 3,672.1 | 2,739.5 | |||||||||
Acceptances, advances and commercial paper and repurchase agreements: | ||||||||||||
Up to 1 year | 3,174.9 | 1,977,1 | 1,524.3 | |||||||||
Loans and lines of credit: | ||||||||||||
Up to 1 year | 103.0 | 131.5 | 143.6 | |||||||||
Between 1 and 3 years | 703.6 | 464.1 | 279.7 | |||||||||
Between 3 and 5 years | 258.6 | 259.5 | 341.1 | |||||||||
More than 5 years | 307.7 | 266.4 | 226.4 | |||||||||
|
|
|
|
|
| |||||||
1,372.9 | 1,121.6 | 990.8 | ||||||||||
Bonds: | ||||||||||||
Up to 1 year | 763.7 | 738.3 | 767.2 | |||||||||
Between 1 and 3 years | 2,011.2 | 1,296.9 | 1,486.6 | |||||||||
Between 3 and 5 years | 2,037.0 | 2,095.9 | 1,196.2 | |||||||||
More than 5 years | 4,240.4 | 3,351.9 | 3,375.8 | |||||||||
|
|
|
|
|
| |||||||
9,052.3 | 7,483.2 | 6,825.9 | ||||||||||
Totals: | ||||||||||||
Up to 1 year | 7,163.4 | 6,519.0 | 4,986.0 | |||||||||
Between 1 and 3 years | 2,714.8 | 1,761.1 | 1,688.7 | |||||||||
Between 3 and 5 years | 2,295.6 | 2,355.5 | 2,382.5 | |||||||||
More than 5 years | 4,547.9 | 3,618.4 | 3,023.2 | |||||||||
|
|
|
|
|
| |||||||
16,721.7 | 14,254.0 | 12,080.4 | ||||||||||
Variation effect between spot and original FX rate | 111.6 | 18.9 | 30.4 | |||||||||
Fair value adjustments on hedging activities | 597.4 | 587.0 | 363.9 | |||||||||
|
|
|
|
|
| |||||||
Total | 17,430.7 | 14,859.9 | 12,474.8 | |||||||||
|
|
|
|
|
|
Our borrowings are primarily U.S. dollar-based: 80.6% of our total borrowings, or 98.3% of borrowings after swaps, were denominated in U.S. dollars at December 31, 2012. The principal amount of non-U.S. dollar borrowings outstanding at December 31, 2012 included 892.0 million Euros, 50,400.0 million Yen, 1,365.0 million Swiss Francs, 1.4 million Canadian Dollars, 484,930.0 million Colombian Pesos, 798 million of Hong Kong Dollars, 1,317.1 million Mexican Pesos, 331.6 million Peruvian Nuevos Soles, and 600 million Chinese Yuan; all of such non-U.S. dollar borrowings are swapped or otherwise hedged into U.S. dollars.
We have never defaulted on the payment of principal of, or premium or interest on, any debt security we have issued, and we have always met all of our debt obligations on a timely basis.
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ASSET AND LIABILITY MANAGEMENT
We reduce our sensitivity to interest rate risk by extending our loans on a floating rather than a fixed interest rate basis. As a result, at December 31, 2012, 99.5% of our outstanding loans were based on LIBOR and subject to interest rate adjustments at least every six months. The liabilities that fund these loans are also contracted at, or swapped into, floating interest rates. When we make loans at fixed interest rates, we also obtain the corresponding funding on a fixed interest rate basis.
We require that counterparties with which we enter into swap agreements be rated “A+/A1” or better by two U.S. nationally recognized statistical rating organizations or have signed a credit support agreement (resulting in the corresponding exchange of collateral). At December 31, 2012, we were party to swap agreements with an aggregate notional amount of $9.3 billion.
We seek, to the extent possible under prevailing market conditions, to match the maturities of our liabilities to the maturities of our loan portfolio. At December 31, 2012, the weighted average life of our financial assets was 4.4 years and the weighted average life of our financial liabilities was 3.7 years. Based on our asset and liability structure at December 31, 2012, we have a positive cumulative gap over a 10 year horizon. This positive gap denotes asset sensitivity, which means that decreases in the general level of interest rates should have a negative effect on our net financial income and, conversely, increases in the general level of interest rates should have a positive effect on our net financial income.
Our management expects the weighted average life of our financial assets to increase gradually, as we make more long-term loans for infrastructure development and similar purposes. At the same time, our management expects that the weighted average life of our liabilities will also increase as a result of our strategy of increasing our presence in the international long-term bond market as market conditions permit.
At December 31, 2012, approximately 99.5% of our assets and 76.6 % of our liabilities were denominated in U.S. dollars, with the remainder of our liabilities being denominated principally in Euro, Yen, Hong Kong Dollar, Chinese Yuan and Swiss Francs, which liabilities were swapped. After swaps, 98.2% of our liabilities were denominated in U.S. dollars. Generally, funding that is contracted in currencies other than the U.S. dollar is swapped into U.S. dollars. In some cases, we extend our loans in the same non-U.S. dollar currencies as debt is incurred in order to minimize exchange risks. Our shareholders’ equity is denominated entirely in U.S. dollars.
Our treasury asset and liability management involves managing liquidity, funding, interest rate and exchange rate risk arising from non-trading positions through the use of on-balance sheet instruments. Our external asset managers use derivatives to hedge the interest and exchange rate risk exposures of our non-U.S. dollar denominated investments. Our policy is that our total exposure on trade derivatives should not exceed 3% of liquid investments. See “Derivative Instruments and Hedging Activities” (Note 18) in the Notes to the Financial Statements for the years ended December 31, 2012, 2011 and 2010.
We are governed and administered by the bodies and officials detailed below:
Shareholders’ General Meeting
The shareholders’ general meeting is the ultimate decision-making body within CAF. Shareholders’ general meetings can be ordinary or extraordinary and are governed by the requirement for the presence of a quorum and compliance with other conditions set out in the Constitutive Agreement.
Shareholders’ ordinary general meetings are held once a year, within 90 days of the close of the financial year, and are convened by the Executive President. The shareholders’ ordinary general meeting:
(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; |
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(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. |
Shareholders’ extraordinary general meetings may be convened after a call has been made at the initiative of the Board of Directors, or the Executive President, or at least 40% of Series “A” shareholders or any shareholders representing at least 25% of paid-in capital. The shareholders’ extraordinary general meeting may:
(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. |
Resolutions before shareholders’ ordinary general meetings are passed by the votes of at least 60% of Series “A” shareholders, together with a majority of the votes of the other shares represented at the meeting. Resolutions passed at shareholders’ extraordinary general meetings (including a decision to dissolve CAF) require the votes of 80% of Series “A” shareholders, together with a majority of the votes of the other shares represented at the meeting, except for resolutions concerning modifications to the structure of the Board of Directors in which case an affirmative vote of all Series “A” shareholders is required, together with a majority of the votes of the other shares represented at the meeting. In the event of adjournment for lack of a quorum, which consists of at least 80% of Series “A” shareholders and a simple majority of the other shareholders, at either an ordinary or extraordinary general meeting, two Series “A” shareholders, plus a majority of the other shares represented at the meeting, may deliberate and approve decisions at a reconvened meeting.
Board of Directors
Our Board of Directors is composed of 18 directors, each of whom is elected for a term of three years and may be re-elected. Each of the Series “A” shareholders is represented by one director. Five directors represent the governments or governmental institutions holding Series “B” shares and one director represents the private financial institutions holding Series “B” shares. Holders of Series “C” shares are entitled to elect two directors. In the event of a vacancy in a director position, the corresponding alternate director serves as director until such vacancy has been filled. Responsibilities of our Board of Directors include:
(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. |
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All of our directors are non-executive. As of the date of this prospectus, the composition of the Board of Directors was as follows:
Directors (and their Alternates) representing Series “A” shareholders:
Argentina | Hernán Lorenzino (Julio Miguel De Vido) | Minister of Economics and Public Finance (Minister of Federal Planning, Public Investments and Services) | ||
Bolivia | Elba Viviana Caro Hinojosa (Harley Rodríguez Téllez) | Minister of Development Planning (Vice Minister of Public Investment and External Financing) | ||
Brazil | Miriam Belchior (João Ghilherme Rochas Machado) | Minister of Planning, Budget and Process (Secretary of International Affairs from the Ministry of Planning, Budget and Process) | ||
Colombia | Mauricio Cardenas (Sergio Diaz-Granados Guida) | Minister of Treasury and Public Credit (Minister of Commerce, Industry and Tourism) | ||
Ecuador | Camilo Samán Salem (Jorge Wated Reshuan) | President of the Board of Directors of Corporación Financiera Nacional (General Manager of Corporación Financiera Nacional) | ||
Panama | Frank De Lima (Mahesh Khemlani) | Minister of Economics and Finance (Vice Minister of Finance) | ||
Paraguay | Manuel Ferreira (Ramón Ramirez) | Minister of Treasury (Vice Minister of Economy) | ||
Peru | Luis Miguel Castilla Rubio (Carlos Augusto Oliva Neyra) | Minister of Economy and Finance (Vice Minister of Treasury) | ||
Uruguay | Fernando Lorenzo (Mario Bergara) | Minister of Economy and Finance (President of Banco Central del Uruguay) | ||
Venezuela | (Pending confirmation from Venezuela) |
Directors (and their Alternates) representing Series “B” shareholders:
Bolivia | Luis Alberto Arce (Roger Edwin Rojas Ulo) | Minister of Economy and Finance (Vice Minister of Treasury and Public Credit) | ||
Colombia | José Dario Uribe (Mauricio Santa Maria Salamanca) | General Manager of Banco de la República (General Director of the National Planning Department) | ||
Ecuador | Patricio Rivera (Diego Martinez) | Minister of Finance (President of the Board of Directors of Banco Central del Ecuador) | ||
Peru | Alfonso Zárate Rivas (Laura Berta Calderón Regio) | President of the Board of Directors of Corporación Financiera de Desarrollo (Vice Minister of Economy) | ||
Venezuela | Edmée Betancourt de García (Gustavo Hernández) | President of Banco de Desarrollo Económico y Social of Venezuela (Vice Minister of Treasury) | ||
Private Financial Institutions | Darko Iván Zuazo Batchelder (Efraín Enrique Forero Fonseca) | President of the Board of Directors of Banco Mercantil Santa Cruz S.A. — Bolivia (President of Banco Davivieda — Colombia) |
The Directors representing the Series “C” shareholders are Luis de Guindos Jurado, Minister of Economy and Competitiveness for Spain and Luis Videgaray, Secretary of Treasury and Public Credit for Mexico. Their alternates are Simón Lizardo Mezquita, Minister of Treasury for the Dominican Republic, and Hernán Cheyre, Executive Vice President of Corporación de Fomento de la Producción de Chile, respectively.
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The business address of each of the directors and each of the alternate directors listed above is Torre CAF, Piso 9, Avenida Luis Roche, Altamira, Caracas, Venezuela.
Our Board of Directors annually elects a Chairman to preside over the meetings of the Board of Directors and the shareholders’ general meeting. Luis Miguel Castilla Rubio is the current Chairman until March 31, 2014.
Executive Committee
The Board of Directors delegates certain functions, including credit approvals within specified limits, to the Executive Committee. This Committee is composed of one director from each full member shareholder country, plus one director representing all of the Series “C” shareholders, and CAF’s Executive President, who presides over the Committee unless the Chairman of the Board of Directors is part of the Committee, in which case he or she will preside.
Executive President
The Executive President is our legal representative and chief executive officer. He is empowered to decide all matters not expressly reserved to the shareholders’ general meeting, the Board of Directors or the Executive Committee. The Executive President is elected by the Board of Directors for a period of five years and may be re-elected.
Our Executive President, L. Enrique García, was re-elected in November 2011 for a fifth five-year term that will expire in December 2016. Before becoming our Executive President in November 1991, Mr. García was Minister of Planning and Coordination and Head of the Economic and Social Cabinet in his native Bolivia. Between 1989 and 1991, he represented Bolivia as Governor to the World Bank, the Inter-American Development Bank (“IADB”) and as a member of the Development Committee of the World Bank. He was also Chairman of the Board of Directors of CAF from 1990 to 1991. Previously, Mr. García held senior positions during a 17 year tenure at the IADB, including Treasurer.
Officers
L. Enrique García | Executive President and Chief Executive Officer | |
Luis Enrique Berrizbeitia | Executive Vice President | |
Lilliana Canale | Corporate Vice President of Country Programs | |
Antonio Juan Sosa | Corporate Vice President of Infrastructure | |
Gustavo Ardila | Corporate Vice President of Productive and Financial Sector | |
Hamilton Moss de Souza | Corporate Vice President of Energy | |
José Curbelo | Corporate Vice President of Development Strategies and Public Policy | |
Hugo Sarmiento Kohlenberger | Corporate Vice President of Finance and Chief Financial Officer | |
José Carrera | Corporate Vice President of Social and Environmental Development | |
Ricardo Sigwald | General Counsel | |
Marcelo Zalles | Controller |
Employees
At December 31, 2012, we employed 418 professionals and 110 support staff. The senior positions of Executive Vice President, Vice President of Finance, Vice President of Country Programs, Vice President of Infrastructure, Vice President of Corporate and Financial Sector, Vice President of Development Strategies and Public Policies and Vice President of Social and Environmental Development are appointed by the Executive President, subject to ratification by the Board of Directors.
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Our management believes that the salaries and other benefits of our professional staff are competitive and that the local support staff is paid at levels above the prevailing local rates. Although we are not subject to local labor laws, we provide our employees with benefits and safeguards at least equivalent to those required under the law of the country where they normally work and reside. We offer technical and professional training opportunities through courses and seminars for our employees. Management considers its relationship with CAF’s employees to be good. There is no employee union and there have been no strikes in the history of CAF.
THE FULL MEMBER SHAREHOLDER COUNTRIES
Certain of the following information has been extracted from publicly available sources. We believe that the information is accurate but we have not independently verified it.
The region occupied by the full member shareholder countries is bordered by the Atlantic Ocean on the east, the Caribbean Sea on the north and the Pacific Ocean on the west, and covers approximately 13.245 million square kilometers in South America (approximately 74% of the South American continent).
Selected Demographic and Economic Data
The following table presents selected demographic and economic data for the full member shareholder countries for the years indicated:
Argentina | Bolivia | Brazil | Colombia | Ecuador | Panama | Paraguay | Peru | Uruguay | Venezuela | |||||||||||||||||||||||||||||||
Population (in millions) (1) | ||||||||||||||||||||||||||||||||||||||||
2011 | 41.1 | 10.2 | 197.1 | 46.9 | 13.9 | 3.6 | 6.6 | 29.8 | 3.4 | 29.5 | ||||||||||||||||||||||||||||||
2010 | 40.7 | 10.0 | 195.5 | 46.3 | 13.8 | 3.5 | 6.5 | 29.5 | 3.4 | 29.0 | ||||||||||||||||||||||||||||||
2009 | 40.3 | 98.6 | 193.8 | 45.7 | 13.6 | 3.5 | 6.3 | 29.2 | 3.4 | 28.6 | ||||||||||||||||||||||||||||||
2008 | 39.9 | 96.9 | 192.0 | 45.0 | 13.5 | 3.4 | 6.2 | 28.8 | 3.4 | 28.1 | ||||||||||||||||||||||||||||||
2007 | 39.5 | 95.2 | 190.1 | 44.4 | 13.3 | 3.3 | 6.1 | 28.5 | 3.3 | 27.7 | ||||||||||||||||||||||||||||||
2006 | 39.1 | 93.5 | 188.2 | 43.7 | 13.2 | 3.0 | 6.0 | 28.2 | 3.3 | 27.2 | ||||||||||||||||||||||||||||||
Life expectancy at birth |
| |||||||||||||||||||||||||||||||||||||||
2009 | 75.5 | 66.0 | 72.6 | 73.2 | 75.3 | 76.7 | n.a | 73.5 | 76.1 | 73.7 | ||||||||||||||||||||||||||||||
2008 | 75.3 | 65.7 | 72.4 | 73.0 | 75.1 | 76.6 | 72.1 | 73.3 | 76.0 | 73.5 | ||||||||||||||||||||||||||||||
2007 | 75.1 | 65.4 | 72.2 | 72.7 | 75.0 | 76.5 | 71.9 | 73.0 | 75.9 | 73.6 | ||||||||||||||||||||||||||||||
2006 | 74.9 | 65.0 | 71.9 | 72.5 | 74.8 | 76.3 | 71.7 | 72.8 | 75.7 | 73.4 | ||||||||||||||||||||||||||||||
2005 | 74.7 | 64.7 | 71.6 | 72.3 | 74.7 | 75.2 | 71.5 | 72.5 | 75.6 | 73.2 | ||||||||||||||||||||||||||||||
2004 | 74.5 | 64.4 | 71.4 | 72.0 | 74.5 | 75.0 | 71.3 | 72.2 | 75.2 | 73.0 | ||||||||||||||||||||||||||||||
2003 | 74.3 | 64.0 | 71.1 | 71.8 | 74.3 | 74.8 | 71.0 | 71.8 | 74.9 | 72.8 |
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Argentina | Bolivia | Brazil | Colombia | Ecuador | Panama | Paraguay | Peru | Uruguay | Venezuela | |||||||||||||||||||||||||||||||
GDP (U.S.$ |
| |||||||||||||||||||||||||||||||||||||||
2011 | 445,651.6 | 23,869.4 | 2,475,066.2 | 333,155.0 | 65,945.0 | 31,316.4 | 23,945.8 | 199,487.5 | 45,029.3 | 315,107.0 | ||||||||||||||||||||||||||||||
2010 | 368,712.0 | 19,585.0 | 2,089,828.0 | 288,717.0 | 56,998.0 | 26,590.0 | 17,628.0 | 153,935.0 | 39,984.0 | 233,218.0 | ||||||||||||||||||||||||||||||
2009 | 306,754.0 | 17,217.0 | 1,598,397.0 | 235,837.0 | 52,021.0 | 24,163.0 | 14,255.0 | 127,370.0 | 30,338.0 | 325,678.0 | ||||||||||||||||||||||||||||||
2008 | 326,872.0 | 17,071.0 | 1,650,713.0 | 244,646.0 | 54,208.0 | 23,002.0 | 16,874.0 | 127,115.0 | 31,260.0 | 310,396.0 | ||||||||||||||||||||||||||||||
2007 | 260,682.0 | 13,430.0 | 1,366,544.0 | 207,411.0 | 45,504.0 | 19,740.0 | 12,260.0 | 107,328.0 | 23,915.0 | 226,221.0 | ||||||||||||||||||||||||||||||
2006 | 212,868.0 | 11,532.0 | 1,088,767.0 | 162,808.0 | 41,705.0 | 17,134.0 | 9,289.0 | 92,439.0 | 19,831.0 | 183,222.0 | ||||||||||||||||||||||||||||||
2005 | 181,967.0 | 9,533.0 | 882,439.0 | 146,570.0 | 36,942.0 | 15,465.0 | 7,505.0 | 79,397.0 | 17,528.0 | 144,128.0 | ||||||||||||||||||||||||||||||
2004 | 152,158.0 | 8,638.0 | 663,783.0 | 117,188.0 | 32,646.0 | 14,179.0 | 6,973.0 | 69,763.0 | 13,708.0 | 112,800.0 | ||||||||||||||||||||||||||||||
2003 | 129,631.0 | 7,896.0 | 553,603.0 | 94,646.0 | 28,409.0 | 12,933.0 | 5,552.0 | 61,367.0 | 11,191.0 | 83,427.0 | ||||||||||||||||||||||||||||||
GDP per capita |
| |||||||||||||||||||||||||||||||||||||||
2011 | 10,896.0 | 2,244.5 | 12,696.0 | 7,235.5 | 4,576.9 | 8,409.7 | 3,649.0 | 5,932.0 | 13,367.4 | 10,906.0 | ||||||||||||||||||||||||||||||
2010 | 8,883.0 | 1,878.0 | 11,094.0 | 6,344.0 | 4,013.0 | 7,587.0 | 2,839.0 | 5,225.0 | 11,912.0 | 8,160.0 | ||||||||||||||||||||||||||||||
2009 | 7,479.0 | 1,677.0 | 8,348.0 | 5,243.0 | 3,716.0 | 7,003.0 | 2,248.0 | 4,372.0 | 9,070.0 | 11,474.0 | ||||||||||||||||||||||||||||||
2008 | 8,047.0 | 1,702.0 | 8,706.0 | 5,504.0 | 3,928.0 | 6,774.0 | 2,709.0 | 4,413.0 | 9,376.0 | 11,122.0 | ||||||||||||||||||||||||||||||
2007 | 6,487.0 | 1,367.0 | 7,283.0 | 4,722.0 | 3,345.0 | 5,911.0 | 2,003.0 | 3,768.0 | 7,195.0 | 8,231.0 | ||||||||||||||||||||||||||||||
2006 | 5,356.0 | 1,197.0 | 5,867.0 | 3,751.0 | 3,110.0 | 5,217.0 | 1,546.0 | 3,284.0 | 5,983.0 | 6,778.0 | ||||||||||||||||||||||||||||||
2005 | 4,630.0 | 1,011.0 | 4,812.0 | 3,417.0 | 2,795.0 | 4,791.0 | 1,272.0 | 2,855.0 | 5,302.0 | 5,528.0 | ||||||||||||||||||||||||||||||
2004 | 3,916.0 | 936.0 | 3,665.0 | 2,766.0 | 2,325.0 | 4,470.0 | 1,205.0 | 2,541.0 | 4,152.0 | 4,317.0 | ||||||||||||||||||||||||||||||
2003 | 3,423.0 | 875.0 | 3,097.0 | 2,262.0 | 2,212.0 | 4,150.0 | 978.0 | 2,264.0 | 3,387.0 | 3,250.0 | ||||||||||||||||||||||||||||||
Gross reserves |
| |||||||||||||||||||||||||||||||||||||||
2010 | 49,734.0 | 9,730.0 | 288,575.0 | 28,452.0 | 2,951.0 | 4,052.0 | 4,137.0 | 44,105.0 | 7,744.0 | 30,332.0 | ||||||||||||||||||||||||||||||
2009 | 46,093.0 | 8,581.0 | 238,520.0 | 25,356.0 | 3,792.0 | 4,400.0 | 3,839.0 | 33,136.0 | 7,987.0 | 35,830.0 | ||||||||||||||||||||||||||||||
2008 | 44,855.0 | 7,722.0 | 193,783.0 | 23,671.0 | 4,472.0 | 3,785.0 | 2,845.0 | 31,196.0 | 6,360.0 | 42,226.0 | ||||||||||||||||||||||||||||||
2007 | 44,682.0 | 5,319.0 | 180,334.0 | 20,949.0 | 3,520.0 | 4,364.0 | 2,461.0 | 27,689.0 | 4,121.0 | 33,500.0 | ||||||||||||||||||||||||||||||
2006 | 30,903.0 | 3,178.0 | 85,839.0 | 15,436.0 | 2,023.0 | 4,985.0 | 1,702.0 | 17,275.0 | 3,091.0 | 36,606.0 | ||||||||||||||||||||||||||||||
2005 | 27,179.0 | 1,714.0 | 53,799.0 | 14,947.0 | 2,147.0 | 2,432.0 | 1,297.0 | 14,097.0 | 3,078.0 | 30,368.0 | ||||||||||||||||||||||||||||||
2004 | 18,884.0 | 1,123.0 | 52,935.0 | 13,536.0 | 1,437.0 | 1,910.0 | 1,168.0 | 12,631.0 | 3,145.0 | 24,208.0 | ||||||||||||||||||||||||||||||
2003 | 14,153.0 | 976.0 | 49,296.0 | 10,916.0 | 1,160.0 | 2,307.0 | 969.0 | 10,194.0 | 2,281.0 | 21,366.0 | ||||||||||||||||||||||||||||||
Customer price |
| |||||||||||||||||||||||||||||||||||||||
2011 | 9.5% | 6.9% | 6.5% | 3.7% | 5.4% | 6.3% | 4.9% | 4.7% | 8.6% | 28.9% | ||||||||||||||||||||||||||||||
2010 | 10.9% | 7.2% | 5.9% | 3.2% | 3.6% | 4.9% | 7.2% | 2.1% | 6.9% | 27.4% | ||||||||||||||||||||||||||||||
2009 | 7.7% | 0.3% | 4.2% | 2.0% | 4.4% | 1.9% | 1.9% | 0.2% | 5.9% | 27.0% | ||||||||||||||||||||||||||||||
2008 | 7.2% | 11.9% | 5.9% | 7.7% | 8.4% | 6.8% | 7.5% | 6.7% | 9.2% | 31.9% | ||||||||||||||||||||||||||||||
2007 | 8.5% | 11.7% | 4.5% | 5.7% | 3.3% | 6.4% | 6.0% | 3.9% | 8.5% | 22.5% | ||||||||||||||||||||||||||||||
2006 | 10.5% | 5.0% | 3.1% | 4.5% | 2.9% | 2.2% | 12.5% | 1.1% | 6.4% | 17.0% | ||||||||||||||||||||||||||||||
2005 | 12.3% | 4.9% | 5.7% | 4.9% | 3.1% | 3.4% | 9.9% | 1.5% | 4.9% | 14.4% | ||||||||||||||||||||||||||||||
2004 | 6.1% | 4.6% | 7.6% | 5.5% | 1.9% | 1.6% | 2.8% | 3.5% | 7.6% | 19.2% |
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Argentina | Bolivia | Brazil | Colombia | Ecuador | Panama | Paraguay | Peru | Uruguay | Venezuela | |||||||||||||||||||||||||||||||
Exports of Goods | ||||||||||||||||||||||||||||||||||||||||
2011 | 83,950.0 | 8,331.9 | 256,040.0 | 57,739.1 | 23,105.0 | 24,109.1 | 10,658.0 | 45,639.5 | 7,911.8 | 92,811.0 | ||||||||||||||||||||||||||||||
2010 | 68,500.0 | 6,390.0 | 201,915.0 | 40,777.0 | 17,826.0 | 18,750.0 | 8,520.0 | 35,565.0 | 8,061.0 | 65,786.0 | ||||||||||||||||||||||||||||||
2009 | 55,669.0 | 4,848.0 | 152,995.0 | 34,025.0 | 14,286.0 | 16,652.0 | 5,805.0 | 26,962.0 | 6,408.0 | 57,595.0 | ||||||||||||||||||||||||||||||
2008 | 70,021.0 | 6,448.0 | 197,942.0 | 38,534.0 | 18,961.0 | 16,111.0 | 7,769.0 | 31,020.0 | 7,095.0 | 95,138.0 | ||||||||||||||||||||||||||||||
2007 | 55,779.0 | 4,458.0 | 160,651.0 | 30,577.0 | 14,847.0 | 14,292.0 | 5,471.0 | 27,892.0 | 5,100.0 | 69,010.0 | ||||||||||||||||||||||||||||||
2006 | 46,456.0 | 3,875.0 | 137,807.0 | 25,181.0 | 11,983.0 | 12,476.0 | 4,409.0 | 23,830.0 | 4,400.0 | 65,578.0 | ||||||||||||||||||||||||||||||
2005 | 40,387.0 | 2,791.0 | 118,308.0 | 21,730.0 | 10,109.0 | 10,808.0 | 3,352.0 | 17,367.0 | 3,774.0 | 55,716.0 | ||||||||||||||||||||||||||||||
2004 | 34,576.0 | 2,146.0 | 96,475.0 | 17,224.0 | 7,405.0 | 8,867.0 | 2,861.0 | 12,809.0 | 3,145.0 | 39,668.0 | ||||||||||||||||||||||||||||||
2003 | 29,939.0 | 1,598.0 | 73,084.0 | 13,813.0 | 6,197.0 | 7,582.0 | 2,170.0 | 9,091.0 | 2,281.0 | 27,230.0 | ||||||||||||||||||||||||||||||
Import of Goods |
| |||||||||||||||||||||||||||||||||||||||
2011 | 73,936.5 | 7,664.2 | 226,243.0 | 52,152.4 | 23,239.0 | 26,329.1 | 11,935.9 | 41,112.7 | 10,166.6 | 46,813.0 | ||||||||||||||||||||||||||||||
2010 | 53,810.0 | 5,380.0 | 181,648.0 | 38,628.0 | 18,855.0 | 19,882.0 | 9,916.0 | 28,815.0 | 9,916.0 | 38,613.0 | ||||||||||||||||||||||||||||||
2009 | 38,781.0 | 4,377.0 | 127,722.0 | 31,479.0 | 14,213.0 | 15,446.0 | 6,836.0 | 21,011.0 | 6,836.0 | 38,442.0 | ||||||||||||||||||||||||||||||
2008 | 57,422.0 | 4,980.0 | 173,107.0 | 37,563.0 | 17,590.0 | 17,502.0 | 8,809.0 | 28,449.0 | 8,809.0 | 49,482.0 | ||||||||||||||||||||||||||||||
2007 | 44,608.0 | 3,455.0 | 120,612.0 | 31,161.0 | 13,024.0 | 14,646.0 | 6,027.0 | 19,591.0 | 6,027.0 | 16,031.0 | ||||||||||||||||||||||||||||||
2006 | 34,151.0 | 2,814.0 | 91,350.0 | 24,858.0 | 11,379.0 | 11,918.0 | 5,022.0 | 14,844.0 | 5,022.0 | 33,583.0 | ||||||||||||||||||||||||||||||
2005 | 27,300.0 | 2,334.0 | 73,606.0 | 20,134.0 | 9,645.0 | 10,688.0 | 3,814.0 | 12,082.0 | 3,814.0 | 24,008.0 | ||||||||||||||||||||||||||||||
2004 | 21,311.0 | 1,844.0 | 62,835.0 | 15,878.0 | 7,630.0 | 9,074.0 | 3,105.0 | 9,805.0 | 3,105.0 | 17,021.0 | ||||||||||||||||||||||||||||||
2003 | 13,851.0 | 1,616.0 | 48,290.0 | 13,258.0 | 6,702.0 | 7,586.0 | 2,446.0 | 8,205.0 | 2,446.0 | 10,687.0 |
* | Sources: Official government sources (including but not limited to the ministries of finance of the full member shareholder countries). |
(1) | This information is extracted from the World Bank’s World Development Indicators (WDI). |
(2) | At December 31. |
(3) | End of period. |
(4) | Free on Board. |
DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth certain general terms and provisions of the debt securities to which any prospectus supplement may relate. The particular terms of the debt securities being offered and the extent to which such general provisions may apply will be described in a prospectus supplement relating to such debt securities.
The debt securities will be issued pursuant to a fiscal agency agreement, dated as of March 17, 1998, between CAF and The Bank of New York Mellon (as successor in interest to JPMorgan Chase Bank), as fiscal agent. The following statements briefly summarize some of the terms of the debt securities and the fiscal agency agreement (a copy of which has been filed as an exhibit to the registration statement). These statements do not purport to be complete and are qualified in their entirety by reference to all provisions of the fiscal agency agreement and such debt securities.
General
The debt securities will constitute our direct, unconditional, unsecured and general obligations. The debt securities will rank equally with all of our other unsecured Indebtedness. “Indebtedness” means all of our indebtedness in respect of monies borrowed by us and guarantees given by us for monies borrowed by others.
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The accompanying prospectus supplement will describe the following terms of the debt securities, as applicable:
(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. |
Certain debt securities will be treated for United States federal income tax purposes as original issue discount notes (“Discount Notes”) if the excess of the debt security’s “stated redemption price at maturity” over its issue price is more than a “de minimis amount” (as defined for United States federal income tax purposes). If applicable, the prospectus supplement will describe the United States federal income tax consequences of the ownership of Discount Notes and any special rules regarding debt securities.
Denominations, Registration and Transfer
The debt securities of each series will be issuable only in fully registered form, without coupons, and, unless otherwise specified in the prospectus supplement, only in denominations of $1,000 and integral multiples thereof.
At the option of the holder, subject to the terms of the fiscal agency agreement and the limitations applicable to global debt securities, debt securities of each series will be exchangeable for other debt securities of the same series of any authorized denomination and of a like tenor and aggregate principal amount.
Debt securities may be presented for exchange and for registration of transfer in the manner, at the places and subject to the restrictions set forth in the debt securities and as summarized in the prospectus supplement. Such services will be provided without charge, other than any tax or other governmental charge payable in connection therewith, but subject to the limitations provided in the terms of the debt securities.
If any definitive notes are issued and at that time the notes are listed on the Luxembourg Stock Exchange, we will appoint a transfer agent in Luxembourg, which we anticipate being the same entity that serves as our Luxembourg paying agent. In such circumstances, transfers or exchanges of any definitive notes may be made at the office of our Luxembourg transfer agent (in addition to the corporate trust office of the fiscal agent).
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Global Debt Securities
Some or all of the debt securities of any series may be represented, in whole or in part, by one or more global debt securities that will have an aggregate principal amount equal to that of the debt securities they represent. If applicable, each global debt security will be:
(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. |
Payment and Paying Agent
Unless otherwise indicated in the prospectus supplement, we will make payments of principal and interest on debt securities:
(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. |
Unless otherwise indicated in the prospectus supplement, our sole paying agent for payments on the debt securities will be the corporate trust office of the fiscal agent in The City of New York.
Any monies we pay to our fiscal agent or any paying agent for the payment of the principal of or interest on any debt securities that remains unclaimed at the end of two years after such principal or interest has become due and payable will be repaid to us by such agent. Upon such repayment, all liability of our fiscal agent or any paying agent with respect to such monies shall thereupon cease, without, however, limiting in any way our unconditional obligation to pay principal of or any interest on the debt securities when due.
Negative Pledge
As long as any of the debt securities are outstanding and unpaid, but only up to the time amounts sufficient for payment of all principal and interest have been placed at the disposal of the fiscal agent, we will not cause or permit to be created on any of our property or assets any mortgage, pledge or other lien or charge as security for any bonds, notes or other evidences of indebtedness heretofore or hereafter issued, assumed or guaranteed by us for money borrowed (other than purchase money mortgages, pledges or liens on property purchased by us as security for all or part of the purchase price thereof), unless the debt securities are secured by such mortgage, pledge or other lien or charge equally and ratably with such other bonds, notes or evidences of indebtedness.
Default; Acceleration of Maturity
Each of the following will constitute an “event of default” with respect to the debt securities of any series:
(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; |
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(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. |
If an event of default occurs with respect to the debt securities of any series at the time outstanding, each holder of any debt security of that series may, by written notice to CAF and the fiscal agent, declare the principal of and any accrued interest on all the debt securities of that series held by it to be, and the principal and accrued interest shall thereupon become, immediately due and payable, unless prior to receipt of the notice by CAF all events of default in respect of such series of debt securities are cured. If all the events of default are cured following the declaration, the declaration may be rescinded by any such holder with respect to the previously accelerated series of debt securities upon delivery of written notice of the rescission to CAF and the fiscal agent.
Additional Payments by CAF
All amounts payable (whether in respect of principal, interest or otherwise) in respect of the debt securities will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of any of the full member shareholder countries or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event, we will pay such additional amounts as may be necessary in order that the net amounts receivable by the holder of debt securities of any series after the withholding or deduction will equal the respective amounts that would have been receivable by the holder in the absence of the withholding or deduction, except that no additional amounts will be payable in relation to any payment in respect of any debt security:
(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 full member 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. |
As used in this prospectus, the “Relevant Date” means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the fiscal agent on or prior to the due date, it means the first date on which, the full amount of the moneys having been so received and being available for payment to holders of debt securities of any series, notice to that effect will have been duly published as set forth below under “— Notices”.
Modification and Amendment
Each and every holder of the debt securities in a series must consent to any amendment of a provision of the debt securities or the fiscal agency agreement that would:
(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 |
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(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. |
We may, however, with the written consent of the holders of 662/3% of the principal amount of the debt securities of a series, modify any of the other terms or provisions of the debt securities of that series or the fiscal agency agreement (as it applies to that series). Also, we and the fiscal agent may, without the consent of the holders of the debt securities of a series, modify any of the terms and conditions of the fiscal agency agreement and the debt securities of that series, for the purpose of:
(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. |
Notices
All notices will be delivered in writing to each holder of the debt securities of any series. If at the time of such notice the debt securities of a series are represented by global debt securities, the notice shall be delivered to the applicable depositary for such securities and shall be deemed to have been given three business days after delivery to such depositary. If at the time of the notice the debt securities of a series are not represented by global debt securities, the notice shall be delivered to the registered holders of the debt securities of the series and in that case shall be deemed to have been given three business days after the mailing of the notice by first class mail.
Further Issues
We may from time to time without the consent of holders of the debt securities create and issue further debt securities so as to form a single series with an outstanding series of debt securities.
Governing Law; Submission to Jurisdiction; Waiver of Immunity
The debt securities are governed by, and shall be construed in accordance with, the laws of the State of New York. We will accept the jurisdiction of any state or federal court in the Borough of Manhattan, The City of New York, in respect of any action arising out of or based on the debt securities that may be instituted by any holder of a debt security. We will appoint CT Corporation in The City of New York as our authorized agent upon which process in any such action may be served. We will irrevocably waive any immunity to which we might otherwise be entitled in any action arising out of or based on the debt securities brought in any state or federal court in the Borough of Manhattan, The City of New York. CT Corporation will not be an agent for service of process for actions brought under the United States securities laws, and our waiver of immunity will not extend to such actions.
From time to time we may issue under this prospectus and applicable prospectus supplement guarantees for the benefit of holders of specified securities of third parties. The issuers of the underlying securities may or may not be affiliated with us. A holder of a primary security will also have the benefit of our guarantee related to the primary security.
The terms and conditions of any guarantee will vary with the terms and conditions of the underlying securities. A complete description of the terms and conditions of any guarantee issued pursuant to this prospectus will be set forth in the prospectus supplement for the issue of the guarantees.
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We may provide guarantees with respect to the certain obligations of an issuer under its securities, including without limitation:
• | 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. |
Unless otherwise specified in the applicable prospectus supplement, guarantees issued under this prospectus will rank equally with all of our other unsecured general debt obligations, and will be governed by the laws of the State of New York.
Full Member Shareholder Country Taxation
Under the terms of the Constitutive Agreement, we are exempt from all types of taxes levied by each of the full member shareholder countries on our income, property and other assets, and on operations we carry out in accordance with that treaty, and we are exempt from all liability related to the payment, retention or collection of any taxes, contributions or tariffs.
Payments of principal and interest in respect of the debt securities to a non-resident of the full member shareholder countries will therefore not be subject to taxation in any of the full member shareholder countries, nor will any withholding for tax of any of the full member shareholder countries be required on any such payments to any holder of debt securities. In the event of the imposition of withholding taxes by any of the full member shareholder countries, we have undertaken to pay additional amounts in respect of any payments subject to such withholding, subject to certain exceptions, as described under “Description of the Debt Securities — Additional Payments by CAF”.
United States Taxation
This section describes the material United States federal income tax consequences of owning the debt securities we are offering. It is the opinion of Sullivan & Cromwell LLP, our counsel. It applies to you only if you acquire debt securities in the offering at the offering price and you hold your debt securities as capital assets for tax purposes. This section does not apply to you if you are a member of a class of holders subject to special rules, such as:
• | 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, |
• | a person that purchases or sells debt securities as part of a wash sale for tax purposes, or |
• | a United States holder (as defined below) whose functional currency for tax purposes is not the U.S. dollar. |
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This discussion deals only with debt securities that are due to mature within 30 years from the date on which they are issued. The United States federal income tax consequences of owning debt securities that are due to mature more than 30 years from their date of issue will be discussed in an applicable prospectus supplement.
This discussion assumes that the debt securities will be issued at par and that all principal and interest payments on the debt securities will be denominated in United States dollars. This discussion also assumes that the principal and interest payments on the debt securities are not subject to contingencies. The United States federal income tax consequences of owning Discount Notes (as defined in “Description of the Debt Securities — General” above), debt securities denominated in a currency other than United States dollars and/or debt securities subject to contingencies will be discussed in an applicable prospectus supplement.
If a partnership holds the debt securities, the United States federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the debt securities should consult its tax advisor with regard to the United States federal income tax treatment of an investment in the debt securities.
If you purchase debt securities at a price other than the offering price, the amortizable bond premium or market discount rules may also apply to you. You should consult your tax advisor regarding this possibility.
This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations under the Internal Revenue Code, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis.
Please consult your own tax advisor concerning the consequences of owning these debt securities in your particular circumstances under the Internal Revenue Code and the laws of any other taxing jurisdiction.
United States Holders
This subsection describes the tax consequences to a United States holder. You are a United States holder if you are a beneficial owner of a debt security and you are:
• | 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. |
If you are not a United States holder, this subsection does not apply to you and you should refer to “United States Alien Holders” below.
Payments of Interest. You will be taxed on interest on your debt security as ordinary income at the time you receive the interest or when it accrues, depending on your method of accounting for tax purposes.
Interest paid by us on the debt securities is income from sources outside the United States for purposes of the rules regarding the foreign tax credit allowable to a United States holder. Under the foreign tax credit rules, interest will, depending on your circumstances, be either “passive” or “general” income for purposes of computing the foreign tax credit.
Purchase, Sale and Retirement of the Debt Securities. Your tax basis in your debt security generally will be its cost. You will generally recognize capital gain or loss on the sale or retirement of your debt securities equal to the difference between the amount you realize on the sale or retirement, excluding any amounts attributable to accrued but unpaid interest (which will be treated as interest payments), and your tax basis in your debt securities. Capital gain of a noncorporate United States holder is generally taxed at preferential rates where the property is held for more than one year.
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Medicare Tax. For taxable years beginning after December 31, 2012, a United States holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) the United States holder’s “net investment income” for the relevant taxable year and (2) the excess of the United States holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000, depending on the individual’s circumstances). A holder’s net investment income generally includes its interest income and its net gains from the disposition of debt securities, unless such interest income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If you are a United States holder that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect of your investment in the debt securities.
United States Alien Holders
This subsection describes the tax consequences to a United States alien holder. You are a United States alien holder if you are a beneficial owner of a debt security and you are, for United States federal income tax purposes:
• | a nonresident alien individual, |
• | a foreign corporation, 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. |
If you are a United States holder, this subsection does not apply to you.
Under United States federal income and estate tax law, and subject to the discussion of backup withholding below, if you are a United States alien holder of a debt security, interest on a debt security paid to you is exempt from United States federal income tax, including withholding tax, whether or not you are engaged in a trade or business in the United States, unless:
• | 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, or are a corporation with a principal business of trading in stocks and securities for its own account. |
Purchase, Sale, Retirement and Other Disposition of the Debt Securities. If you are a United States alien holder of a debt security, you generally will not be subject to United States federal income tax on gain realized on the sale, exchange or retirement of a debt security unless:
• | 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. |
For purposes of the United States federal estate tax, the debt securities will be treated as situated outside the United States and will not be includible in the gross estate of a holder who is neither a citizen nor a resident of the United States at the time of death.
Information with Respect to Foreign Financial Assets
Owners of “specified foreign financial assets” with an aggregate value in excess of $50,000 (and in some circumstances, a higher threshold) may be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” may include financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are not held in accounts maintained by
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financial institutions: (i) stocks and securities issued by non-United States persons, (ii) financial instruments and contracts held for investment that have non-United States issuers or counterparties, and (iii) interests in foreign entities. Holders are urged to consult their tax advisors regarding the application of this reporting requirement to their ownership of the debt securities.
Backup Withholding and Information Reporting
If you are a noncorporate United States holder, information reporting requirements, on Internal Revenue Service Form 1099, generally will apply to:
• | 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. |
Additionally, backup withholding may apply to such payments if you are a noncorporate United States holder that:
• | 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. |
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the holder’s United States federal income tax liability, if any, provided that the required information is furnished to the Internal Revenue Service in a timely manner.
If you are a United States alien holder, you are generally exempt from backup withholding and information reporting requirements with respect to:
• | 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. |
Payment of the proceeds from the sale of a debt security effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, a sale of a debt security that is effected at a foreign office of a broker will be subject to information reporting and backup withholding if:
• | 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, |
unless the broker does not have actual knowledge or reason to know that you are a United States person and the documentation requirements described above are met or you otherwise establish an exemption.
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In addition, a sale of a debt security effected at a foreign office of a broker will be subject to information reporting if the broker is:
• | 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, |
unless the broker does not have actual knowledge or reason to know that you are a United States person and the documentation requirements described above are met or you otherwise establish an exemption. Backup withholding will apply if the sale is subject to information reporting and the broker has actual knowledge that you are a United States person.
We may sell the securities described in this prospectus to one or more underwriters for public offering and sale by them or may sell the securities to investors directly or through agents, which agents may be affiliated with us. Any such underwriter or agent involved in the offer and sale of the securities will be named in the accompanying prospectus supplement.
We may sell our guarantees separately from our debt securities to guarantee certain obligations associated with the securities of third party issuers. In such cases, we may sell the guarantees in the same transaction as the sale of the underlying security or we may sell the guarantee independently to guarantee the obligations of outstanding securities of third party issuers.
Sales of securities offered pursuant to any prospectus supplement may be effected from time to time in one or more transactions at a fixed price or prices which may be changed, at prices related to the prevailing market prices at the time of sale or at negotiated prices. We also may, from time to time, authorize underwriters, acting as our agents, to offer and sell securities upon the terms and conditions set forth in the prospectus supplement. In connection with the sale of securities, underwriters may be deemed to have received compensation from us in the form of underwriting discounts or commissions and may also receive commissions from purchasers of securities for whom they may act as agent. Underwriters may sell securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from purchasers of securities for whom they may act as agent.
CAF may offer the securities of any series to present holders of other securities of CAF as consideration for the purchase or exchange by CAF of other securities. This offer may be in connection with a publicly announced tender, exchange or other offer for these securities or in privately negotiated transactions. This offering may be in addition to or in lieu of sales of securities directly or through underwriters or agents as set forth in the applicable prospectus supplement.
Any underwriting compensation we pay to underwriters or agents in connection with the offering of securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers, will be set forth in the prospectus supplement. Underwriters, dealers and agents participating in the distribution of the securities may be deemed to be underwriters, and any discounts, concessions or commissions received by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters, dealers and agents may be entitled, under agreements entered into with CAF, to several indemnification against and contribution toward certain civil liabilities, including liabilities under the Securities Act.
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Unless otherwise specified in the prospectus supplement, each series of securities will be a new issue with no established trading market. We may elect to list any series of securities on any exchange, but we are not obligated to do so.
One or more underwriters may make a market in a series of securities, but they will not be obligated to do so and may discontinue any market making at any time without notice. Neither we nor any underwriter can give assurances as to the liquidity of the trading market for the securities.
Certain of the underwriters, agents and their affiliates may be customers of, engage in transactions with and perform services for CAF in the ordinary course of business, for which they received or will receive customary fees and expenses.
VALIDITY OF THE DEBT SECURITIES
In connection with particular offerings of the debt securities in the future, and if stated in the applicable prospectus supplements, the validity of those debt securities will be passed upon for us by Sullivan & Cromwell LLP, Washington, D.C., and for any underwriters or agents by counsel named in the applicable prospectus supplement. Sullivan & Cromwell LLP and counsel to the underwriters or agents may rely as to certain matters on the opinion of our General Counsel.
The validity of the guarantees will be passed upon for us by counsel to be named in the applicable prospectus supplement. The validity of the guarantees will be passed upon for the underwriters by counsel to be named in the applicable prospectus supplement.
The balance sheets as of December 31, 2012 and 2011 and the related statements of income, stockholders’ equity and cash flows for the years ended December 31, 2012, 2011 and 2010 included in this Prospectus and the effectiveness of CAF’s internal control over financial reporting, have been audited by Lara Marambio & Asociados, a member firm of Deloitte Touche Tohmatsu Limited, independent auditors, as stated in their reports appearing herein. Such financial statements are included in reliance upon their report given on the authority of this firm as experts in accounting and auditing.
Our authorized representative in the United States of America is Puglisi & Associates. The address of the authorized representative in the United States is 850 Library Avenue, Suite 204, Newark, Delaware 19711.
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WHERE YOU CAN FIND MORE INFORMATION
This registration statement of which the prospectus forms a part, including its various exhibits, is available to the public over the internet at the SEC’s website: http://www.sec.gov. You may also read and copy these documents at the Securities and Exchange Commission’s Public Reference Room, at the following address:
SEC Public Reference Room
100 F Street, N.E.
Washington, D.C. 20549
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information about how to access the documents we have filed with it.
The information set forth herein, except the information appearing in the section entitled “The Full Member Shareholder Countries”, is stated on the authority of the Executive President of CAF, in his duly authorized capacity as Executive President.
CORPORACIÓN ANDINA DE FOMENTO | ||
By: | /S/ L. ENRIQUE GARCÍA | |
Name: L. Enrique García | ||
Title: Executive President |
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Pages | ||||
Management’s Report on the Effectiveness of Internal Control Over Financial Reporting | F-2 | |||
F-3-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-9-10 | ||||
F-11-46 |
F-1
Table of Contents
Management’s Report on the Effectiveness of Internal Control
Over Financial Reporting
The Management of Corporación Andina de Fomento (CAF) is responsible for establishing and maintaining effective internal control over financial reporting in CAF. Management has evaluated CAF’s internal control over financial reporting as of December 31, 2012, based on the criteria for effective internal control determined in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
CAF’s internal control over financial reporting is a process effected by those in charged of governance, management, and other personnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance with U.S. generally accepted accounting principles. An entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and those charged with governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial statements.
Management has assessed the effectiveness of CAF’s internal control over financial reporting as of December 31, 2012. Based on this assessment, CAF’s Management concluded that CAF’s internal control over financial reporting was effective as of December 31, 2012.
There are inherent limitations in the effectiveness of any internal control system, including the possibility of human error and the deception or overriding of controls. Accordingly, even an effective internal control can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.
CAF’s financial statements as of December 31, 2012, have been audited by an independent accounting firm, which has also issued an attestation report on management’s assertion on the effectiveness of CAF’s internal control over financial reporting. The attestation report, which is included in this document, expresses an unqualified opinion on management’s assertion on the effectiveness of CAF’s internal control over financial reporting as of December 31, 2012.
/s/ L. Enrique Garcia | /s/ Hugo Sarmiento K. | |
Executive President and Chief Executive Officer | Corporate Vice President, Chief Financial Officer |
/s/ Marcos Subía G.
Director, Accounting and Budget
January 31, 2013
Torre CAF, Av. Luis Roche, Altamira, Caracas, Venezuela. Telf. +58 (212) 209 2111 www.caf.com
F-2
Table of Contents
Independent Accountants’ Report on Management’s Assertion on
Effectiveness of Internal Control Over Financial Reporting
To the Board of Directors and Stockholders of
Corporación Andina de Fomento (CAF)
We have audited management’s assertion, included in the accompanying Management’s Report on the Effectiveness of Internal Control Over Financial Reporting, that Corporación Andina de Fomento (CAF) maintained effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). CAF’s management is responsible for maintaining effective internal control over financial reporting and for its assertion on the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on the Effectiveness of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on management’s assertion based on our audit.
We conducted our audit in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
An entity’s internal control over financial reporting is a process effected by those charged with governance, management, and other personnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance with accounting principles generally accepted in the United States of America. An entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and those charged with governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial statements.
Because of the inherent limitations, internal control over financial reporting may not prevent, or detect and correct misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, management’s assertion that CAF maintained effective internal control over financial reporting as of December 31, 2012 is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
F-3
Table of Contents
We also have audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheets of CAF as of December 31, 2012, 2011 and 2010, and the related statements of income, changes in stockholders’ equity and cash flows for the years then ended, and our report dated January 31, 2013 expressed an unqualified opinion on those financial statements.
/s/ Deloitte
January 31, 2013
Caracas — Venezuela
Lara Marambio & Asociados. A member firm of Deloitte Touche Tohmatsu Limited.
www.deloitte.com/ve
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
F-4
Table of Contents
Report of Independent Auditors
To the Board of Directors and Stockholders of
Corporación Andina de Fomento (CAF)
We have audited the accompanying balance sheets of Corporación Andina de Fomento (CAF) as of December 31, 2012, 2011 and 2010 and the related statements of income, changes in stockholders’ equity and cash flows for the years then ended and the related notes to the financial statements. These financial statements are the responsibility of CAF’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our audit opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Corporación Andina de Fomento (CAF) as of December 31, 2012, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with attestation standards established by the American Institute of Certified Public Accountants, the management’s assertion that CAF maintained effective internal control over financial reporting at December 31, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated January 31, 2013 expressed an unqualified opinion thereon.
/s/ Deloitte
January 31, 2013
Caracas — Venezuela
Lara Marambio & Asociados. A member firm of Deloitte Touche Tohmatsu Limited.
www.deloitte.com/ve
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
F-5
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Balance Sheets
December 31, 2012, 2011 and 2010
(In thousands of U.S. dollars)
NOTES | 2012 | 2011 | 2010 | |||||||||||||
ASSETS | ||||||||||||||||
Cash and due from banks | 2 | 141,720 | 256,797 | 119,834 | ||||||||||||
Deposits with banks | 2 | 1,490,049 | 1,543,885 | 1,403,443 | ||||||||||||
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|
| |||||||||||
Cash and deposits with banks | 1,631,769 | 1,800,682 | 1,523,277 | |||||||||||||
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|
|
|
| |||||||||||
Marketable securities - | ||||||||||||||||
Trading | 4 and 19 | 5,453,137 | 3,760,325 | 2,456,745 | ||||||||||||
Other investments | 3 | 100,910 | 95,211 | 146,852 | ||||||||||||
Loans (US$ 72,354, US$ 64,811 and US$ 67,678 at fair value as of december 31, 2012, 2011 and 2010) | 5 and 19 | 16,355,410 | 14,980,744 | 13,783,043 | ||||||||||||
Less loan commissions, net of origination costs | 76,837 | 77,033 | 70,129 | |||||||||||||
Less allowance for loan losses | 5 | 125,799 | 130,636 | 141,364 | ||||||||||||
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|
|
| |||||||||||
Loans, net | 16,152,774 | 14,773,075 | 13,571,550 | |||||||||||||
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|
|
| |||||||||||
Accrued interest and commissions receivable | 216,323 | 196,316 | 159,559 | |||||||||||||
Equity investments | 6 | 146,811 | 111,889 | 94,721 | ||||||||||||
Derivative instruments | 18 and 19 | 772,448 | 703,264 | 524,989 | ||||||||||||
Property and equipment, net | 7 | 39,226 | 36,840 | 29,901 | ||||||||||||
Other assets | 8 | 90,313 | 57,748 | 39,281 | ||||||||||||
|
|
|
|
|
| |||||||||||
Total | 24,603,711 | 21,535,350 | 18,546,875 | |||||||||||||
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|
|
| |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
LIABILITIES - | ||||||||||||||||
Deposits | 9 | 3,121,843 | 3,672,063 | 2,739,497 | ||||||||||||
Commercial papers | 10 | 3,174,927 | 1,977,050 | 1,524,285 | ||||||||||||
Borrowings (US$ 341,553, US$ 356,851 and US$ 347,310 at fair value as of december 31, 2012, 2011 and 2010) | 11 and 19 | 1,391,093 | 1,138,450 | 998,089 | ||||||||||||
Bonds (US$ 9,595,784, US$ 7,947,340 and US$ 7,089,124 at fair value as of december 31, 2012, 2011 and 2010) | 12 and 19 | 9,742,852 | 8,072,328 | 7,212,812 | ||||||||||||
Accrued interest payable | 180,597 | 163,561 | 120,001 | |||||||||||||
Derivative instruments | 18 and 19 | 60,067 | 93,869 | 132,887 | ||||||||||||
Accrued expenses and other liabilities | 13 | 67,270 | 66,776 | 66,117 | ||||||||||||
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| |||||||||||
Total liabilities | 17,738,649 | 15,184,097 | 12,793,688 | |||||||||||||
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| |||||||||||
STOCKHOLDERS’ EQUITY - | 15 | |||||||||||||||
Subscribed and paid-in capital (authorized capital US$10,000 million) | 3,636,715 | 3,229,365 | 2,813,940 | |||||||||||||
Additional paid-in capital | 782,523 | 739,733 | 616,171 | |||||||||||||
Reserves | 2,285,655 | 2,229,576 | 2,156,937 | |||||||||||||
Retained earnings | 160,169 | 152,579 | 166,139 | |||||||||||||
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Total stockholders’ equity | 6,865,062 | 6,351,253 | 5,753,187 | |||||||||||||
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| |||||||||||
Total | 24,603,711 | 21,535,350 | 18,546,875 | |||||||||||||
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|
See accompanying notes to the financial statements
F-6
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. dollars)
NOTES | 2012 | 2011 | 2010 | |||||||||||
Interest income - | ||||||||||||||
Loans | 1(g) | 440,957 | 363,260 | 320,068 | ||||||||||
Investments and deposits with banks | 1(f), 2 and 3 | 52,315 | 26,849 | 33,965 | ||||||||||
Loan commissions | 1(g) | 26,867 | 38,910 | 31,522 | ||||||||||
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| |||||||||
Total interest income | 520,139 | 429,019 | 385,555 | |||||||||||
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Interest expense - | ||||||||||||||
Deposits | 23,027 | 14,082 | 9,255 | |||||||||||
Commercial papers | 12,183 | 9,350 | 9,771 | |||||||||||
Advances | — | 163 | — | |||||||||||
Bonds | 214,976 | 166,977 | 136,651 | |||||||||||
Borrowings | 17,354 | 10,986 | 10,057 | |||||||||||
Commissions | 14,148 | 11,470 | 7,481 | |||||||||||
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Total interest expense | 281,688 | 213,028 | 173,215 | |||||||||||
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| |||||||||
Net interest income | 238,451 | 215,991 | 212,340 | |||||||||||
Credit to allowance for loan losses | 5 | (4,865 | ) | (11,771 | ) | (2,990 | ) | |||||||
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Net interest income, after credit to allowance for loan losses | 243,316 | 227,762 | 215,330 | |||||||||||
Non-interest income - | ||||||||||||||
Other commissions | 6,150 | 8,405 | 3,798 | |||||||||||
Dividends and equity in (losses) earnings of investees | 2,649 | (6,244 | ) | 3,301 | ||||||||||
Other income | 482 | 2,404 | 801 | |||||||||||
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Total non-interest income | 9,281 | 4,565 | 7,900 | |||||||||||
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Non-interest expenses - | ||||||||||||||
Administrative expenses | 23 | 90,988 | 81,006 | 69,735 | ||||||||||
Other expenses | 863 | 3,565 | 1,069 | |||||||||||
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| |||||||||
Total non-interest expenses | 91,851 | 84,571 | 70,804 | |||||||||||
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| |||||||||
Net income before unrealized changes in fair value related to financial instruments | 160,746 | 147,756 | 152,426 | |||||||||||
Unrealized changes in fair value related to financial instruments | (577 | ) | 4,823 | 13,713 | ||||||||||
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| |||||||||
Net income | 160,169 | 152,579 | 166,139 | |||||||||||
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|
See accompanying notes to the financial statements
F-7
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Statements of changes in Stockholders’ Equity
Years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. dollars)
Subscribed and paid- in capital | Additional paid-in capital | Reserves | Total | |||||||||||||||||||||||||||
NOTES | General reserve | Article N° 42 of by-laws | Total reserves | Retained earnings | stockholders’ equity | |||||||||||||||||||||||||
Balances at December 31, 2009 | 2,485,645 | 539,222 | 1,668,515 | 358,713 | 2,027,228 | 234,709 | 5,286,804 | |||||||||||||||||||||||
Capital increase | 15 | 150,835 | 254,409 | — | — | — | — | 405,244 | ||||||||||||||||||||||
Capitalization of Additional paid-in capital | 15 | 177,460 | (177,460 | ) | — | — | — | — | — | |||||||||||||||||||||
Net income | 15 | — | — | — | — | — | 166,139 | 166,139 | ||||||||||||||||||||||
Appropriated for general reserve | 15 | — | — | 106,238 | — | 106,238 | (106,238 | ) | — | |||||||||||||||||||||
Appropriated for reserve pursuant to Article N° 42 of by-laws | 15 | — | — | — | 23,471 | 23,471 | (23,471 | ) | — | |||||||||||||||||||||
Distributions to stockholders’ funds | 16 | — | — | — | — | — | (105,000 | ) | (105,000 | ) | ||||||||||||||||||||
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Balances at December 31, 2010 | 2,813,940 | 616,171 | 1,774,753 | 382,184 | 2,156,937 | 166,139 | 5,753,187 | |||||||||||||||||||||||
Capital increase | 15 | 199,045 | 339,942 | — | — | — | — | 538,987 | ||||||||||||||||||||||
Capitalization of Additional paid-in capital | 15 | 216,380 | (216,380 | ) | — | — | — | — | — | |||||||||||||||||||||
Net income | 15 | — | — | — | — | — | 152,579 | 152,579 | ||||||||||||||||||||||
Appropriated for general reserve | 15 | — | — | 55,989 | — | 55,989 | (55,989 | ) | — | |||||||||||||||||||||
Appropriated for reserve pursuant to Article N° 42 of by-laws | 15 | — | — | — | 16,650 | 16,650 | (16,650 | ) | — | |||||||||||||||||||||
Distributions to stockholders’ funds | 16 | — | — | — | — | — | (93,500 | ) | (93,500 | ) | ||||||||||||||||||||
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Balances at December 31, 2011 | 3,229,365 | 739,733 | 1,830,742 | 398,834 | 2,229,576 | 152,579 | 6,351,253 | |||||||||||||||||||||||
Capital increase | 15 | 159,030 | 291,110 | — | — | — | — | 450,140 | ||||||||||||||||||||||
Capitalization of Additional paid-in capital | 15 | 248,320 | (248,320 | ) | — | — | — | — | — | |||||||||||||||||||||
Net income | 15 | — | — | — | — | — | 160,169 | 160,169 | ||||||||||||||||||||||
Appropriated for general reserve | 15 | — | — | 40,779 | — | 40,779 | (40,779 | ) | — | |||||||||||||||||||||
Appropriated for reserve pursuant to Article N° 42 of by-laws | 15 | — | — | — | 15,300 | 15,300 | (15,300 | ) | — | |||||||||||||||||||||
Distributions to stockholders’ funds | 16 | — | — | — | — | — | (96,500 | ) | (96,500 | ) | ||||||||||||||||||||
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Balances at December 31, 2012 | 3,636,715 | 782,523 | 1,871,521 | 414,134 | 2,285,655 | 160,169 | 6,865,062 | |||||||||||||||||||||||
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See accompanying notes to the financial statements
F-8
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. dollars)
NOTES | 2012 | 2011 | 2010 | |||||||||||||
Cash flows from operating activities - | ||||||||||||||||
Net income | 160,169 | 152,579 | 166,139 | |||||||||||||
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|
|
| |||||||||||
Adjustments to reconcile net income to net cash used in operating activities - | ||||||||||||||||
Unrealized (gain) loss on trading securities | 4 | (11,320 | ) | (1,883 | ) | 4,209 | ||||||||||
Amortization of loan commissions, net of origination costs | (10,677 | ) | (12,845 | ) | (11,943 | ) | ||||||||||
Credit to allowance for loan losses | 5 | (4,865 | ) | (11,771 | ) | (2,990 | ) | |||||||||
Equity in earnings of investees | 1,067 | 10,527 | (678 | ) | ||||||||||||
Amortization of deferred charges | 2,799 | 2,077 | 2,297 | |||||||||||||
Depreciation of property and equipment | 7 | 3,924 | 2,957 | 2,224 | ||||||||||||
Provision for employees’ severance indemnities and benefits | 7,745 | 7,977 | 7,812 | |||||||||||||
Provision for employees’ savings plan | 1,286 | 1,317 | 1,334 | |||||||||||||
Unrealized changes in fair value related to financial instruments | 577 | (4,823 | ) | (13,713 | ) | |||||||||||
Net changes in operating assets and liabilities - | ||||||||||||||||
Severance indemnities paid or advanced | (5,013 | ) | (7,144 | ) | (3,973 | ) | ||||||||||
Employees’ savings plan paid or advanced | (379 | ) | (1,545 | ) | (31 | ) | ||||||||||
Trading securities, net | 4 | (1,681,492 | ) | (1,301,697 | ) | (246,700 | ) | |||||||||
Interest and commissions receivable | (20,007 | ) | (36,757 | ) | (23,854 | ) | ||||||||||
Other assets | (35,297 | ) | (20,543 | ) | (12,552 | ) | ||||||||||
Accrued interest payable | 17,036 | 43,560 | 21,908 | |||||||||||||
Accrued expenses and other liabilities | (3,212 | ) | 54 | 7,748 | ||||||||||||
|
|
|
|
|
| |||||||||||
Total adjustments and net changes in operating assets and liabilities | (1,737,828 | ) | (1,330,539 | ) | (268,902 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Net cash used in operating activities | (1,577,659 | ) | (1,177,960 | ) | (102,763 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Cash flows from investing activities - | ||||||||||||||||
Purchases of other investments | 3 | (236,168 | ) | (186,308 | ) | (273,927 | ) | |||||||||
Maturities of other investments | 3 | 230,469 | 237,949 | 330,436 | ||||||||||||
Loan origination and principal collections, net | 5 | (1,364,921 | ) | (1,177,631 | ) | (2,070,844 | ) | |||||||||
Equity investments | 6 | (35,989 | ) | (27,696 | ) | (8,561 | ) | |||||||||
Purchases of property and equipment | 7 | (6,310 | ) | (9,896 | ) | (4,051 | ) | |||||||||
|
|
|
|
|
| |||||||||||
Net cash used in investing activities | (1,412,919 | ) | (1,163,582 | ) | (2,026,947 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Carried forward, | (2,990,578 | ) | (2,341,542 | ) | (2,129,710 | ) | ||||||||||
|
|
|
|
|
|
See accompanying notes to the financial statements
F-9
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Statements of Cash Flows
Years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. dollars)
NOTES | 2012 | 2011 | 2010 | |||||||||||||
Brought forward, | (2,990,578 | ) | (2,341,542 | ) | (2,129,710 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Cash flows from financing activities - | ||||||||||||||||
Net increase in deposits | (550,220 | ) | 932,566 | 88,791 | ||||||||||||
Net increase in commercial paper | 1,197,877 | 452,765 | 258,868 | |||||||||||||
Proceeds from advances | — | 50,000 | — | |||||||||||||
Repayment of advances | — | (50,000 | ) | — | ||||||||||||
Proceeds from issuance of bonds | 12 | 2,337,449 | 1,447,991 | 1,986,056 | ||||||||||||
Repayment of bonds | 12 | (768,355 | ) | (790,682 | ) | (448,608 | ) | |||||||||
Proceeds from borrowings | 11 | 384,795 | 288,971 | 337,008 | ||||||||||||
Repayment of borrowings | 11 | (133,521 | ) | (158,151 | ) | (137,141 | ) | |||||||||
Distributions to stockholders’ special funds | 16 | (96,500 | ) | (93,500 | ) | (105,000 | ) | |||||||||
Proceeds from issuance of shares | 15 | 450,140 | 538,987 | 405,244 | ||||||||||||
|
|
|
|
|
| |||||||||||
Net cash provided by financing activities | 2,821,665 | 2,618,947 | 2,385,218 | |||||||||||||
|
|
|
|
|
| |||||||||||
Net (decrease) increase in cash and deposits with banks | (168,913 | ) | 277,405 | 255,508 | ||||||||||||
Cash and deposits with banks at beginning of year | 1,800,682 | 1,523,277 | 1,267,769 | |||||||||||||
|
|
|
|
|
| |||||||||||
Cash and deposits with banks at end of year | 1,631,769 | 1,800,682 | 1,523,277 | |||||||||||||
|
|
|
|
|
| |||||||||||
Consisting of - | ||||||||||||||||
Cash and deposits with banks | 1,631,769 | 1,800,682 | 1,523,277 | |||||||||||||
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|
|
|
| |||||||||||
Supplemental disclosure - | ||||||||||||||||
Interest paid during the year | 239,221 | 159,749 | 143,237 | |||||||||||||
|
|
|
|
|
| |||||||||||
Noncash financing activities - | ||||||||||||||||
Changes in derivative instruments assets | 69,184 | 178,275 | 88,244 | |||||||||||||
Changes in derivative instruments liabilities | (33,802 | ) | (39,018 | ) | 87,751 |
See accompanying notes to the financial statements
F-10
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
1. SIGNIFICANT ACCOUNTING POLICIES
a. Description of Business — Corporación Andina de Fomento (CAF) began its operations on June 8, 1970, and was established under public international law which abides by the provisions set forth in its by-laws. Series “A” and “B” stockholder countries are: Argentina, Bolivia, Brazil, Colombia, Ecuador, Panama, Paraguay, Peru, Uruguay and Venezuela. Series “C” stockholder countries are: Chile, Costa Rica, Dominican Republic, Jamaica, Mexico, Portugal, Spain and Trinidad and Tobago. In addition, there are 14 banks which are Series “B” stockholders. CAF is headquartered in Caracas, Venezuela.
CAF’s objective is to support sustainable development and economic integration within Latin America and the Caribbean by helping stockholder countries diversify their economies, and become more competitive and responsive to social needs.
CAF offers financial and related services to the governments of its stockholder countries, as well as their public and private institutions, corporations and joint ventures. CAF’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 stockholder countries. Furthermore, CAF manages and supervises third-party cooperation funds of other countries and organizations, generally non-reimbursable, destined to finance programs agreed upon with donor organizations which are in line with CAF policies and strategies.
CAF raises funds to finance operations both within and outside its stockholder countries.
b. Financial Statement 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.
Certain amounts in the 2011 financial statements have been reclassified to conform to the current year´s presentation.
CAF has no accumulated other comprehensive income.
c. Use of estimates — The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires that management makes estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, as well as the amounts reported as revenues and expenses during the corresponding reporting period. The most important estimates related with the preparation of CAF’s financial statements refer to revenue recognition, valuation and classification at fair values of financial instruments, and estimating the allowance for loan losses, among others. Management believes these estimates are adequate. Actual results could differ from those estimates.
d. Transactions in other currencies — Transactions in currencies other than U.S. dollars are translated at exchange rates prevailing in international markets on the dates of the transactions. Currency balances other than U.S. dollars are translated at year-end exchange rates. Any foreign exchange gains or losses, including related hedge effects, are included in the statement of income.
e. Cash and Cash Equivalents — Cash and cash equivalents are defined as cash, due from banks and short-term deposits with an original maturity of three months or less.
f. Marketable Securities — CAF classifies its investments, according to management intention, as trading marketable securities. Trading securities are mainly bought and held with the purpose of selling them in the short term. Trading securities are recorded at fair value. Gains and losses, from sales of trading securities and changes in the fair value of trading securities are included in interest income of investments and deposits with banks in the statements of income.
F-11
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
g. Loans — CAF grants short-, medium- and long-term loans to finance projects, working capital, trade activities and to undertake feasibility studies for investment opportunities, both to public and private entities, for development and integration programs and projects in stockholder countries.
For credit risk purposes, CAF classifies its portfolio into sovereign and non-sovereign.
Sovereign loans — include loans granted to national, regional or local governments or decentralized institutions and other loans fully guaranteed by national governments.
Non-sovereign loans — include loans granted to corporate and financial sectors, among others, which are not guaranteed by national governments.
Loans are reported at their outstanding principal balances less: (i) write-offs, (ii) the allowance for loan losses, and (iii) loan commission fees received upon origination net of certain direct 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 for interest on loans is discontinued at the time a private sector loan is 90 days (180 days for public sector loans) delinquent unless the loan is well-secured and in process of collection.
Interest accrued but not collected for loans that are placed on nonaccrual is reversed against interest income. The interest on these loans is accounted for on a cash-basis, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Non-accrual loans are considered impaired loans. Factors considered by management in determining impairment include payments status and the probability of collecting scheduled principal and interest payments when due.
Loan losses, partial or total, are written off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries on written off loans, if any, will be credited to the allowance.
CAF maintains risk exposure policies to avoid concentrating its loan portfolio in one country or specific economic group, which might be affected by market situations or other circumstances. For this reason, CAF uses certain measurement parameters, such as: CAF’s stockholders’ equity, total loan portfolio, economic groups from public and private sectors, among others. CAF reviews, on semi- annual basis, the credit risk rating of its loans and classifies the risk into the following categories:
Satisfactory — credits with sufficient cash flow capacity and favorable financial indicators.
Special mention — credits which are less vulnerable in the short term but which now reflect inferior financial indicators or uncertainties in the face of adverse economic conditions or instability with the guaranties.
Doubtful — credits whose recovery is doubtful.
h. Allowance for Loan Losses — Allowance for loan losses is maintained at a level CAF believes to be adequate to absorb probable losses inherent to the loan portfolio as of the date of the financial statements. Allowance for sovereign loan losses is established by CAF based on the individual long-term foreign currency debt rating of the borrower countries considering the weighted average rating of three recognized international risk rating agencies as of the date of the financial statements preparation. These country risk
F-12
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
ratings consider a default probability. Given CAF’s status as a preferred creditor and taking into account the immunities and privileges conferred by its stockholder countries, which are established in CAF’s by-laws and other similar agreements, a factor that reflects a lower default probability — usually equivalent to three levels up in this average rating -. For non- sovereign loans, the allowance is based on the individual local currency debt rating of the borrower countries considering the weighted average rating of the mentioned agencies.
A specific allowance is established by CAF for individually impaired loans. A loan is considered impaired when, based on currently available information and events, there is a 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 original loan’s effective interest rate.
The allowance attributable to loans is reported as a deduction of loans and the allowance for off-balance sheet credit risk, such as, stand-by letters of credit and guarantees, is reported as other liabilities.
i. Equity Investments — CAF participates with equity investments in companies and investment funds in strategic sectors, with the objective of promoting the development of such companies and their participation in the securities markets and to serve as a catalytic agent in attracting resources to stockholder countries.
Equity investments are accounted for using the equity method or at cost. If CAF 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% – 50% 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 according to CAF’s proportionate share of earnings or losses, dividends received and certain transactions of the investee company.
A decline in the value of any equity investment accounted at cost that is not deemed to be temporary, results in a reduction in the carrying amount to fair value. These investments are evaluated, any impairment is charged to income and a new cost basis for the investment is established.
The equity investments do not have readily determinable fair values.
j. Property and Equipment — net — Property and equipment are stated at cost less accumulated depreciation. Maintenance and repair expenses are charged directly to the statements of income for the year as incurred, while improvements and renewals are capitalized. Depreciation, is calculated using the straight-line method, and charged to the statements of income over the estimated useful life of assets.
The assets in conformity with their estimated useful life are as follows:
Buildings | 30 years | |
Buildings improvements | 15 years | |
Leasing building improvements | Term of leasing contract | |
Furniture and equipment | 2 to 10 years | |
Vehicles | 5 years |
k. Other Assets — Other assets include deferred charges and intangible assets.
Deferred costs capital investment — include projects which are in progress. Once they are completed and in place, the total amount invested is capitalized. The depreciation or amortization starts applying the current policy applicable for each asset category.
F-13
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Deferred costs finance — include up-front costs and fees related to bonds and borrowings denominated in US$ that are deferred and amortized during their life time.
Intangible assets — which are reported at cost less accumulated amortization, are also included. The amortization is calculated with the straight-line method over the useful life estimated by CAF. The estimated useful life of these assets is between 2 and 5 years.
l. Deposits and Commercial Papers — Deposits and commercial papers are recorded at amortized cost.
m. Borrowings — The borrowings account includes those obligations with local or foreign financial institutions and commercial banks, which are commonly recorded at amortized cost, except for some borrowings that are hedged using interest rate swaps as an economic hedge.
n. Bonds — Medium and long-term debt issuances, whose objective is to provide the financial resources required to finance CAF’s operations, are registered as follows:
• | Bonds denominated in other currencies other than the US$ are recognized at fair value, as provided by ASC 825-10-25 “Fair Value Option”. Gains or losses resulting from changes in the fair value of these bonds, as well as the related up-front costs and fees are recognized in the statement of income, when they occur. CAF enters into cross-currency and interest rate swaps as an economic hedge for interest rate and foreign exchange risks related with these bonds. |
• | Bonds denominated in US$ are hedged for interest rate risk using interest rate swaps, and are designated as part of fair value hedge accounting relationships assuming no hedge ineffectiveness (the “short cut method”), as established in ASC 815-20-25-102. The related up-front costs and fees are deferred and amortized during their life time. |
Partial repurchases of bond issuances result in the derecognition of the corresponding liabilities. The difference between the repurchase price and the debt’s settlement net cost is recognized as income/loss for the year.
o. Employees’ Severance Indemnities — Accrual for severance benefits comprises all the liabilities related to the workers’ vested rights according to CAF’s employee policies and the Labor Law of the member countries, when applicable. The accrual for employee severance indemnities is presented as part of “labor benefits” account under “other liabilities” caption.
Under CAF’s employee policies, employees earn a severance indemnity equal to five days of salary per month, up to a total of 60 days per year of service. From the second year of service, employees earn an additional two-day salary for each year of service (or fraction of a year greater than six months), cumulative up to a maximum of 30 days of salary per year. Severance benefits are recorded in the accounting records of CAF and interest on the amounts owed to employees are paid.
In the case of unjustified dismissal or involuntary termination, employees have the right to an additional indemnity of one-month salary per year of service up to a maximum of 150 days.
p. Pension Plan — In March 2005, CAF established a 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´s benefit are calculated based on years of service and the average salary of the three consecutive years in wich the employee received the highest salary. CAF periodically reviews these contributions considering actuarial assumptions.
F-14
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
q. 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, for which hedge accounting should apply, CAF 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”). CAF 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 the derivatives that are designated as fair-value to specific assets and liabilities on the balance sheet, or to specific firm commitments or forecasted transactions. CAF 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.
Changes in the fair value of a highly effective derivate designated and qualified 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 attributable to the hedged risk, are recorded as income.
CAF discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the fair value 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 the 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, CAF 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, CAF 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. In all situations in which hedge accounting is discontinued, CAF continues to carry the derivative at its fair value on the balance sheet, and recognizes any changes in its fair value in income.
r. Guarantees — CAF provides guarantees for loans originated by third parties to support projects located within a stockholder country that are undertaken by public and private entities. CAF may offer guarantees of private credit agreements or it may offer public guarantees of obligations of the securities of third party issuers. CAF generally offers partial credit guarantees with the intention to share the risk with private lenders or holders of securities. CAF’s responsibility is limited to paying up to the amount of the guarantee upon default by the client. The guarantee fee income received is deferred and recognized over the life of the transaction.
s. Allowance for guarantees losses — Allowance for guarantees is maintained at a level CAF believes adequate to absorb probable losses inherent to the guarantees portfolio as of the date of the financial statements. Allowance for sovereign guarantees is established by CAF based on the individual long-term foreign currency debt rating of the guarantor countries considering the weighted average rating of three recognized international risk rating agencies as of the date of the financial statements preparation. These country risk ratings consider a default probability. Given CAF’s status as a preferred creditor and taking into account the immunities and privileges conferred by its stockholder countries, which are established in CAF’s by-laws and other similar agreements, a factor that reflects a lower default probability – usually equivalent to three levels up in this average rating -. For non- sovereign guarantees, the allowance is based on the individual local currency debt rating of the guarantor countries considering the weighted average rating of the mentioned agencies.
F-15
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
t. Recent Accounting Pronouncements Applicable —
ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment
On July 27, 2012, the FASB issued ASU 2012-02, which revises the qualitative analysis, may be applied to an annual or interim impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories performed as of a date before July 27, 2012, if an entity’s financial statements have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. Effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. This statement has not affected CAF´s financial results.
ASU 2012-04, Technical Corrections and Improvements
On October, 2012, the FASB issued ASU 2012-04, which includes amendments that identify when the use of fair value should be linked to the definition of fair value in Topic 820, Fair Value Measurement. At the time of issuance of FASB Statement No. 157, Fair Value Measurements, only Accounting Principles Board Opinions, FASB Statements, and certain FASB Technical Bulletins were amended. Certain areas of the authoritative guidance were not updated, such as guidance issued by the Emerging Issues Task Force, or Statements of Position issued by the American Institute of Certified Public Accountants (AICPA). This Update contains conforming amendments to the Codification to reflect the measurement and disclosure requirements of Topic 820. These amendments are referred to as Conforming Amendments. Additionally, this Update deletes the second glossary definition of fair value that originated from AICPA Statement of Position 92-6, Accounting and Reporting by Health and Welfare Benefit Plans. The first definition (originating from FASB Statement No. 123 [revised 2004]), Share-Based Payment, and the third definition (originating from Statement 157) remain.
The amendments in this Update that will not have transition guidance will be effective upon issuance for both public entities and nonpublic entities. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. For nonpublic entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2013. CAF will be considered this statement for future periods.
2. CASH AND DEPOSITS WITH BANKS
Deposits with banks mature in three months or less and include the following:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Cash and due from banks | 141,720 | 256,797 | 119,834 | |||||||||
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| |||||||
Deposits with banks: | ||||||||||||
U.S. dollars | 1,374,559 | 1,533,316 | 1,403,230 | |||||||||
Other currencies | 115,490 | 10,569 | 213 | |||||||||
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| |||||||
1,490,049 | 1,543,885 | 1,403,443 | ||||||||||
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| |||||||
1,631,769 | 1,800,682 | 1,523,277 | ||||||||||
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F-16
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
3. OTHER INVESTMENTS
Deposits due in 90 days or more (original maturity) as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
U.S. dollars | 99,427 | 93,351 | 105,345 | |||||||||
Other currencies | 1,483 | 1,860 | 41,507 | |||||||||
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| |||||||
100,910 | 95,211 | 146,852 | ||||||||||
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|
4. MARKETABLE SECURITIES
Trading Securities
A summary of trading securities follows:
December 31, | ||||||||||||||||||||||||
2012 | 2011 | 2010 | ||||||||||||||||||||||
Amount | Average maturity (years) | Amount | Average maturity (years) | Amount | Average maturity (years) | |||||||||||||||||||
U.S. Treasury Notes | 944,773 | 2.47 | 7,117 | 1.51 | 45,011 | 1.77 | ||||||||||||||||||
Non-U.S. governments and government entities bonds | 178,846 | 2.49 | 995,483 | 0.74 | 258,673 | 2.23 | ||||||||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||||||||||
Commercial papers | 1,899,734 | — | 1,442,343 | — | 882,529 | — | ||||||||||||||||||
Certificates of deposit | 344,044 | — | 428,609 | — | 340,711 | — | ||||||||||||||||||
Bonds | 1,723,496 | — | 620,495 | — | 666,388 | — | ||||||||||||||||||
Others | 362,244 | — | 266,278 | — | 263,433 | — | ||||||||||||||||||
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| |||||||||||||
4,329,518 | 1.21 | 2,757,725 | 0.49 | 2,153,061 | 0.46 | |||||||||||||||||||
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5,453,137 | 1.47 | 3,760,325 | 0.56 | 2,456,745 | 0.68 | |||||||||||||||||||
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Trading securities include net unrealized gains of US$ 11,320 and US$ 1,883 at December 31, 2012 and 2011, respectively, and net unrealized losses of US$ 4,209 at December 31, 2010.
Net realized gains from trading securities of US$ 6,968, of US$ 4,084 and of US$ 11,781 at December 31, 2012, 2011 and 2010, respectively, are included in the statement of income in the line Investment and deposits with banks.
CAF places its short-term investments mainly in high grade financial institutions and corporate securities. CAF has very conservative investment guidelines that limit the amount of credit risk exposure, considering among other factors, limits in credit ratings, limits in duration exposure, specific allocations by type of investment instruments and limits across sector and currency allocation. As of December 31, 2012, 2011 and 2010, CAF does not have any significant concentrations of credit risk. In other currencies, total marketable
F-17
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
securities include the equivalent of US$ 165,652, US$ 158,893 and US$ 97,485, at December 31, 2012, 2011 and 2010, respectively.
5. LOANS
Loans include short-, medium- and long-term loans to finance projects, working capital and trade activities. The majority of the loans are to Series “A” and “B” stockholder countries, or with private institutions or companies of these countries.
Loans by country are summarized as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Stockholder country: | ||||||||||||
Argentina | 2,114,725 | 1,913,325 | 1,395,137 | |||||||||
Bolivia | 1,598,808 | 1,417,564 | 1,301,123 | |||||||||
Brazil | 1,252,829 | 989,489 | 1,115,992 | |||||||||
Colombia | 1,832,312 | 1,816,515 | 1,965,880 | |||||||||
Costa Rica | 126,698 | 149,346 | 152,388 | |||||||||
Dominican Republic | 176,047 | 158,276 | 119,722 | |||||||||
Ecuador | 2,648,222 | 2,508,673 | 2,436,631 | |||||||||
Jamaica | 6,590 | 5,607 | — | |||||||||
Mexico | 18,026 | 18,776 | 19,466 | |||||||||
Panama | 586,944 | 321,489 | 139,604 | |||||||||
Paraguay | 134,501 | 100,448 | 66,049 | |||||||||
Peru | 2,660,320 | 2,573,155 | 2,181,681 | |||||||||
Spain | 50,000 | — | — | |||||||||
Uruguay | 331,820 | 351,725 | 656,678 | |||||||||
Venezuela | 2,816,083 | 2,652,070 | 2,227,613 | |||||||||
|
|
|
|
|
| |||||||
Loans | 16,353,925 | 14,976,458 | 13,777,964 | |||||||||
Fair value adjustments | 1,485 | 4,286 | 5,079 | |||||||||
|
|
|
|
|
| |||||||
Carrying value of loans | 16,355,410 | 14,980,744 | 13,783,043 | |||||||||
|
|
|
|
|
|
Fair value adjustments to the carrying value of loans represent adjustments to the carrying value of loans for which the fair value option is elected.
At December 31, 2012, 2011 and 2010, loans in other currencies were granted for an equivalent of US$ 57,317, US$ 41,793 and US$ 34,506, respectively, principally in Bolivian bolivianos, Peruvian nuevos soles, Paraguaian guarani and Colombian pesos. At December 31, 2012, 2011 and 2010, loans include fixed interest rate loans of US$ 88,552, of US$ 89,469 and US$ 38,286, respectively.
F-18
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Loans classified by public sector and private sector borrowers, are as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Public Sector | 13,823,556 | 12,613,728 | 11,050,387 | |||||||||
Private Sector | 2,530,369 | 2,362,730 | 2,727,577 | |||||||||
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|
|
| |||||||
16,353,925 | 14,976,458 | 13,777,964 | ||||||||||
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|
The average yield of the loan portfolio average yield is shown below:
December 31, | ||||||||||||||||||||||||
2012 | 2011 | 2010 | ||||||||||||||||||||||
Amount | Average yield (%) | Amount | Average yield (%) | Amount | Average yield (%) | |||||||||||||||||||
Loans | 16,353,925 | 2.69 | 14,976,458 | 2.70 | 13,777,964 | 2.44 | ||||||||||||||||||
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Loans by industry segments are as follows:
December 31, | ||||||||||||||||||||||||
2012 | % | 2011 | % | 2010 | % | |||||||||||||||||||
Agriculture, hunting and forestry | 62,651 | — | 34,053 | — | 40,454 | — | ||||||||||||||||||
Mining and Quarrying | — | — | 50,000 | 1 | 66,000 | 1 | ||||||||||||||||||
Manufacturing industry | 205,789 | 1 | 280,763 | 2 | 199,896 | 1 | ||||||||||||||||||
Electricity, gas and water supply | 5,530,511 | 34 | 5,013,277 | 34 | 4,089,458 | 30 | ||||||||||||||||||
Transport, warehousing and communications | 5,825,822 | 36 | 5,316,619 | 34 | 4,362,460 | 32 | ||||||||||||||||||
Commercial banks | 1,144,172 | 7 | 1,076,707 | 7 | 1,698,488 | 12 | ||||||||||||||||||
Development banks | 496,262 | 3 | 250,351 | 2 | 253,993 | 2 | ||||||||||||||||||
Social and other infrastructure programs | 3,033,455 | 19 | 2,954,688 | 20 | 3,067,215 | 22 | ||||||||||||||||||
Others | 55,263 | — | — | — | — | — | ||||||||||||||||||
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16,353,925 | 100 | 14,976,458 | 100 | 13,777,964 | 100 | |||||||||||||||||||
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F-19
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Loans mature as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Remaining maturities: | ||||||||||||
Less than one year | 2,683,514 | 2,211,155 | 2,328,806 | |||||||||
Between one and two years | 1,481,612 | 1,640,247 | 1,635,890 | |||||||||
Between two and three years | 1,598,393 | 1,349,666 | 1,377,283 | |||||||||
Between three and four years | 1,530,782 | 1,333,411 | 1,240,399 | |||||||||
Between four and five years | 1,274,371 | 1,201,470 | 1,102,446 | |||||||||
Over five years | 7,785,253 | 7,240,509 | 6,093,140 | |||||||||
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| |||||||
16,353,925 | 14,976,458 | 13,777,964 | ||||||||||
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Loan portfolio is classified depending on the credit risk type, as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Sovereign guaranteed | 13,228,048 | 12,065,730 | 10,512,483 | |||||||||
Non-sovereign guaranteed | 3,125,877 | 2,910,728 | 3,265,481 | |||||||||
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| |||||||
16,353,925 | 14,976,458 | 13,777,964 | ||||||||||
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CAF maintains an internal risk rating system to evaluate the quality of the portfolio which identifies, through standardized rating and review parameters, those risks related to credit transactions. The credit quality of the loan portfolio as of December 31, 2012, 2011 and 2010, as represented by the internal credit risk classification, is as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Risk classification: | ||||||||||||
Satisfactory | 16,334,424 | 14,932,028 | 13,757,964 | |||||||||
Special Mention | 11,650 | 36,276 | 20,000 | |||||||||
Doubtful | 7,851 | 8,154 | — | |||||||||
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| |||||||
16,353,925 | 14,976,458 | 13,777,964 | ||||||||||
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F-20
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Loan portfolio quality
The loan portfolio quality indicators are presented below:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Overdue loans | 0 | 0 | 0 | |||||||||
Non-accrual loans | 7,851 | 8,154 | 0 | |||||||||
Impaired Loans | 7,851 | 8,154 | 0 | |||||||||
Loans written-off | 0 | 0 | 0 | |||||||||
Overdue loan principal as a percentage of loan portfolio | 0 | % | 0 | % | 0 | % | ||||||
Nonaccrual loans as a percentage of loan portfolio | 0.05 | % | 0.05 | % | 0 | % | ||||||
Allowance for losses as a percentage of loan portfolio | 0.77 | % | 0.87 | % | 1.03 | % |
At December 31, 2012 and 2011, all loans were performing except for loans to a private client for US$ 7,851 and US$ 8,154, respectively, which were classified as impaired and were in non-accrual status. During 2010, there were no loans in non-accrual status.
Purchase of loan portfolio
During 2012 and 2010, CAF did not purchase any loans. During 2011, CAF purchased loans for the amount of US$ 75,000.
Sale of loan portfolio
During 2012, CAF sold loans to commercial banks for US$ 76,900, without recourse.
A/B Loans
CAF administers loan-participations sold, and only assumes the credit risk for the portion of the loan owned by CAF. At December 31, 2012, 2011 and 2010, CAF maintained loans of this nature amounting to US$ 1,820,980, US$ 1,904,386 and US$ 1,392,931, respectively; whereby other financial institutions provided funds for US$ 1,325,996, US$ 1,396,404 and US$ 1,002,034, respectively.
Troubled debt restructurings
During 2012, 2011 and 2010, there were no troubled debt restructurings.
F-21
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Allowance for Loan Losses
Changes in the allowance for loan losses are presented below:
December 31, | ||||||||||||||||||||||||||||||||||||
2012 | 2011 | 2010 | ||||||||||||||||||||||||||||||||||
Sector | Sector | Sector | ||||||||||||||||||||||||||||||||||
Sovereign | Non-sovereign | Total | Sovereign | Non-sovereign | Total | Sovereign | Non-sovereign | Total | ||||||||||||||||||||||||||||
Balances at beginning of year | 99,414 | 31,222 | 130,636 | 104,209 | 37,155 | 141,364 | 91,316 | 52,595 | 143,911 | |||||||||||||||||||||||||||
Credit to results of operations | (3,542 | ) | (1,323 | ) | (4,865 | ) | (4,795 | ) | (6,976 | ) | (11,771 | ) | 12,893 | (15,883 | ) | (2,990 | ) | |||||||||||||||||||
Recoveries | — | 28 | 28 | — | 1,043 | 1,043 | — | 443 | 443 | |||||||||||||||||||||||||||
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| |||||||||||||||||||
Balances at end of year | 95,872 | 29,927 | 125,799 | 99,414 | 31,222 | 130,636 | 104,209 | 37,155 | 141,364 | |||||||||||||||||||||||||||
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6. EQUITY INVESTMENTS
Equity investments, which have no market value, are as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Direct investments in companies accounted under equity method | 8,226 | 7,318 | 30,466 | |||||||||
Investment funds accounted under equity method | 15,274 | 12,323 | 23,034 | |||||||||
Direct investments in companies at cost | 30,411 | 27,442 | 9,674 | |||||||||
Investment funds at cost | 92,900 | 64,806 | 31,547 | |||||||||
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|
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|
|
| |||||||
146,811 | 111,889 | 94,721 | ||||||||||
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|
|
Investments by country are summarized as follow:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Investment Funds: | ||||||||||||
Bolivia | 802 | — | — | |||||||||
Brazil | 5,241 | 2,522 | — | |||||||||
Colombia | 12,746 | 5,577 | 2,657 | |||||||||
Mexico | 10,629 | 5,473 | 5,364 | |||||||||
Peru | 13,156 | 3,259 | 2,236 | |||||||||
Regional | 65,600 | 60,298 | 44,324 | |||||||||
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|
|
| |||||||
108,174 | 77,129 | 54,581 | ||||||||||
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F-22
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Direct Investments in companies: | ||||||||||||
Argentina | 2,000 | — | — | |||||||||
Bolivia | 8,111 | 7,318 | 6,385 | |||||||||
Colombia | 3,969 | 3,000 | — | |||||||||
Ecuador | 490 | 490 | 490 | |||||||||
Peru | 4,182 | 4,182 | 4,182 | |||||||||
Regional | 19,885 | 19,770 | 29,084 | |||||||||
|
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|
|
| |||||||
38,637 | 34,760 | 40,141 | ||||||||||
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|
|
At December 31, 2012, 2011 and 2010, CAF did not recognized any impairment.
7. PROPERTY AND EQUIPMENT — NET
A summary of property and equipment follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Land | 18,704 | 17,820 | 16,650 | |||||||||
Buildings | 23,662 | 23,662 | 20,412 | |||||||||
Buildings improvements | 21,420 | 19,024 | 17,058 | |||||||||
Furniture and equipment | 20,451 | 13,789 | 13,641 | |||||||||
Vehicles | 854 | 785 | 752 | |||||||||
|
|
|
|
|
| |||||||
85,091 | 75,080 | 68,513 | ||||||||||
Less accumulated depreciation | 45,865 | 38,240 | 38,612 | |||||||||
|
|
|
|
|
| |||||||
39,226 | 36,840 | 29,901 | ||||||||||
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|
|
The depreciation expenses of US$ 3,924, of US$ 2,957 and US$ 2,224 for property and equipment at December 31, 2012, 2011 and 2010, respectively, are included in the statement of income.
8. OTHER ASSETS
A summary of other assets follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Intangible assests, net | 11,244 | 10,253 | 7,858 | |||||||||
Deferred charges, net | 68,354 | 22,482 | 26,820 | |||||||||
Other assets | 10,715 | 25,013 | 4,603 | |||||||||
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| |||||||
90,313 | 57,748 | 39,281 | ||||||||||
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F-23
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
9. DEPOSITS
A summary of deposits follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Demand deposits | 68,555 | 105,855 | 430,367 | |||||||||
Time deposits: | ||||||||||||
Less than one year | 3,053,288 | 3,566,208 | 2,309,130 | |||||||||
|
|
|
|
|
| |||||||
3,121,843 | 3,672,063 | 2,739,497 | ||||||||||
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|
At December 31, 2012, 2011 and 2010, the interest rates on deposits ranged from 0.04% to 1.809%, from 0.10% to 1.86% and from 0.01% to 1.35% respectively. Deposits are issued for amounts equal to or more than US$ 100. Total deposits in other currencies include US$ 283,004, US$ 169,168 and US$ 136,180, at December 31, 2012, 2011 and 2010, respectively.
10. COMMERCIAL PAPERS
CAF’s commercial paper of US$ 3,174,927 at December 31, 2012 mature in 2013 (US$ 1,977,050 at December 31, 2011-matured in 2012, and US$ 1,524,285 at December 31, 2010-matured in 2011). At December 31, 2012, 2011 and 2010, the interest rates on commercial paper ranged from 0.08% to 1.07%, from 0.16% to 1.02% and from 0.26% to 1.16%, respectively.
11. BORROWINGS
A summary of borrowings follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
U.S. dollars | 1,344,860 | 1,107,857 | 977,147 | |||||||||
Peruvian nuevos soles | 6,857 | 10,351 | 10,575 | |||||||||
Venezuelan bolivars | 16,279 | — | — | |||||||||
Other currencies | 4,877 | 3,391 | 3,057 | |||||||||
|
|
|
|
|
| |||||||
1,372,873 | 1,121,599 | 990,779 | ||||||||||
Fair value adjustments | 18,220 | 16,851 | 7,310 | |||||||||
|
|
|
|
|
| |||||||
Carrying value of borrowings | 1,391,093 | 1,138,450 | 998,089 | |||||||||
|
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|
|
At December 31, 2012, 2011 and 2010, there are fixed interest-bearing borrowings in the amount of US$ 169,892, US$ 155,655 and US$ 155,113, respectively.
F-24
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Borrowings, by remaining maturities, are summarized below:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Remaining maturities: | ||||||||||||
Less than one year | 103,038 | 131,527 | 143,618 | |||||||||
Between one and two years | 468,797 | 101,886 | 130,822 | |||||||||
Between two and three years | 234,823 | 362,241 | 148,869 | |||||||||
Between three and four years | 191,591 | 195,588 | 233,505 | |||||||||
Between four and five years | 66,965 | 63,921 | 107,590 | |||||||||
Over five years | 307,659 | 266,436 | 226,375 | |||||||||
|
|
|
|
|
| |||||||
1,372,873 | 1,121,599 | 990,779 | ||||||||||
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|
|
Some borrowing agreements contain covenants requiring the use of the proceeds for specific purposes or projects.
At December 31, 2012, 2011 and 2010 there were unused term credit facilities amounting to US$ 722,685, US$ 804,882 and US$ 172,000, respectively.
12. BONDS
An analysis of bonds follows:
December 31, | ||||||||||||||||||||||||||||||||||||
2012 | 2011 | 2010 | ||||||||||||||||||||||||||||||||||
Outstanding principal | Outstanding principal | Outstanding principal | ||||||||||||||||||||||||||||||||||
At original exchange rate | At spot exchange rate | Weighted average cost, after swaps (%) (Year-end) | At original exchange rate | At spot exchange rate | Weighted average cost, after swaps (%) (Year-end) | At original exchange rate | At spot exchange rate | Weighted average cost, after swaps (%) (Year-end) | ||||||||||||||||||||||||||||
U.S. dollars | 5,208,530 | 5,208,530 | 2.54 | 4,545,954 | 4,545,954 | 2.56 | 4,300,007 | 4,300,007 | 2.42 | |||||||||||||||||||||||||||
Euros | 1,190,396 | 1,177,262 | 2.55 | 1,013,806 | 973,722 | 2.46 | 1,043,647 | 1,046,260 | 1.86 | |||||||||||||||||||||||||||
Japanese yen | 622,024 | 581,583 | 2.30 | 591,917 | 640,394 | 2.12 | 417,384 | 483,554 | 2.40 | |||||||||||||||||||||||||||
Colombian pesos | 205,352 | 273,709 | 3.34 | 205,352 | 249,128 | 3.35 | 205,352 | 243,221 | 3.38 | |||||||||||||||||||||||||||
Venezuelan bolivars | — | — | — | 109,302 | 54,651 | (1.44 | ) | 209,302 | 104,651 | (0.63 | ) | |||||||||||||||||||||||||
Swiss francs | 1,421,295 | 1,491,640 | 2.44 | 730,380 | 752,160 | 2.40 | 455,616 | 478,062 | 2.30 | |||||||||||||||||||||||||||
Mexican pesos | 98,108 | 101,908 | 2.90 | 166,915 | 148,184 | 2.21 | 68,807 | 60,618 | 1.14 | |||||||||||||||||||||||||||
Peruvian nuevos soles | 107,141 | 129,950 | 1.40 | 119,546 | 137,872 | 1.17 | 125,748 | 139,882 | 1.21 | |||||||||||||||||||||||||||
Chinesse renminbi | 96,618 | 96,288 | 1.55 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Hong Kong dollars | 102,803 | 102,953 | 2.62 | — | — | — | — | — | — | |||||||||||||||||||||||||||
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| |||||||||||||||||||||||||
9,052,267 | 9,163,823 | 7,483,172 | 7,502,065 | 6,825,863 | 6,856,255 | |||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
Fair value adjustments | 579,029 | 570,263 | 356,557 | |||||||||||||||||||||||||||||||||
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|
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| |||||||||||||||||||||||||||||||
Carrying value of bonds | 9,742,852 | 8,072,328 | 7,212,812 | |||||||||||||||||||||||||||||||||
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F-25
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
A summary of the bonds issued, by remaining maturities, follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Remaining maturities: | ||||||||||||
Less than one year | 763,729 | 738,314 | 767,225 | |||||||||
Between one and two years | 944,354 | 748,641 | 738,123 | |||||||||
Between two and three years | 1,066,805 | 548,299 | 748,476 | |||||||||
Between three and four years | 1,148,506 | 957,546 | 498,119 | |||||||||
Between four and five years | 888,469 | 1,138,400 | 698,107 | |||||||||
Over five years | 4,240,404 | 3,351,972 | 3,375,813 | |||||||||
|
|
|
|
|
| |||||||
9,052,267 | 7,483,172 | 6,825,863 | ||||||||||
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|
At December 31, 2012, 2011 and 2010, fixed interest rate bonds amounted to US$ 8,703,859, US$ 7,032,177 and US$ 5,906,811, respectively, of which US$ 3,719,349, US$ 2,627,507 and US$ 1,742,141, respectively, are denominated in Japanese yen, Euros, Swiss francs, Colombian pesos, Mexican pesos, Hong Kong dollars, Chinesse renminbi, and Peruvian nuevos soles.
There were no bonds repurchased during the years ended December 31, 2012, 2011 and 2010.
13. ACCRUED EXPENSES AND OTHER LIABILITIES
A summary of accrued expenses and other liabilities follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Employees’ severance indemnities, benefits and savings plan | 55,553 | 56,614 | 54,317 | |||||||||
Other liabilities | 9,078 | 7,337 | 11,800 | |||||||||
Allowance Contingencies | 2,639 | 2,825 | — | |||||||||
|
|
|
|
|
| |||||||
67,270 | 66,776 | 66,117 | ||||||||||
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|
14. PENSION PLAN
At December 31, 2012 the Plan has 343 participants and not retired employees. The measurement date used to determine pension plan benefits is December 31.
The Plan’s benefit obligation (PBO) and assets as of December 31, 2012, 2011 and 2010 follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Plan’s benefit obligation (PBO) | 6,953 | 4,871 | 3,388 | |||||||||
Plan Assets | 6,359 | 4,493 | 3,121 | |||||||||
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| |||||||
Unrecognized actuarial losses, net | 594 | 378 | 267 | |||||||||
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F-26
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
As of December 31, 2012, 2011 and 2010, the PBO’s net assets are as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Net assets: | ||||||||||||
Deposits with banks | 6,359 | 4,493 | 3,121 | |||||||||
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|
|
|
|
|
The table below summarizes the evolution of the periodic cost of projected benefits related to the PBO for the years ended December 31, 2012, 2011 and 2010:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Service cost | 911 | 719 | 574 | |||||||||
Interest cost | 213 | 148 | 35 | |||||||||
Expected return on plan assets | (80 | ) | (138 | ) | (35 | ) | ||||||
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1,044 | 729 | 574 | ||||||||||
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A summary of the net projected cost for the year 2013 follows:
Service cost: | ||||
Contributions to the plan | 967 | |||
Guaranteed benefit | 116 | |||
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| |||
1,083 | ||||
Interest cost | 297 | |||
Expected return on plan assets | (110 | ) | ||
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1,270 | ||||
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Weighted-average assumptions used to determine net benefit cost since the origination of the Plan to December 31, 2012 follows:
Discount rate | 4 | % | ||
Expected long-term rate return on Plan assets | 1.5 | % | ||
Salary increase rate | 3 | % |
15. STOCKHOLDERS’ EQUITY
Authorized Capital
The authorized capital of CAF at December 31, 2012, 2011 and 2010, amounts to US$ 10,000,000, distributed among Series “A”, “B” and “C” shares.
F-27
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
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 CAF, when internal resources are inadequate.
Shares
CAF’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: Argentina, Bolivia, Brazil, Colombia, Ecuador, Panama, Paraguay, Peru, Uruguay and Venezuela. Each of these shares grants the right of representation on CAF’s Board of Directors to one principal director and one alternate director. 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: Argentina, Bolivia, Brazil, Colombia, Ecuador, Panama, Paraguay, Peru, Uruguay and Venezuela. Each of these shares grants the right of representation on CAF’s Board of Directors to one principal director and one alternate director for each of the following countries: Bolivia, Colombia, Ecuador, Peru and Venezuela. Also, the commercial banks that currently hold shares of CAF are entitled altogether to one principal director and one alternate director on the Board of Directors. Series “B” shares have a par value of US$ 5.
Series “C” shares: Subscribed by legal entities or individuals belonging to countries other than Argentina, Bolivia, Brazil, Colombia, Ecuador, Panama, Paraguay, Peru, Uruguay and Venezuela. These shares confer the right of representation on CAF´s Board of Directors to 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.
A summary of the changes in subscribed and paid-in capital for the years ended December 31, 2012, 2011 and 2010, follows:
Number of Shares | Amounts | |||||||||||||||||||||||||||
Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | ||||||||||||||||||||||
At December 31, 2009 | 5 | 382,826 | 113,103 | 6,000 | 1,914,130 | 565,515 | 2,485,645 | |||||||||||||||||||||
Capitalization of additional paid-in capital | — | 30,403 | 5,089 | — | 152,015 | 25,445 | 177,460 | |||||||||||||||||||||
Exchanged shares | — | 50,695 | (50,695 | ) | — | 253,475 | (253,475 | ) | — | |||||||||||||||||||
Issued for cash | 3 | 12,858 | 16,589 | 3,600 | 64,290 | 82,945 | 150,835 | |||||||||||||||||||||
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At December 31, 2010 | 8 | 476,782 | 84,086 | 9,600 | 2,383,910 | 420,430 | 2,813,940 | |||||||||||||||||||||
Capitalization of additional paid-in capital | — | 40,237 | 3,039 | — | 201,185 | 15,195 | 216,380 | |||||||||||||||||||||
Exchanged shares | — | 63,106 | (63,106 | ) | — | 315,530 | (315,530 | ) | — | |||||||||||||||||||
Issued for cash | 2 | 19,891 | 19,438 | 2,400 | 99,455 | 97,190 | 199,045 | |||||||||||||||||||||
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At December 31, 2011 | 10 | 600,016 | 43,457 | 12,000 | 3,000,080 | 217,285 | 3,229,365 | |||||||||||||||||||||
Capitalization of additional paid-in capital | — | 46,325 | 3,339 | — | 231,625 | 16,695 | 248,320 | |||||||||||||||||||||
Issued for cash | — | 16,827 | 14,979 | — | 84,135 | 74,895 | 159,030 | |||||||||||||||||||||
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At December 31, 2012 | 10 | 663,168 | 61,775 | 12,000 | 3,315,840 | 308,875 | 3,636,715 | |||||||||||||||||||||
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F-28
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
During 2011, Argentina and Paraguay became Series “A” stockholders. During 2010, Brazil, Panama and Uruguay became Series “A” stockholders.
Subscribed and paid-in capital is presented as follows at December 31, 2012:
Number of Shares | Amounts | |||||||||||||||||||||||||||
Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | ||||||||||||||||||||||
Argentina | 1 | 63,523 | — | 1,200 | 317,615 | — | 318,815 | |||||||||||||||||||||
Bolivia | 1 | 38,987 | — | 1,200 | 194,935 | — | 196,135 | |||||||||||||||||||||
Brazil | 1 | 58,372 | — | 1,200 | 291,860 | — | 293,060 | |||||||||||||||||||||
Colombia | 1 | 138,188 | — | 1,200 | 690,940 | — | 692,140 | |||||||||||||||||||||
Ecuador | 1 | 39,291 | — | 1,200 | 196,455 | — | 197,655 | |||||||||||||||||||||
Panama | 1 | 14,975 | — | 1,200 | 74,875 | — | 76,075 | |||||||||||||||||||||
Paraguay | 1 | 12,447 | — | 1,200 | 62,235 | — | 63,435 | |||||||||||||||||||||
Peru | 1 | 140,030 | — | 1,200 | 700,150 | — | 701,350 | |||||||||||||||||||||
Uruguay | 1 | 18,329 | — | 1,200 | 91,645 | — | 92,845 | |||||||||||||||||||||
Venezuela | 1 | 138,621 | — | 1,200 | 693,105 | — | 694,305 | |||||||||||||||||||||
Chile | — | — | 5,541 | — | — | 27,705 | 27,705 | |||||||||||||||||||||
Costa Rica | — | — | 3,291 | — | — | 16,455 | 16,455 | |||||||||||||||||||||
Dominican Republic | — | — | 5,838 | — | — | 29,190 | 29,190 | |||||||||||||||||||||
Jamaica | — | — | 182 | — | — | 910 | 910 | |||||||||||||||||||||
Mexico | — | — | 11,757 | — | — | 58,785 | 58,785 | |||||||||||||||||||||
Portugal | — | — | 1,109 | — | — | 5,545 | 5,545 | |||||||||||||||||||||
Spain | — | — | 25,923 | — | — | 129,615 | 129,615 | |||||||||||||||||||||
Trinidad & Tobago | — | — | 8,134 | — | — | 40,670 | 40,670 | |||||||||||||||||||||
Commercial banks | — | 405 | — | — | 2,025 | — | 2,025 | |||||||||||||||||||||
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10 | 663,168 | 61,775 | 12,000 | 3,315,840 | 308,875 | 3,636,715 | ||||||||||||||||||||||
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F-29
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
At December 31, 2012, 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” | |||||||||||||||||||||||||||||
Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | |||||||||||||||||||||||||
Argentina | 11,620 | 58,100 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Bolivia | 12,426 | 62,130 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Brazil | 29,486 | 147,430 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Colombia | 37,928 | 189,640 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Ecuador | 12,426 | 62,130 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Panama | 11,871 | 59,355 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Paraguay | 7,479 | 37,395 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Peru | 20,424 | 102,120 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Uruguay | 9,750 | 48,750 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Venezuela | 37,928 | 189,640 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Chile | — | — | — | — | — | — | 800 | 4,000 | ||||||||||||||||||||||||
Mexico | — | — | — | — | — | — | 1,600 | 8,000 | ||||||||||||||||||||||||
Portugal | — | — | 346 | 1,730 | — | — | 15,688 | 78,439 | ||||||||||||||||||||||||
Spain | — | — | 13,816 | 69,080 | — | — | 40,000 | 200,000 | ||||||||||||||||||||||||
Trinidad & Tobago | — | — | 15,323 | 76,615 | — | — | — | — | ||||||||||||||||||||||||
Commercial banks | 18 | 90 | — | — | — | — | — | — | ||||||||||||||||||||||||
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191,356 | 956,780 | 29,485 | 147,425 | 252,000 | 1,260,000 | 58,088 | 290,439 | |||||||||||||||||||||||||
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F-30
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Subscribed and paid-in capital is presented as follows at December 31, 2011:
Number of Shares | Amounts | |||||||||||||||||||||||||||
Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | ||||||||||||||||||||||
Argentina | 1 | 57,989 | — | 1,200 | 289,945 | — | 291,145 | |||||||||||||||||||||
Bolivia | 1 | 35,533 | — | 1,200 | 177,665 | — | 178,865 | |||||||||||||||||||||
Brazil | 1 | 52,988 | — | 1,200 | 264,940 | — | 266,140 | |||||||||||||||||||||
Colombia | 1 | 126,340 | — | 1,200 | 631,700 | — | 632,900 | |||||||||||||||||||||
Ecuador | 1 | 35,815 | — | 1,200 | 179,075 | — | 180,275 | |||||||||||||||||||||
Panama | 1 | 11,593 | — | 1,200 | 57,965 | — | 59,165 | |||||||||||||||||||||
Paraguay | 1 | 9,246 | — | 1,200 | 46,230 | — | 47,430 | |||||||||||||||||||||
Peru | 1 | 126,743 | — | 1,200 | 633,715 | — | 634,915 | |||||||||||||||||||||
Uruguay | 1 | 16,676 | — | 1,200 | 83,380 | — | 84,580 | |||||||||||||||||||||
Venezuela | 1 | 126,742 | — | 1,200 | 633,710 | — | 634,910 | |||||||||||||||||||||
Chile | — | — | 5,146 | — | — | 25,730 | 25,730 | |||||||||||||||||||||
Costa Rica | — | — | 3,056 | — | — | 15,280 | 15,280 | |||||||||||||||||||||
Dominican Republic | — | — | 5,421 | — | — | 27,105 | 27,105 | |||||||||||||||||||||
Jamaica | — | — | 169 | — | — | 845 | 845 | |||||||||||||||||||||
Mexico | — | — | 4,379 | — | — | 21,895 | 21,895 | |||||||||||||||||||||
Portugal | — | — | 709 | — | — | 3,545 | 3,545 | |||||||||||||||||||||
Spain | — | — | 24,072 | — | — | 120,360 | 120,360 | |||||||||||||||||||||
Trinidad & Tobago | — | — | 505 | — | — | 2,525 | 2,525 | |||||||||||||||||||||
Commercial banks | — | 351 | — | — | 1,755 | — | 1,755 | |||||||||||||||||||||
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10 | 600,016 | 43,457 | 12,000 | 3,000,080 | 217,285 | 3,229,365 | ||||||||||||||||||||||
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F-31
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
At December 31, 2011, 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” | |||||||||||||||||||||||||||||
Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | |||||||||||||||||||||||||
Argentina | 12,676 | 63,380 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Bolivia | 6,690 | 33,450 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Brazil | 14,680 | 73,400 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Colombia | 9,154 | 45,770 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Ecuador | 6,690 | 33,450 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Panama | 7,903 | 39,515 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Paraguay | 9,951 | 49,755 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Peru | 23,944 | 119,720 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Uruguay | 3,662 | 18,310 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Venezuela | 23,944 | 119,720 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Chile | — | — | — | — | — | — | 800 | 4,000 | ||||||||||||||||||||||||
Mexico | — | — | — | — | — | — | 1,600 | 8,000 | ||||||||||||||||||||||||
Portugal | — | — | 718 | 3,590 | — | — | 16,164 | 80,820 | ||||||||||||||||||||||||
Spain | — | — | 13,816 | 69,080 | — | — | 40,000 | 200,000 | ||||||||||||||||||||||||
Trinidad & Tobago | — | — | 142 | 710 | — | — | — | — | ||||||||||||||||||||||||
Commercial banks | 10 | 50 | — | — | — | — | — | — | ||||||||||||||||||||||||
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119,304 | 596,520 | 14,676 | 73,380 | 252,000 | 1,260,000 | 58,564 | 292,820 | |||||||||||||||||||||||||
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F-32
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Subscribed and paid-in capital is presented as follows at December 31, 2010:
Number of Shares | Amounts | |||||||||||||||||||||||||||
Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | ||||||||||||||||||||||
Bolivia | 1 | 32,652 | — | 1,200 | 163,260 | — | 164,460 | |||||||||||||||||||||
Brazil | 1 | 39,888 | — | 1,200 | 199,440 | — | 200,640 | |||||||||||||||||||||
Colombia | 1 | 116,123 | — | 1,200 | 580,615 | — | 581,815 | |||||||||||||||||||||
Ecuador | 1 | 32,914 | — | 1,200 | 164,570 | — | 165,770 | |||||||||||||||||||||
Panama | 1 | 8,912 | — | 1,200 | 44,560 | — | 45,760 | |||||||||||||||||||||
Peru | 1 | 116,367 | — | 1,200 | 66,160 | — | 67,360 | |||||||||||||||||||||
Uruguay | 1 | 13,232 | — | 1,200 | 581,835 | — | 583,035 | |||||||||||||||||||||
Venezuela | 1 | 116,365 | — | 1,200 | 581,825 | — | 583,025 | |||||||||||||||||||||
Argentina | — | — | 44,542 | — | — | 222,710 | 222,710 | |||||||||||||||||||||
Costa Rica | — | — | 2,838 | — | — | 14,190 | 14,190 | |||||||||||||||||||||
Chile | — | — | 4,779 | — | — | 23,895 | 23,895 | |||||||||||||||||||||
Dominican Republic | — | — | 5,034 | — | — | 25,170 | 25,170 | |||||||||||||||||||||
Jamaica | — | — | 157 | — | — | 785 | 785 | |||||||||||||||||||||
Mexico | — | — | 4,067 | — | — | 20,335 | 20,335 | |||||||||||||||||||||
Paraguay | — | — | 4,124 | — | — | 20,620 | 20,620 | |||||||||||||||||||||
Spain | — | — | 18,076 | — | — | 90,380 | 90,380 | |||||||||||||||||||||
Trinidad & Tobago | — | — | 469 | — | — | 2,345 | 2,345 | |||||||||||||||||||||
Commercial banks | — | 329 | — | — | 1,645 | — | 1,645 | |||||||||||||||||||||
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8 | 476,782 | 84,086 | 9,600 | 2,383,910 | 420,430 | 2,813,940 | ||||||||||||||||||||||
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F-33
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
At December 31, 2010, 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” | |||||||||||||||||||||||||||||
Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | |||||||||||||||||||||||||
Bolivia | 7,042 | 35,210 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Brazil | 11,314 | 56,570 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Colombia | 10,421 | 52,105 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Ecuador | 7,042 | 35,210 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Panama | 9,880 | 49,400 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Peru | 25,352 | 126,760 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Uruguay | 6,070 | 30,350 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Venezuela | 25,352 | 126,760 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Argentina | — | — | 9,318 | 46,590 | — | — | 25,200 | 126,000 | ||||||||||||||||||||||||
Chile | — | — | — | — | — | — | 800 | 4,000 | ||||||||||||||||||||||||
Mexico | — | — | — | — | — | — | 1,600 | 8,000 | ||||||||||||||||||||||||
Paraguay | — | — | 10,883 | 54,415 | — | — | — | — | ||||||||||||||||||||||||
Spain | — | — | 18,422 | 92,110 | — | — | 40,000 | 200,000 | ||||||||||||||||||||||||
Trinidad & Tobago | — | — | 142 | 710 | — | — | — | — | ||||||||||||||||||||||||
Commercial banks | 4 | 20 | — | — | — | — | — | — | ||||||||||||||||||||||||
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102,477 | 512,385 | 38,765 | 193,825 | 219,600 | 1,098,000 | 67,600 | 338,000 | |||||||||||||||||||||||||
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General Reserve
CAF maintains a general reserve approved by the stockholders’ Assembly, which is considered an equity reserve. Stockholders decided to increase the reserve by US$ 40,779, US$ 55,989 and US$ 106,238 during the years ended December 31, 2012, 2011 and 2010, by appropriations from net income for the years ended December 31, 2011, 2010 and 2009, respectively.
Reserve Pursuant to Article N° 42 of the By-laws
CAF’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’ Assembly in March 2012, 2011 and 2010, it was authorized to increase the reserve by US$ 15,300, US$ 16,650 and US$ 23,471, from net income for the years ended December 31, 2011, 2010 and 2009, respectively.
Capitalization of additional paid-in capital
At the stockholders’ Assembly in March 2012, 2011 and 2010, it was authorized to capitalize, through dividends in shares from additional paid-in capital, the amount of US$ 248,320, US$ 216,380 and US$ 177,460, respectively.
F-34
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
16. DISTRIBUTIONS TO STOCKHOLDERS’ SPECIAL FUNDS
Stockholders may distribute a portion of retained earnings to special funds, created to promote technical and financial cooperation, sustainable human development, and management of poverty relief funds in stockholder countries.
In March 2012, 2011 and 2010, stockholders agreed to distribute US$ 96,500, US$ 93,500 and US$ 105,000, from retained earnings at December 31, 2011, 2010 and 2009, respectively, to the stockholders’ special funds.
17. TAX EXEMPTIONS
CAF 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.
18. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
CAF utilizes derivative financial instruments to reduce exposure to interest rate risk and foreign currency risk. CAF does not hold or issue derivative financial instruments for trading or speculative purposes.
By using derivative financial instruments to hedge exposure to changes in interest rate and foreign exchange rates, CAF 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 CAF, creating credit risk for CAF. When the fair value of a derivative contract is negative, CAF owes the counterparty and, therefore, it does not possess credit risk. CAF 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 other currency into floating interest rate instruments denominated in U.S. dollars. CAF 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 CAF 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.
CAF monitors the credit risk associated with derivative transactions. Credit risk is managed by establishing exposure limits based on the credit rating and size of the individual counterparty, among other factors. To further reduce the credit risk in derivatives, CAF enters into credit support agreements with its major swap counterparties. This provides risk mitigation, as the swap transactions are regularly mark-to-market, and the party being the net obligor is requested to post collateral when net mark to-market exposure exceeds certain predetermined thresholds, which decrease as the counterparty’s credit rating deteriorates. This collateral is in the form of cash or highly rated and liquid government securities. CAF offsets the fair value amount recognized for derivative instruments and the fair value amount recognized for the collateral, whether posted or received, under master netting arrangements executed with the same counterparty, in accordance with ASC 815-10-45-5.
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
The amount recognized for the right to receive collateral or the obligation to post collateral that have been offset at year-end 2012 and 2011, was US$ 214,624 and US$ 202,585 received, and at year-end 2010 were US$ 17,530 and US$ 29,401, respectively.
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, 2012, 2011 and 2010:
Notional amount | Fair value | |||||||||||||||
Interest rate swap | Cross- currency swap | Derivative assets | Derivative liabilities | |||||||||||||
At December 31, 2012 — | ||||||||||||||||
Loans | — | 42,820 | — | 6,506 | ||||||||||||
Loans | 23,900 | — | 617 | — | ||||||||||||
Borrowings | 323,333 | — | 18,220 | — | ||||||||||||
Bonds | 5,049,510 | — | 357,504 | 4,705 | ||||||||||||
Bonds | — | 3,855,689 | 396,107 | 48,856 | ||||||||||||
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5,396,743 | 3,898,509 | 772,448 | 60,067 | |||||||||||||
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| |||||||||
At December 31, 2011 — | ||||||||||||||||
Loans | — | 29,525 | — | 6,035 | ||||||||||||
Loans | 31,000 | — | — | 821 | ||||||||||||
Borrowings | 340,000 | — | 16,851 | — | ||||||||||||
Bonds | 4,416,318 | — | 411,582 | — | ||||||||||||
Bonds | — | 2,941,867 | 274,831 | 87,013 | ||||||||||||
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4,787,318 | 2,971,392 | 703,264 | 93,869 | |||||||||||||
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At December 31, 2010 — | ||||||||||||||||
Loans | — | 22,499 | — | 7,532 | ||||||||||||
Loans | 40,100 | — | 907 | — | ||||||||||||
Borrowings | 340,000 | — | 5,970 | (1,340 | ) | |||||||||||
Bonds | 4,176,318 | — | 260,030 | — | ||||||||||||
Bonds | — | 2,525,857 | 258,082 | 126,695 | ||||||||||||
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4,556,418 | 2,548,356 | 524,989 | 132,887 | |||||||||||||
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For the years ended December 31, 2012, 2011 and 2010, all of CAFs’ derivatives which had been designated as hedging relationship were considered fair value hedges. The change in the fair value of such derivative instruments and the change in fair value of hedged items attributable to risk being hedged are included in the statement of income.
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
19. FAIR VALUE MEASUREMENTS
ASC 820 “Fair Value Measurements and disclosures”, defines fair value, expands disclosure requirements around fair value and specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect CAF’s market assumptions to determine the best price of these instruments. These two types of inputs create the following fair value hierarchy:
- | Level 1 — Quoted prices for identical instruments in active markets. |
- | Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
- | Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Determination of Fair Value
The following section describes the valuation methodologies used by CAF to measure various financial instruments at fair value, including an indication of the level in the fair-value hierarchy in which each instrument is classified. Where appropriate, the description includes details of the valuation models, the key inputs to those models, as well as any significant assumptions.
When available, CAF generally uses quoted market prices to determine fair value, and classifies such items in Level 1. In some cases where a market price is not available, CAF makes use of acceptable practical expedients (such as matrix pricing) to calculate fair value, in which case the items are classified in Level 2.
If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest rates, currency rates, etc. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.
Where available, CAF may also make use of quoted prices for recent trading activity in positions with the same or similar characteristics to the one being valued. The frequency and size of transactions and the amount of the bid-ask spread are among the factors considered in determining the liquidity of markets and the relevance of observed prices from those markets. If relevant and observable prices are available, those valuations would be classified as Level 2. If prices are not available, other valuation techniques would be used and the item would be classified as Level 3.
The following methods are used to estimate the fair-value hierarchy of CAF’s financial instruments:
- | Marketable securities: CAF uses quoted market prices to determine the fair value of trading securities and these financial assets are classified in Level 1 of the fair-value hierarchy. |
- | Loans: The fair value of fixed rate loans, which are hedged using derivative transactions, is determined using the current variable interest rate for similar loans. These loans are classified in Level 2 of the fair value hierarchy. |
- | Derivative assets and liabilities: Derivative transactions contracted and designated by CAF as hedges of risks related to interest rates, currency rates or both, for transactions recorded as financial assets or |
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
liabilities are also presented at fair value. In those cases the fair value is calculated using market prices given by the counterparties. Derivative transactions are classified in Level 2 of the fair-value hierarchy. |
- | Bonds and borrowings: For CAF´s bonds issued and medium and long term borrowings, fair value is determined using an internal valuation technique, taking into consideration yield curves to discount the expected cash flows for the applicable maturity, thus reflecting the fluctuation of variables such as interest and exchange rates. These yield curves adjusted to incorporate CAF credit risk spread. Those transactions are generally classified in Level 2 of the fair-value hierarchy depending on the observability of significant inputs to the model. |
During 2012, there were no transfers between levels 1, 2 and 3.
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Items Measured at Fair Value on a Recurring Basis
The following tables present for each of the fair-value hierarchy levels CAF’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2012, 2011 and 2010:
Level 1 | Level 2 | Level 3 | Net balance | |||||||||||||
At December 31, 2012 — | ||||||||||||||||
Assets: | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. Treasury Notes | 944,773 | — | — | 944,773 | ||||||||||||
Bonds of non-U.S. governments and government entities | 178,846 | — | — | 178,846 | ||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | 1,899,734 | — | — | 1,899,734 | ||||||||||||
Certificate of deposits | 344,044 | — | — | 344,044 | ||||||||||||
Bonds | 1,723,496 | — | — | 1,723,496 | ||||||||||||
Others | 362,244 | — | — | 362,244 | ||||||||||||
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4,329,518 | — | — | 4,329,518 | |||||||||||||
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5,453,137 | — | — | 5,453,137 | |||||||||||||
Loans | — | 72,354 | — | 72,354 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 376,341 | — | 376,341 | ||||||||||||
Cross-currency swap | — | 396,107 | — | 396,107 | ||||||||||||
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— | 772,448 | — | 772,448 | |||||||||||||
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5,453,137 | 844,802 | — | 6,297,939 | |||||||||||||
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Liabilities: | ||||||||||||||||
Bonds | — | 9,595,784 | — | 9,595,784 | ||||||||||||
Borrowings | — | 341,553 | — | 341,553 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 4,705 | — | 4,705 | ||||||||||||
Cross-currency swap | — | 55,362 | — | 55,362 | ||||||||||||
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— | 60,067 | — | 60,067 | |||||||||||||
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— | 9,997,404 | — | 9,997,404 | |||||||||||||
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Level 1 | Level 2 | Level 3 | Net balance | |||||||||||||
At December 31, 2011 — | ||||||||||||||||
Assets: | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. Treasury Notes | 7,117 | — | — | 7,117 | ||||||||||||
Bonds of non-U.S. governments and government entities | 995,483 | — | — | 995,483 | ||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | 1,442,343 | — | — | 1,442,343 | ||||||||||||
Certificate of deposits | 428,609 | — | — | 428,609 | ||||||||||||
Bonds | 620,495 | — | — | 620,495 | ||||||||||||
Others | 266,278 | — | — | 266,278 | ||||||||||||
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2,757,725 | — | — | 2,757,725 | |||||||||||||
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3,760,325 | — | — | 3,760,325 | |||||||||||||
Loans | — | 64,811 | — | 64,811 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 428,433 | — | 428,433 | ||||||||||||
Cross-currency swap | — | 274,831 | — | 274,831 | ||||||||||||
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— | 703,264 | — | 703,264 | |||||||||||||
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3,760,325 | 768,075 | — | 4,528,400 | |||||||||||||
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Liabilities: | ||||||||||||||||
Bonds | — | 7,947,340 | — | 7,947,340 | ||||||||||||
Borrowings | — | 356,851 | — | 356,851 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 821 | — | 821 | ||||||||||||
Cross-currency swap | — | 93,048 | — | 93,048 | ||||||||||||
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— | 93,869 | — | 93,869 | |||||||||||||
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— | 8,398,060 | — | 8,398,060 | |||||||||||||
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F-40
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
Level 1 | Level 2 | Level 3 | Net balance | |||||||||||||
At December 31, 2010 — | ||||||||||||||||
Assets: | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. Treasury Notes | 45,011 | — | — | 45,011 | ||||||||||||
Bonds of non-U.S. governments and government entities | 258,673 | — | — | 258,673 | ||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | 882,529 | — | — | 882,529 | ||||||||||||
Certificate of deposits | 340,711 | — | — | 340,711 | ||||||||||||
Bonds | 666,388 | — | — | 666,388 | ||||||||||||
Others | 263,433 | — | — | 263,433 | ||||||||||||
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2,153,061 | — | — | 2,153,061 | |||||||||||||
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2,456,745 | — | — | 2,456,745 | |||||||||||||
Loans | — | 67,678 | — | 67,678 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 266,907 | — | 266,907 | ||||||||||||
Cross-currency swap | — | 258,082 | — | 258,082 | ||||||||||||
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— | 524,989 | — | 524,989 | |||||||||||||
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2,456,745 | 592,667 | — | 3,049,412 | |||||||||||||
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Liabilities: | ||||||||||||||||
Bonds | — | 7,089,124 | — | 7,089,124 | ||||||||||||
Borrowings | — | 347,310 | — | 347,310 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | — | — | — | ||||||||||||
Cross-currency swap | — | 132,887 | — | 132,887 | ||||||||||||
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— | 132,887 | — | 132,887 | |||||||||||||
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— | 7,569,321 | — | 7,569,321 | |||||||||||||
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20. FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with ASC 825 Financial Instruments, CAF also estimated the fair value of all financial instruments in CAF’s balance sheet, including those financial instruments carried at cost, as presented in the table below. The fair value estimates, methods and assumptions, set forth below, for CAF’s financial
F-41
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
instruments are made solely to comply with the requirements of ASC 820 Fair Value Measurements and Disclosures and should be read in conjunction with the financial statements.
The following is a summary of the carrying value and estimated fair value of CAF’s financial instruments at December 31, 2012, 2011 and 2010:
December 31, | ||||||||||||||||||||||||||||
2012 | 2011 | 2010 | ||||||||||||||||||||||||||
Hierarchy Levels | Carrying amount | Estimated fair value | Carrying amount | Estimated fair value | Carrying amount | Estimated fair value | ||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||
Cash and due from banks | 1 | 141,720 | 141,720 | 256,797 | 256,797 | 119,834 | 119,834 | |||||||||||||||||||||
Deposits with banks | 1 | 1,490,049 | 1,490,049 | 1,543,885 | 1,543,885 | 1,403,443 | 1,403,443 | |||||||||||||||||||||
Other investments | 1 | 100,910 | 100,910 | 95,211 | 95,211 | 146,852 | 146,852 | |||||||||||||||||||||
Loans, net | 2 | 16,283,056 | 16,283,792 | 14,915,933 | 14,917,736 | 13,715,365 | 13,718,781 | |||||||||||||||||||||
Equity investments (Cost method) | 2 | 123,311 | 123,311 | 92,248 | 92,248 | 41,221 | 41,221 | |||||||||||||||||||||
Acrrued interest and commissions receivable | 2 | 216,323 | 216,323 | 196,316 | 196,316 | 159,559 | 159,559 | |||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||
Deposits | 2 | 3,121,843 | 3,121,843 | 3,672,063 | 3,672,063 | 2,739,497 | 2,739,497 | |||||||||||||||||||||
Commercial paper | 2 | 3,174,927 | 3,174,927 | 1,977,050 | 1,977,050 | 1,524,285 | 1,524,285 | |||||||||||||||||||||
Borrowings | 2 | 1,049,540 | 1,049,681 | 781,599 | 781,836 | 650,779 | 651,159 | |||||||||||||||||||||
Bonds | 2 | 147,068 | 149,043 | 124,988 | 127,167 | 123,688 | 126,057 | |||||||||||||||||||||
Accrued interest payable | 2 | 180,597 | 180,597 | 163,561 | 163,561 | 120,001 | 120,001 |
The following methods and assumptions were used to estimate the fair value of those financial instruments, not accounted for at fair value under ASC 820 Fair Value Measurements and Disclosures:
- | Cash and due from banks, deposits with banks, interest and commissions receivable, other investment, deposits, commercial paper and accrued interest payable: The carrying amounts approximate fair value because of the short maturity of these instruments. |
- | Loans: CAF is one of the few institutions that offers loans for development in the stockholder countries. A secondary market does not exist for the type of loans granted by CAF. 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. The fair value of impaired loans is estimated on the basis of discounted cash flows. |
- | Equity investments: The fair value of equity investments recorded at cost is determined based on a financial analysis of the investees. CAF’s equity investments in other entities do not have available market price quotations. |
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
- | Bonds and borrowings: For CAF’s bonds issued and medium and long term borrowings, fair value is determined using an internal valuation technique, taking into consideration yield curves to discount the expected cash flows for the applicable maturity, thus reflecting the fluctuation of variables such as interest and exchange rates. These yield curves are adjusted to incorporate CAF credit risk spread. Those transactions are generally classified in Level 2 of the fair-value hierarchy depending on the observability of significant inputs to the model. |
During 2012, there were no transfers between levels 1, 2 and 3.
21. FAIR VALUE OPTION
ASC 825-10-25 “Fair value option” permits to choose the option of measuring eligible financial assets and financial liabilities at fair value. Once the fair value option has been chosen for an instrument, this choice cannot be reversed. Fair value changes on these financial assets and financial liabilities must be recorded in the statement of income.
CAF’s management decided to measure at fair value those financial assets and liabilities denominated in currencies other than US dollars for which it has contracted a derivative as an economic hedge for other currency and interest rate risks.
The results recorded in the statement of income resulting from the periodic cash flows and unrealized changes in fair value as of December 31, 2012, 2011 and 2010 for instruments that fair value option was chosen, and for derivatives used as economic hedges for these instruments, are as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Bonds | (779 | ) | 5,777 | 16,897 | ||||||||
Loans | 202 | (954 | ) | (3,184 | ) | |||||||
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| |||||||
(577 | ) | 4,823 | 13,713 | |||||||||
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22. COMMITMENTS AND CONTINGENCIES
Commitments and contingencies include the following:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Credit agreements subscribed — eligibles | 3,706,207 | 4,391,248 | 3,427,301 | |||||||||
Credit agreements subscribed — non eligibles | 2,531,805 | 1,207,380 | 2,845,372 | |||||||||
Lines of credit | 3,578,581 | 3,823,830 | 2,735,976 | |||||||||
Letters of credit | 27,991 | 155,110 | 195,327 | |||||||||
Equity Investments agreements subscribed | 185,799 | 161,102 | 98,362 | |||||||||
Guarantees | 331,630 | 251,895 | 225,973 |
These commitments and contingencies result from the normal course of CAF’s business and are related principally to loans that have been approved or committed for disbursement.
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
In the ordinary course of business, CAF has entered into commitments to extend credits; such financial instruments are recorded as commitments upon signing the corresponding contract and are reported in the financial statements when disbursements are made. Those commitments that have fulfilled the necessary requirements for disbursement are classified as eligibles.
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.
Guarantees mature as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Remaining maturities: | ||||||||||||
Less than one year | 81,822 | 38,456 | 54,715 | |||||||||
Between one and two years | — | — | 62 | |||||||||
Over five years | 249,808 | 213,439 | 171,196 | |||||||||
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331,630 | 251,895 | 225,973 | ||||||||||
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To the best knowledge of CAF’s management, CAF is not engaged in any litigation that is material to CAF’s business or that is likely to have any impact on its business, financial condition or results of operations.
23. ADMINISTRATIVE EXPENSES
As of December 31, 2012, 2011 and 2010, CAF records administrative expenses as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Salaries and employee benefits | 57,696 | 54,229 | 45,199 | |||||||||
Logistics and infrastructure | 13,797 | 11,585 | 9,576 | |||||||||
Expenses associated with the business | 11,630 | 9,050 | 8,563 | |||||||||
Telecommunications and technology | 7,865 | 6,142 | 6,397 | |||||||||
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| |||||||
90,988 | 81,006 | 69,735 | ||||||||||
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24. THIRD-PARTY ASSETS UNDER MANAGEMENT
CAF, as a multilateral financial institution, acts as administrator of several funds owned by third-parties and CAF’s stockholders special funds. These stockholder special funds are financed through distributions made each year by the stockholders’ meeting from CAF’s prior year’s net income.
In connection with the operations carried out by the Funds, CAF’s financial responsibility is limited to the fund’s balance, less commitments contracted. Since CAF does not maintain residual interests in these funds, it does not expect the generation of economic benefits for future distribution. These funds are not part of CAF’s accounts.
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
As of December 31, 2012, 2011 and 2010, managed funds net assets are US$ 498,048, US$ 466,173 and US$ 426,461, respectively. The balances of main managed funds are as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Compensatory Financing Fund (FFC)(1) | 324,270 | 289,856 | 256,961 | |||||||||
Fund for the Development of Small and Medium Enterpreises (FIDE) | 43,567 | 43,407 | 35,233 | |||||||||
Fund for the Promotion of Sustainable Infrastructure Projects (PROINFRA) | 24,480 | 27,344 | 29,257 | |||||||||
Technical Assistance Fund (FAT) | 22,917 | 23,271 | 24,079 | |||||||||
Human Development Fund (FONDESHU) | 16,884 | 20,241 | 20,001 | |||||||||
Latin American Carbon, Clean Alternative Energies Program (PLAC) | 7,696 | 8,268 | 8,260 | |||||||||
Cross-Border Cooperation and Integration (COPIF) | 3,487 | 3,049 | 3,160 | |||||||||
Others | 54,747 | 50,737 | 49,510 | |||||||||
|
|
|
|
|
| |||||||
498,048 | 466,173 | 426,461 | ||||||||||
|
|
|
|
|
|
(1) | This fund was created by CAF’s Stockholders for the purpose of compensating a portion of interest costs of certain loans granted by CAF to finance economic and social infrastructure projects. As of December 31, 2012, 2011 and 2010, this fund compensated CAF US$ 37,489, US$ 28,201 and US$ 22,169, respectively. |
25. SEGMENT REPORTING
Management has determined that CAF has only one reportable segment since it does not manage its operations by allocating resources based on a determination of the contributions to net income of individual operations. CAF does not differentiate between the nature of the products or services provided, the preparation process, or the method for providing the services among individual countries. For the periods ended December 31, 2012, 2011 and 2010, loans made to or guaranteed by six countries individually generated an excess, before swaps, of 10 percent of loan income, as follows:
December 31, | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Argentina | 61,101 | 40,721 | 30,065 | |||||||||
Bolivia | 42,497 | 35,625 | 34,376 | |||||||||
Colombia | 54,042 | 49,931 | 45,512 | |||||||||
Ecuador | 66,006 | 60,059 | 54,300 | |||||||||
Peru | 77,420 | 64,798 | 55,270 | |||||||||
Venezuela | 78,464 | 63,371 | 57,004 | |||||||||
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| |||||||
379,530 | 314,505 | 276,527 | ||||||||||
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F-45
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2012, 2011 and 2010
(In thousands of U.S. Dollars)
26. SUBSEQUENT EVENTS
Management has evaluated subsequent events through January 31, 2013, financial statements issue date. As a result of this evaluation, there are no subsequent events, as defined, that require a disclosure in CAF’s financial statements at the year ended December 31, 2012, except for:
• | On January 14, 2013 CAF priced bonds under EMTN for CHF 250,000, 1.375%, due 2021. |
• | On January 30, 2013 CAF priced bonds under the EMTN program for US $100,000, LIBOR 3 month plus 85bps, due 2016. |
F-46
Table of Contents
UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION AND NOTES THERETO
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Financial Information
As of March 31, 2013 and Audited Financial Information as of December 31, 2012
Balance Sheets
(In thousands of U.S. dollars)
March 31, 2013 | December 31, 2012 | |||||||
ASSETS | ||||||||
Cash and due from banks | 450,897 | 141,720 | ||||||
Deposits with banks | 1,725,433 | 1,490,049 | ||||||
Marketable securities | ||||||||
Trading | 4,706,827 | 5,453,137 | ||||||
Other investments | 147,606 | 100,910 | ||||||
Loans (includes U.S.$ 71,084 and U.S.$ 72,354 as of March 31, 2013 and December 31, 2012, respectively, at fair value) | 17,130,430 | 16,355,410 | ||||||
Less loan commissions, net of origination costs | 73,867 | 76,837 | ||||||
Less allowance for losses | 128,081 | 125,799 | ||||||
|
|
|
| |||||
Loans, net | 16,928,482 | 16,152,774 | ||||||
|
|
|
| |||||
Accrued Interest and commissions receivable | 237,594 | 216,323 | ||||||
Equity investments | 157,034 | 146,811 | ||||||
Derivative Instruments | 570,241 | 772,448 | ||||||
Property and equipment, net | 40,270 | 39,226 | ||||||
Other assets | 121,918 | 90,313 | ||||||
|
|
|
| |||||
Total assets | 25,086,302 | 24,603,711 | ||||||
|
|
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| |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES | ||||||||
Deposits | 3,332,328 | 3,121,843 | ||||||
Commercial paper | 3,151,745 | 3,174,927 | ||||||
Borrowings and other obligations (includes U.S.$ 323,617 and U.S.$ 341,553 at fair value as of March 31, 2013 and December 31, 2012, respectively) | 1,367,517 | 1,391,093 | ||||||
Bonds (includes U.S.$ 9,706,246 and U.S.$ 9,595,784 as of March 31, 2013 and December 31, 2012, respectively, at fair value) | 9,953,687 | 9,742,852 | ||||||
Accrued interest and commissions payable | 200,578 | 180,597 | ||||||
Derivative instruments | 151,847 | 60,067 | ||||||
Accrued expenses and other liabilities | 67,534 | 67,270 | ||||||
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|
| |||||
Total liabilities | 18,225,236 | 17,738,649 | ||||||
|
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| |||||
STOCKHOLDERS’ EQUITY | ||||||||
Subscribed and paid-in capital (authorized capital U.S.$ 10 billion) | 3,668,610 | 3,636,715 | ||||||
Additional paid-in capital | 841,190 | 782,523 | ||||||
Reserves | 2,325,826 | 2,285,655 | ||||||
Retained earnings | 25,440 | 160,169 | ||||||
|
|
|
| |||||
Total stockholders’ equity | 6,861,066 | 6,865,062 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | 25,086,302 | 24,603,711 | ||||||
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S-1
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Financial Information for
the Three-Month Period ended March 31, 2013 and 2012
Statements of Income
(In thousands of U.S. dollars)
Three Months Ended March 31, | ||||||||
2013 | 2012 | |||||||
Interest income | ||||||||
Loans | 108,650 | 107,465 | ||||||
Investments and deposits with banks | 8,889 | 16,003 | ||||||
Loan commissions | 6,369 | 7,704 | ||||||
|
|
|
| |||||
Total interest income | 123,908 | 131,172 | ||||||
|
|
|
| |||||
Interest expense | ||||||||
Deposits | 5,138 | 4,938 | ||||||
Commercial paper | 4,865 | 2,170 | ||||||
Advances and short-term borrowings | — | — | ||||||
Bonds | 56,458 | 48,420 | ||||||
Borrowings and other obligations | 4,722 | 4,099 | ||||||
Commissions | 3,558 | 3,163 | ||||||
|
|
|
| |||||
Total interest expense | 74,741 | 62,790 | ||||||
|
|
|
| |||||
Net interest income | 49,167 | 68,382 | ||||||
Provision to allowance for loan losses | 2,203 | 4,700 | ||||||
|
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|
| |||||
Net interest income, after provision to allowance for loan losses | 46,964 | 63,682 | ||||||
|
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| |||||
Non-interest income | ||||||||
Other commissions | 1,715 | 784 | ||||||
Dividends and equity in earnings of investees | 15 | 414 | ||||||
Other income | 2,083 | 213 | ||||||
|
|
|
| |||||
Total non-interest income | 3,813 | 1,411 | ||||||
|
|
|
| |||||
Non-interest expenses | ||||||||
Administrative expenses | 24,655 | 21,682 | ||||||
Other expenses | 89 | 192 | ||||||
|
|
|
| |||||
Total non-interest expenses | 24,744 | 21,874 | ||||||
|
|
|
| |||||
Net income before unrealized changes in fair value related to financial instruments | 26,033 | 43,219 | ||||||
Unrealized changes in fair value related to financial instruments | (593 | ) | 3,400 | |||||
|
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|
| |||||
Net income | 25,440 | 46,619 | ||||||
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S-2
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Financial Information for
the Three-Month Period ended March 31, 2013 and 2012
Statements of Cash Flows
(In thousands of U.S. dollars)
Three Months Ended March 31, | ||||||||
2013 | 2012 | |||||||
Cash flows from operating activities: | ||||||||
Net income | 25,440 | 46,619 | ||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities | ||||||||
Unrealized (gain) loss on trading securities | (10,273 | ) | (6,611 | ) | ||||
Amortization of loan commissions, net of origination costs | (2,702 | ) | (2,780 | ) | ||||
Provision for loan losses | 2,203 | 4,700 | ||||||
Depreciation of property and equipment | 1,081 | 1,022 | ||||||
Amortization of deferred charges | 663 | 387 | ||||||
Provision for employees’ severance indemnities and benefits | 1,844 | 1,958 | ||||||
Provisions for employees’ savings plan | 315 | 323 | ||||||
Unrealized changes in fair value related to financial instruments | 592 | (3,400 | ) | |||||
Net changes in operating assets and liabilities | ||||||||
Severance indemnities paid or advanced | (901 | ) | (1,196 | ) | ||||
Employees’ savings plan paid or advanced | 13 | (636 | ) | |||||
Trading securities, net | 756,583 | 537,417 | ||||||
Interest and commissions receivable | (21,271 | ) | (22,969 | ) | ||||
Other assets | (32,268 | ) | 15,600 | |||||
Accrued interest payable | 19,981 | (5,703 | ) | |||||
Accrued expenses and other liabilities | (1,007 | ) | (595 | ) | ||||
|
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|
| |||||
Total adjustments and net changes in operating assets and liabilities | 714,853 | 517,517 | ||||||
|
|
|
| |||||
Net cash used in operating activities | 740,293 | 564,136 | ||||||
|
|
|
| |||||
Cash flows from investing activities | ||||||||
Purchases of other investments | (124,109 | ) | (50,173 | ) | ||||
Maturities of other investments | 77,413 | 38,523 | ||||||
Loan origination and principal collections, net | (773,577 | ) | (340,414 | ) | ||||
Equity investments | (10,223 | ) | (2,283 | ) | ||||
Purchases of property and equipment | (2,125 | ) | (2,475 | ) | ||||
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| |||||
Net cash used in investing activities | (832,621 | ) | (356,822 | ) | ||||
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S-3
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Financial Information for
the Three-Month Period ended March 31, 2013 and 2012
Statements of Cash Flows, Continued
(In thousands of U.S. dollars)
Three Months Ended March 31, | ||||||||
2013 | 2012 | |||||||
Cash flows from financing activities | ||||||||
Net increase in deposits | 210,485 | 623,846 | ||||||
Net increase in commercial paper | (23,182 | ) | 92,285 | |||||
Proceeds from advances and short-term borrowings | — | — | ||||||
Proceeds from issuance of bonds | 507,530 | 379,061 | ||||||
Repayment of bonds | (6,202 | ) | (647,264 | ) | ||||
Proceeds from borrowings and other obligations | 6,500 | 1,770 | ||||||
Repayment of borrowings and other obligations | (28,806 | ) | (6,630 | ) | ||||
Distributions to stockholders’ funds | (119,998 | ) | (96,500 | ) | ||||
Proceeds from issuance of shares | 90,562 | 17,146 | ||||||
|
|
|
| |||||
Net cash provided by financing activities | 636,889 | 363,714 | ||||||
|
|
|
| |||||
Net increase in cash and cash equivalents | 544,561 | 571,028 | ||||||
Cash and cash equivalents at beginning of period | 1,631,769 | 1,800,682 | ||||||
|
|
|
| |||||
Cash and cash equivalents at end of period | 2,176,330 | 2,371,710 | ||||||
|
|
|
| |||||
Consisting of: | ||||||||
Cash and due from banks | 450,897 | 160,277 | ||||||
Deposits with banks | 1,725,433 | 2,211,433 | ||||||
|
|
|
| |||||
2,176,330 | 2,371,710 | |||||||
|
|
|
| |||||
Supplemental disclosure | ||||||||
Interest paid during the period | 53,296 | 63,919 | ||||||
|
|
|
| |||||
Non-cash financing activities | ||||||||
Change in derivative instrument assets | (202,207 | ) | 12,272 | |||||
Change in derivative instrument liabilities | 91,780 | (59,809 | ) | |||||
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S-4
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Financial Information for
the Three-Month Period ended March 31, 2013 and Audited Financial Information for the
Year ended December 31, 2012
Statement of Stockholders’ Equity
(In thousands of U.S. dollars)
Subscribed and paid-in capital | Additional paid-in capital | Reserve Pursuant to | Retained earnings | Total stockholders’ equity | ||||||||||||||||||||||||
General Reserve | Article No 42 of by-laws | Total | ||||||||||||||||||||||||||
Balance at December 31, 2012 | 3,636,715 | 782,523 | 1,871,521 | 414,134 | 2,285,655 | 160,169 | 6,865,062 | |||||||||||||||||||||
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| |||||||||||||||
Capital Increase | 31,895 | 58,667 | — | — | — | — | 90,562 | |||||||||||||||||||||
Appropriated for general reserve | — | — | 24,071 | — | 24,071 | (24,071 | ) | — | ||||||||||||||||||||
Appropriated for general reserve to Article 42 of by-laws | — | — | — | 16,100 | 16,100 | (16,100 | ) | — | ||||||||||||||||||||
Distribution to stockholders’ funds | — | — | — | — | — | (119,998 | ) | (119,998 | ) | |||||||||||||||||||
Net Income | — | — | — | — | — | 25,440 | 25,440 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
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| |||||||||||||||
Balance at March 31, 2013 | 3,668,610 | 841,190 | 1,895,592 | 430,234 | 2,325,826 | 25,440 | 6,861,066 | |||||||||||||||||||||
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S-5
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Financial Information for
the Three-Month Period ended March 31, 2012 and Audited Financial Information for the
Year ended December 31, 2011
Statement of Stockholders’ Equity
(In thousands of U.S. dollars)
Subscribed and paid-in capital | Additional paid-in capital | Reserve Pursuant to | Retained earnings | Total stockholders’ equity | ||||||||||||||||||||||||
General Reserve | Article No 42 of by-laws | Total | ||||||||||||||||||||||||||
Balance at December 31, 2011 | 3,229,365 | 739,733 | 1,830,742 | 398,834 | 2,229,576 | 152,579 | 6,351,253 | |||||||||||||||||||||
|
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|
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|
|
| |||||||||||||||
Capital Increase | 254,810 | (237,664 | ) | — | — | — | — | 17,176 | ||||||||||||||||||||
Appropriated for general reserve | — | — | 40,779 | — | 40,779 | (40,779 | ) | — | ||||||||||||||||||||
Appropriated for general reserve to Article 42 of by-laws | — | — | — | 15,300 | 15,300 | (15,300 | ) | — | ||||||||||||||||||||
Distribution to stockholders’ funds | — | — | — | — | — | (96,500 | ) | (96,500 | ) | |||||||||||||||||||
Net Income | — | — | — | — | — | 45,202 | 45,202 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at March 31, 2012 | 3,484,175 | 502,069 | 1,871,521 | 414,134 | 2,285,655 | 45,202 | 6,317,101 | |||||||||||||||||||||
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S-6
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
(1) Basis of Presentation
The condensed interim financial information as of March 31, 2013 and for the three-month periods ended March 31, 2013 and 2012 is unaudited and has been prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, such interim financial information includes all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the results of the interim periods. The results of operations for the three-month period ended March 31, 2013 are not necessarily an indication of the results to be expected for the full year 2013.
This condensed interim financial information should be read in conjunction with CAF’s financial statements for each of the years in the three-year period ended December 31, 2012 and the notes thereto presented in the accompanying prospectus.
(2) Allowance for Loan Losses
For the three-month period ended March 31, 2013, CAF had a provision for loan losses of US$ 2.2 million, compared to a credit for loan losses of US$ 4.7 million for the same period in 2012. The allowance for loan losses as a percentage of the loan portfolio was 0.8% at 31 March 2013, compared to 0.9% at 31 March 2012.
The allowance for loan losses is maintained at a level CAF 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 CAF 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 a sovereign loan portfolio, CAF’s preferred creditor status is also considered.
A specific allowance is established by CAF for those loans that are considered impaired. A loan is considered 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 loan’s 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.
S-7
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
(3) Marketable Securities
Trading Securities
A summary of trading securities follows:
March 31, 2013 | December 31, 2012 | |||||||||||||||
Amount | Average maturity (years) | Amount | Average maturity (years) | |||||||||||||
U.S. Treasury Notes | 764,188 | 3.15 | 944,773 | 2.47 | ||||||||||||
Non-U.S. governments and government entities bonds | 116,548 | 3.24 | 178,846 | 2.49 | ||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | 1,485,051 | — | 1,899,734 | — | ||||||||||||
Certificates of deposit | 203,345 | — | 344,044 | — | ||||||||||||
Bonds | 1,767,243 | — | 1,723,496 | — | ||||||||||||
Others | 370,452 | — | 362,244 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
3,826,091 | 1.34 | 4,329,518 | 1.21 | |||||||||||||
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|
|
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|
|
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| |||||||||
4,706,827 | 1.68 | 5,453,137 | 1.47 | |||||||||||||
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|
|
(4) Loans
Loans include short-, medium- and long-term loans to finance projects, working capital and trade activities. The majority of the loans are to Series “A” and “B” stockholder countries, or with private institutions or companies of these countries.
Loans by country are summarized as follows:
March 31, 2013 | December 31, 2012 | |||||||
Stockholder country: | ||||||||
Argentina | 2.155.929 | 2.114.725 | ||||||
Bolivia | 1.580.138 | 1.598.808 | ||||||
Brazil | 1.630.532 | 1.252.829 | ||||||
Colombia | 1.753.677 | 1.832.312 | ||||||
Costa Rica | 126.698 | 126.698 | ||||||
Dominican Republic | 175.673 | 176.047 | ||||||
Ecuador | 2.630.897 | 2.648.222 | ||||||
Jamaica | 6.479 | 6.590 | ||||||
Mexico | 18.026 | 18.026 | ||||||
Panama | 623.774 | 586.944 | ||||||
Paraguay | 136.983 | 134.501 | ||||||
Peru | 2.973.516 | 2.660.320 | ||||||
Spain | 50.000 | 50.000 | ||||||
Uruguay | 333.699 | 331.820 | ||||||
Venezuela | 2.929.652 | 2.816.083 | ||||||
|
|
|
| |||||
Loans | 17.125.673 | 16.353.925 | ||||||
Fair value adjustments | 4.757 | 1.485 | ||||||
|
|
|
| |||||
Carrying value of loans | 17.130.430 | 16.355.410 | ||||||
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S-8
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
Fair value adjustments to the carrying value of loans represent adjustments to the carrying value of loans for which the fair value option is elected.
At March 31, 2013 and December 31, 2012, loans in other currencies were granted for an equivalent of US$ 53,589 and US$ 57,317, respectively, principally in Bolivian bolivianos, Peruvian nuevos soles, Paraguaian guarani and Colombian pesos. At March 31, 2013 and December 31, 2012, loans include fixed interest rate loans of US$ 82,653, and US$ 88,552, respectively.
Loans classified by public sector and private sector borrowers, are as follows:
March 31, 2013 | December 31, 2012 | |||||||
Public Sector | 14.080.880 | 13.823.556 | ||||||
Private Sector | 3.044.793 | 2.530.369 | ||||||
|
|
|
| |||||
17.125.673 | 16.353.925 | |||||||
|
|
|
|
The average yield of the loan portfolio average yield is shown below:
March 31, 2013 | December 31, 2012 | |||||||||||||||
Amount | Average yield (%) | Amount | Average yield (%) | |||||||||||||
Loans | 17.125.673 | 2,53 | 16.353.925 | 2,69 | ||||||||||||
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|
Loans by industry segments are as follows:
March 31, | December 31, | |||||||||||||||
2013 | % | 2012 | % | |||||||||||||
Agriculture, hunting and forestry | 58.692 | — | 62.651 | — | ||||||||||||
Mining and Quarrying | — | — | — | — | ||||||||||||
Manufacturing industry | 195.241 | 1 | 205.789 | 1 | ||||||||||||
Electricity, gas and water supply | 5.767.054 | 34 | 5.530.511 | 34 | ||||||||||||
Transport, warehousing and communications | 5.871.595 | 34 | 5.825.822 | 36 | ||||||||||||
Commercial banks | 1.649.671 | 9 | 1.144.172 | 7 | ||||||||||||
Development banks | 477.596 | 3 | 496.262 | 3 | ||||||||||||
Social and other infrastructure programs | 3.001.255 | 18 | 3.033.455 | 19 | ||||||||||||
Others | 104.569 | 1 | 55.263 | — | ||||||||||||
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| |||||||||
17.125.673 | 100 | 16.353.925 | 100 | |||||||||||||
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S-9
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
Loans mature as follows:
March 31, 2013 | December 31, 2012 | |||||||
Remaining maturities: | ||||||||
Less than one year | 3.184.723 | 2.683.514 | ||||||
Between one and two years | 1.546.706 | 1.481.612 | ||||||
Between two and three years | 1.631.750 | 1.598.393 | ||||||
Between three and four years | 1.601.760 | 1.530.782 | ||||||
Between four and five years | 1.286.833 | 1.274.371 | ||||||
Over five years | 7.873.901 | 7.785.253 | ||||||
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| |||||
17.125.673 | 16.353.925 | |||||||
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|
Loan portfolio is classified depending on the credit risk type, as follows:
March 31, 2013 | December 31, 2012 | |||||||
Sovereign guaranteed | 13.371.550 | 13.228.048 | ||||||
Non-sovereign guaranteed | 3.754.123 | 3.125.877 | ||||||
|
|
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| |||||
17.125.673 | 16.353.925 | |||||||
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|
Loan portfolio quality
The loan portfolio quality indicators are presented below:
March 31, 2013 | December 31, 2012 | |||||||
Overdue loans | 0 | 0 | ||||||
Non-accrual loans | 7.851 | 7.851 | ||||||
Impaired Loans | 7.851 | 7.851 | ||||||
Loans written-off | 0 | 0 | ||||||
Overdue loan principal as a percentage of loan portfolio | 0 | % | 0 | % | ||||
Nonaccrual loans as a percentage of loan portfolio | 0,05 | % | 0,05 | % | ||||
Allowance for losses as a percentage of loan portfolio | 0,75 | % | 0,77 | % |
At March 31, 2013 and December 31, 2012, all loans were performing except for loans to a private client for US$ 7,851 and US$ 7,851, respectively, which were classified as impaired and were in non-accrual status.
Purchase of loan portfolio
During first quarter 2013 and year-end 2012, CAF did not purchase any loans.
Sale of loan portfolio
During 2012, CAF sold loans to commercial banks for US$ 76,900, without recourse.
S-10
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
A/B Loans
CAF administers loan-participations sold, and only assumes the credit risk for the portion of the loan owned by CAF. At March 31, 2013 and December 31, 2012, CAF maintained loans of this nature amounting to US$ 1,726,067 and US$ 1,820,980, respectively; whereby other financial institutions provided funds for US$ 1,240,877, and US$ 1,325,996, respectively.
Troubled debt restructurings
During first quarter 2013 and year-end 2012, there were no troubled debt restructurings.
Allowance for Loan Losses
Changes in the allowance for loan losses are presented below:
March 31, 2013 | December 31, 2012 | |||||||||||||||||||||||
Sector | Sector | |||||||||||||||||||||||
Sovereign | Non-sovereign | Total | Sovereign | Non-sovereign | Total | |||||||||||||||||||
Balances at beginning of year | 95.872 | 29.927 | 125.799 | 99.414 | 31.222 | 130.636 | ||||||||||||||||||
Credit to results of operations | 1.414 | 868 | 2.282 | (3.542 | ) | (1.323 | ) | (4.865 | ) | |||||||||||||||
Recoveries | — | — | — | 28 | 28 | |||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balances at end of year | 97.286 | 30.795 | 128.081 | 95.872 | 29.927 | 125.799 | ||||||||||||||||||
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|
|
(5) Deposits
A summary of deposits follows:
March 31, 2013 | December 31, 2012 | |||||||
Demand deposits | 72,229 | 68,555 | ||||||
Time deposits: | ||||||||
Less than one year | 3,260,099 | 3,053,288 | ||||||
|
|
|
| |||||
3,332,328 | 3,121,843 | |||||||
|
|
|
|
At March 31, 2013 and December 31, 2012, the interest rates on deposits ranged from 0.04% to 1.81% and from 0.04% to 1.809%. Deposits are issued for amounts equal to or more than US$ 100. Total deposits in other currencies include US$ 111,254 and US$ 283,004, at March 31, 2013 and December 31, 2012, respectively.
(6) Commercial Papers
CAF’s commercial paper of US$ 3,151,745 at March 31, 2013 mature in 2013 and 2014 (US$ 3,174,927 at December 31, 2012 mature in 2013). At March 31, 2013 and December 31, 2012, the interest rates on commercial paper ranged from 0.09% to 0.99% and from 0.08% to 1.07%, respectively.
S-11
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
(7) Borrowings
A summary of borrowings follows:
March 31, 2013 | December 31, 2012 | |||||||
U.S. dollars | 1,329,844 | 1,344,860 | ||||||
Peruvian nuevos soles | 5,015 | 6,857 | ||||||
Venezuelan bolivars | 11,111 | 16,279 | ||||||
Other currencies | 4,597 | 4,877 | ||||||
|
|
|
| |||||
1,350,567 | 1,372,873 | |||||||
Fair value adjustments | 16,950 | 18,220 | ||||||
|
|
|
| |||||
Carrying value of borrowings | 1,367,517 | 1,391,093 | ||||||
|
|
|
|
At March 31, 2013 and December 31, 2012 there are fixed interest-bearing borrowings in the amount of US$ 162,602 and US$ 169,892, respectively.
Borrowings, by remaining maturities, are summarized below:
March 31, 2013 | December 31, 2012 | |||||||
Remaining maturities: | ||||||||
Less than one year | 100,092 | 103,038 | ||||||
Between one and two years | 551,224 | 468,797 | ||||||
Between two and three years | 246,093 | 234,823 | ||||||
Between three and four years | 80,928 | 191,591 | ||||||
Between four and five years | 80,428 | 66,965 | ||||||
Over five years | 291,802 | 307,659 | ||||||
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|
| |||||
1,350,567 | 1,372,873 | |||||||
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|
At March 31, 2013 and December 31, 2012 there were unused term credit facilities amounting to US$ 718,911 and US$ 722,685, respectively.
S-12
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
(8) Bonds
An analysis of bonds follows:
March 31, 2013 | December 31, 2012 | |||||||||||||||||||||||
Outstanding principal | Outstanding principal | |||||||||||||||||||||||
At original exchange rate | At spot exchange rate | Weighted average cost, after swaps (%) (Year-end) | At original exchange rate | At spot exchange rate | Weighted average cost, after swaps (%) (Year-end) | |||||||||||||||||||
U.S. dollars | 5,307,994 | 5,307,994 | 2.43 | 5,208,530 | 5,208,530 | 2.54 | ||||||||||||||||||
Euros | 1,326,279 | 1,271,942 | 2.28 | 1,190,396 | 1,177,262 | 2.55 | ||||||||||||||||||
Japanese yen | 622,024 | 535,544 | 2.23 | 622,024 | 581,583 | 2.30 | ||||||||||||||||||
Colombian pesos | 205,352 | 264,152 | 3.34 | 205,352 | 273,709 | 3.34 | ||||||||||||||||||
Swiss francs | 1,693,478 | 1,701,074 | 2.21 | 1,421,295 | 1,491,640 | 2.44 | ||||||||||||||||||
Mexican pesos | 98,108 | 106,868 | 2.90 | 98,108 | 101,908 | 2.90 | ||||||||||||||||||
Peruvian nuevos soles | 100,939 | 120,074 | 1.28 | 107,141 | 129,950 | 1.40 | ||||||||||||||||||
Chinese renminbi | 96,618 | 96,607 | 1.55 | 96,618 | 96,288 | 1.55 | ||||||||||||||||||
Hong Kong dollars | 102,803 | 102,794 | 2.62 | 102,803 | 102,953 | 2.62 | ||||||||||||||||||
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| |||||||||||||||||
9,553,595 | 9,507,049 | 9,052,267 | 9,163,823 | |||||||||||||||||||||
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| |||||||||||||||||||||
Fair value adjustments | 446,638 | 579,029 | ||||||||||||||||||||||
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| |||||||||||||||||||||
Carrying value of bonds | 9,953,687 | 9,742,852 | ||||||||||||||||||||||
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|
|
A summary of the bonds issued, by remaining maturities, follows:
March 31, 2013 | December 31, 2012 | |||||||
Remaining maturities: | ||||||||
Less than one year | 1,120,733 | 763,729 | ||||||
Between one and two years | 723,843 | 944,354 | ||||||
Between two and three years | 2,128,172 | 1,066,805 | ||||||
Between three and four years | 878,249 | 1,148,506 | ||||||
Between four and five years | 917,607 | 888,469 | ||||||
Over five years | 3,784,991 | 4,240,404 | ||||||
|
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| |||||
9,553,595 | 9,052,267 | |||||||
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|
At March 31, 2013 and December 31, 2012 fixed interest rate bonds amounted to US$ 9,111,016 and US$ 8,703,859, respectively, of which US$ 4,126,506 and US$ 3,719,349, respectively, are denominated in Japanese yen, Euros, Swiss francs, Colombian pesos, Mexican pesos, Hong Kong dollars, Chinese renminbi, and Peruvian nuevos soles.
S-13
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
(9) Derivative Instruments and Hedging Activities
The following table presents the notional amount and fair values of interest rate swaps and cross-currency swaps and the underlying hedged items at March 31, 2013 and December 31, 2012:
Notional amount | Fair value | |||||||||||||||
Interest rate swap | Cross- currency swap | Derivative assets | Derivative liabilities | |||||||||||||
At March 31, 2013 - | ||||||||||||||||
Loans | — | 42,820 | — | 5,925 | ||||||||||||
Loans | 21,000 | — | 489 | — | ||||||||||||
Borrowings | 306,667 | — | 16,950 | — | ||||||||||||
Bonds | 5,049,510 | — | 306,076 | 4,216 | ||||||||||||
Bonds | — | 4,121,374 | 246,726 | 141,706 | ||||||||||||
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| |||||||||
5,377,177 | 4,164,194 | 570,241 | 151,847 | |||||||||||||
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Notional amount | Fair value | |||||||||||||||
Interest rate swap | Cross- currency swap | Derivative assets | Derivative liabilities | |||||||||||||
At December 31, 2012 - | ||||||||||||||||
Loans | — | 42,820 | — | 6,506 | ||||||||||||
Loans | 23,900 | — | 617 | — | ||||||||||||
Borrowings | 323,333 | — | 18,220 | — | ||||||||||||
Bonds | 5,049,510 | — | 357,504 | 4,705 | ||||||||||||
Bonds | — | 3,855,689 | 396,107 | 48,856 | ||||||||||||
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5,396,743 | 3,898,509 | 772,448 | 60,067 | |||||||||||||
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|
The amount recognized for the right to receive collateral or the obligation to post collateral that have been offset at March 31,2013 were US$ 81,147 and US$ 33,598, respectively, and year-end 2012, was US$ 214,624, received.
For March 31,2013 and the year ended December 31, 2012 all of CAFs’ derivatives which had been designated as hedging relationship were considered fair value hedges. The change in the fair value of such derivative instruments and the change in fair value of hedged items attributable to risk being hedged are included in the statement of income.
S-14
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
(10) Fair Value Measurement
ASC 820 “Fair Value Measurements and Disclosures” establishes a single authoritative definition of value, sets out a framework for measuring fair value, and provides a hierarchical disclosure framework for assets and liabilities measured at fair value.
The following tables present for each of the fair-value hierarchy levels CAF’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012:
Level 1 | Level 2 | Level 3 | Net balance | |||||||||||||
At March 31, 2013 — | ||||||||||||||||
Assets — | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. Treasury Notes | 764,188 | — | — | 764,188 | ||||||||||||
Bonds of non-U.S. governments and government entities | 116,548 | — | — | 116,548 | ||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | 1,485,051 | — | — | 1,485,051 | ||||||||||||
Certificate of deposits | 203,345 | — | — | 203,345 | ||||||||||||
Bonds | 1,767,243 | — | — | 1,767,243 | ||||||||||||
Others | 370,452 | — | — | 370,452 | ||||||||||||
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| |||||||||
3,826,091 | — | — | 3,826,091 | |||||||||||||
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4,706,827 | 4,706,827 | |||||||||||||||
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| |||||||||
Loans | — | 71,084 | — | 71,084 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 322,538 | — | 322,538 | ||||||||||||
Cross-currency swap | — | 247,703 | — | 247,703 | ||||||||||||
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| |||||||||
— | 570,241 | — | 570,241 | |||||||||||||
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4,706,827 | 641,325 | 5,348,152 | ||||||||||||||
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| |||||||||
Liabilities — | ||||||||||||||||
Bonds | — | 9,706,246 | — | 9,706,246 | ||||||||||||
Borrowings | — | 323,617 | — | 323,617 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 4,216 | — | 4,216 | ||||||||||||
Cross-currency swap | — | 147,631 | — | 147,631 | ||||||||||||
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— | 151,847 | — | 151,847 | |||||||||||||
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— | 10,181,710 | — | 10,181,710 | |||||||||||||
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S-15
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
Level 1 | Level 2 | Level 3 | Net balance | |||||||||||||
At December 31, 2012 — | ||||||||||||||||
Assets — | ||||||||||||||||
Marketable securities: | ||||||||||||||||
U.S. Treasury Notes | 944,773 | — | — | 944,773 | ||||||||||||
Bonds of non-U.S. governments and government entities | 178,846 | — | — | 178,846 | ||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | 1,899,734 | — | — | 1,899,734 | ||||||||||||
Certificate of deposits | 344,044 | — | — | 344,044 | ||||||||||||
Bonds | 1,723,496 | — | — | 1,723,496 | ||||||||||||
Others | 362,244 | — | — | 362,244 | ||||||||||||
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| |||||||||
4,329,518 | — | — | 4,329,518 | |||||||||||||
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| |||||||||
5,453,137 | — | — | 5,453,137 | |||||||||||||
|
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| |||||||||
Loans | — | 72,354 | — | 72,354 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 376,341 | — | 376,341 | ||||||||||||
Cross-currency swap | — | 396,107 | — | 396,107 | ||||||||||||
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| |||||||||
— | 772,448 | — | 772,448 | |||||||||||||
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| |||||||||
5,453,137 | 844,802 | — | 6,297,939 | |||||||||||||
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| |||||||||
Liabilities — | ||||||||||||||||
Bonds | — | 9,595,784 | — | 9,595,784 | ||||||||||||
Borrowings | — | 341,553 | — | 341,553 | ||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swap | — | 4,705 | — | 4,705 | ||||||||||||
Cross-currency swap | — | 55,362 | — | 55,362 | ||||||||||||
|
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| |||||||||
— | 60,067 | — | 60,067 | |||||||||||||
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— | 9,997,404 | — | 9,997,404 | |||||||||||||
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During March 31, 2013 and year-end 2012, there were no transfers between levels 1, 2 and 3.
S-16
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
(11) Fair Value of Financial Instruments
The following is a summary of the carrying value and estimated fair value of CAF’s financial instruments at March 31, 2013 and December 31, 2012:
March 31, 2013 | December 31, 2012 | |||||||||||||||||||
Hierarchy | Carrying amount | Estimated fair value | Carrying amount | Estimated fair value | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | 1 | 450.897 | 450.897 | 141.720 | 141.720 | |||||||||||||||
Deposits with banks | 1 | 1.725.433 | 1.725.433 | 1.490.049 | 1.490.049 | |||||||||||||||
Other investments | 1 | 147.606 | 147.606 | 100.910 | 100.910 | |||||||||||||||
Loans, net | 2 | 17.059.346 | 17.060.039 | 16.283.056 | 16.283.792 | |||||||||||||||
Equity investments (Cost | 2 | 132.463 | 132,463 | 123.311 | 123.311 | |||||||||||||||
Accrued interest and receivable | 2 | 237.594 | 237.594 | 216.323 | 216.323 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 2 | 3.332.328 | 3.332.328 | 3.121.843 | 3.121.843 | |||||||||||||||
Commercial paper | 2 | 3.151.745 | 3.151.745 | 3.174.927 | 3.174.927 | |||||||||||||||
Borrowings | 2 | 1.043.900 | 1.044.081 | 1.049.540 | 1.049.681 | |||||||||||||||
Bonds | 2 | 247.441 | 249.354 | 147.068 | 149.043 | |||||||||||||||
Accrued interest payable | 2 | 200.578 | 200.578 | 180.597 | 180.597 |
(12) Commitments and Contingencies
Commitments and contingencies include the following:
March 31, 2013 | December 31, 2012 | |||||||
Credit agreements subscribed- eligibles | 3,570,482 | 3,706,207 | ||||||
Credit agreements subscribed- non eligibles | 3,024,640 | 2,531,805 | ||||||
Lines of credit for foreign trade | 2,974,502 | 3,578,581 | ||||||
Letters of credit for foreign trade | 11,688 | 27,991 | ||||||
Guarantees | 185,295 | 331,630 | ||||||
Others | 305,236 | 185,799 |
These commitments and contingencies result from the normal course of CAF’s business and are related principally to loans and loan equivalents that have been approved or committed for disbursement.
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 CAF.
S-17
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to Unaudited Condensed Interim Financial Information
As of March 31, 2013 and 2012 and Audited Financial Information
for the Year ended December 31, 2012
Guarantees primarily consist of partial credit guarantees given to the Plurinational State of Bolivia, the Republic of Peru and some private sector companies from the region for the payment of principal and interest up to the following amounts (in millions of U.S. dollars):
March 31, 2013 | December 31, 2012 | |||||||
Less than one year | 80.1 | 81.8 | ||||||
Between one and two years | — | — | ||||||
Over five years | 250.3 | 249.8 | ||||||
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| |||||
330.4 | 331.6 | |||||||
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|
(13) Segment Operations
Management has determined that CAF has only one reportable segment since it does not manage its operations by allocating resources based on a determination of the contributions to net income of individual operations. CAF does not differentiate between the nature of the products or services provided, the preparation process, or the method for providing the services among individual countries. For the three-month periods ended March 31, 2013 and 2012, loans made to or guaranteed by six countries individually generated in excess of 10% of interest income, before swaps, as follows (in thousands of U.S. dollars):
Three Months Ended March 31, | ||||||||
2013 | 2012 | |||||||
Argentina | 9,374 | 14,357 | ||||||
Bolivia | 6,967 | 10,177 | ||||||
Colombia | 8,024 | 14,351 | ||||||
Ecuador | 10,683 | 16,043 | ||||||
Perú | 11,989 | 19,430 | ||||||
Venezuela | 11,993 | 19,352 |
(14) Subsequent Events
As of the date of the issuance of these condensed financial statements there are no other significant sub-sequent events that require adjustments or disclosure, if applicable, which were not already considered in this note or disclosure in the financial statements.
S-18
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
SUPPLEMENTARY INFORMATION (UNAUDITED)
AS OF MARCH 31, 2013
BONDS
Title | Interest Rate | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding at March 31, 2013 | |||||||||||||
7.79% Yankee Bonds | Fixed | 1997 | 2017 | USD | 50.0 | |||||||||||||
77/8% Yankee Bonds | Fixed | 2002 | 2022 | USD | 85.0 | |||||||||||||
51/5% Yankee Bonds | Fixed | 2003 | 2013 | USD | 500.0 | |||||||||||||
5.8175% Euro Bonds | Fixed | 2004 | 2014 | USD | 29.0 | |||||||||||||
51/8% Yankee Bonds | Fixed | 2005 | 2015 | USD | 250.0 | |||||||||||||
5.75% Yankee Bonds | Fixed | 2006 | 2017 | USD | 250.0 | |||||||||||||
Peruvian Soles Bonds | Fixed | 2006 | 2018 | PEN | (2) | 187.4 | ||||||||||||
5.75% Yankee Bonds | Fixed | 2007 | 2017 | USD | 115.4 | |||||||||||||
2.32% Samurai Bonds | Fixed | 2007 | 2014 | JPY | (1) | 10,000.0 | ||||||||||||
5.75% Yankee Bonds | Fixed | 2008 | 2017 | USD | 250.0 | |||||||||||||
5% Swiss Franc Bonds | Fixed | 2008 | 2013 | CHF | (4) | 200.0 | ||||||||||||
Colombian Peso Bonds | Fixed | 2008 | 2013 | COP | (5) | 150,250.0 | ||||||||||||
Colombian Peso Bonds | Fixed | 2008 | 2018 | COP | 94,250.0 | |||||||||||||
8.125% Yankee Bonds | Fixed | 2009 | 2019 | USD | 733.7 | |||||||||||||
Colombian Peso Bonds | Fixed | 2009 | 2019 | COP | 127,500.0 | |||||||||||||
Colombian Peso Bonds | Fixed | 2009 | 2014 | COP | 111,980.0 | |||||||||||||
4.30% Euro Yen Bonds | Fixed | 2009 | 2019 | JPY | 10,000.0 | |||||||||||||
Peruvian Soles Bonds | Fixed | 2009 | 2014 | PEN | 144.2 | |||||||||||||
Structured Note | Floating | 2010 | 2017 | USD | 50.0 | |||||||||||||
3.11% Euro Dollar Bonds | Fixed | 2010 | 2014 | USD | 74.0 | |||||||||||||
3.75% Yankee Bonds | Fixed | 2010 | 2016 | USD | 600.0 | |||||||||||||
Structured Note | Floating | 2010 | 2017 | USD | 50.0 | |||||||||||||
2.625% Swiss Franc Bonds | Fixed | 2010 | 2015 | CHF | 250.0 | |||||||||||||
Euro Bond | Floating | 2010 | 2015 | EUR | (6) | 100.0 | ||||||||||||
4.625% Euro Bond | Fixed | 2010 | 2018 | EUR | 400.0 | |||||||||||||
1.56% Samurai Bonds | Fixed | 2010 | 2014 | JPY | 9,800.0 | |||||||||||||
1.82% Samurai Bonds | Fixed | 2010 | 2015 | JPY | 4,600.0 | |||||||||||||
Euro Dollar Bond | Floating | 2010 | 2014 | USD | 100.0 | |||||||||||||
3.625% Panamanian Bonds | Fixed | 2011 | 2016 | USD | 40.0 | |||||||||||||
3.75% Yankee Bonds | Fixed | 2011 | 2016 | USD | 500.0 | |||||||||||||
Mexican Pesos Bonds | Fixed | 2011 | 2021 | MXN | (3) | 1,317.0 | ||||||||||||
2.625% Swiss Franc Bonds | Fixed | 2011 | 2015 | CHF | 130.0 | |||||||||||||
2.75% Swiss Franc Bonds | Fixed | 2011 | 2017 | CHF | 125.0 | |||||||||||||
4.625% Euro Bond | Fixed | 2011 | 2018 | EUR | 250.0 | |||||||||||||
1.0% Samurai Bonds | Fixed | 2011 | 2015 | JPY | 10,000.0 | |||||||||||||
5% Structured Note | Fixed | 2012 | 2042 | USD | 50.0 | |||||||||||||
4.375% Yankee Bonds | Fixed | 2012 | 2022 | USD | 1,092.9 |
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
SUPPLEMENTARY INFORMATION (UNAUDITED)
AS OF MARCH 31, 2013
BONDS (CONTINUED)
Title | Interest Rate | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding at March 31, 2013 | |||||||||||||
4.375% Yankee Bonds | Fixed | 2012 | 2022 | USD | 407.1 | |||||||||||||
1.25% Swiss Franc Bonds | Floating | 2012 | 2014 | CHF | 125.0 | |||||||||||||
1.45% Swiss Franc Bonds | Floating | 2012 | 2014 | CHF | 235.0 | |||||||||||||
1.5% Swiss Franc Bonds | Fixed | 2012 | 2018 | CHF | 300.0 | |||||||||||||
3.55% Dim Sum | Fixed | 2012 | 2015 | CNY | (7) | 600.0 | ||||||||||||
Euro Bond (Schuldschein) | Fixed | 2012 | 2027 | EUR | 82.0 | |||||||||||||
Euro Bond (Schuldschein) | Fixed | 2012 | 2032 | EUR | 60.0 | |||||||||||||
4.03% Structured Note | Fixed | 2012 | 2022 | HKD | (8) | 400.0 | ||||||||||||
4% Structured Note | Fixed | 2012 | 2024 | HKD | 398.0 | |||||||||||||
1.85% Samurai Bonds | Fixed | 2012 | 2023 | JPY | 6,000.0 | |||||||||||||
1.375% Swiss Franc Bonds | Fixed | 2013 | 2021 | CHF | 250.0 | |||||||||||||
Structured Note | Floating | 2013 | 2016 | USD | 100.0 | |||||||||||||
1.375% Swiss Franc Bonds(9) | Fixed | 2013 | 2021 | CHF | 250.0 |
(1) | Yen. |
(2) | Peruvian Nuevos Soles. |
(3) | Mexican Pesos. |
(4) | Swiss Francs. |
(5) | Colombian Pesos. |
(6) | Euro. |
(7) | Chinese Yuan. |
(8) | Hong Kong Dollar. |
(9) | In April 2013, CAF issued an additional CHF 100 million of this series. |
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
SUPPLEMENTARY INFORMATION (UNAUDITED)
AS OF MARCH 31, 2013
LOANS FROM COMMERCIAL BANKS, ADVANCES, DEPOSITS,
COMMERCIAL PAPER AND REPURCHASE AGREEMENTS
Title | Interest Rate | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding at March 31, 2013 | |||||||||||||
(in US$ millions) | ||||||||||||||||||
Medium and Long-term Loans | Various | Various | Various | Various | 1,367.5 | |||||||||||||
Deposits | Floating | Various | Various | Various | 3,332.3 | |||||||||||||
Commercial Paper | Floating | Various | Various | Various | 3,151.7 |
LOANS FROM MULTILATERALS AND BILATERALS, EXIMS AND EXPORT CREDIT AGENCIES
Title | Interest Rate | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding at March 31, 2013 | |||||||
ACDI | 0% | 29-Mar-74 | 30-Sep-23 | CAN(1) | 1.4 | |||||||
AID (U.S.A.) | 3% | 10-Oct-72 | 27-Nov-14 | US | 1.0 | |||||||
Agencia Francesa de Desarrollo | Floating | 10-Oct-11 | 10-Oct-23 | US | 260.0 | |||||||
China Development Bank - CDB | Floating | 20-Nov-07 | 29-Nov-19 | US | 105.0 | |||||||
European Investment Bank | Floating | 16-Oct-97 | 15-Dec-13 | US | 1.3 | |||||||
IADB | Floating | Various | Various | US | 13.8 | |||||||
Instituto de Crédito Oficial - ICO | Floating | 31-May-04 | 15-Mar-18 | US | 25.3 | |||||||
JBIC, Japan | Floating | Various | Various | US | 93.7 | |||||||
KfW (Germany) | Floating | Various | Various | US | 198.8 | |||||||
Nordic Investment Bank | Floating | Various | Various | US | 30.0 |
(1) | Canadian dollars. |
GUARANTEED DEBT
| ||||||||||||
Borrower | Date of Issue | Year of Final Maturity | Principal Amount Outstanding at March 31, 2013 | |||||||||
(in U.S.$ millions) | ||||||||||||
Plurinational State of Bolivia | 10/03/2001 | 04/03/2018 | 22.5 | |||||||||
Plurinational State of Bolivia | 5/22/2004 | 5/22/2018 | 40.9 | |||||||||
Republic of Peru | 4/17/2006 | 2/13/2025 | 28.0 | |||||||||
Cemento Andino S.A. (Peru) | 07/15/2010 | 07/13/2018 | 50.0 | |||||||||
Instituto de la función registral del Estado de Mexico | 08/23/2010 | 08/23/2030 | 30.5 | |||||||||
Abengoa Transmisión Sur | 07/27/2011 | 09/03/2013 | 21.7 | |||||||||
Gym S.A. (Peru) | 09/19/2012 | 09/16/2013 | 21.3 | |||||||||
Gym S.A. (Peru) | 01/31/2013 | 04/02/2013 | 8.5 | |||||||||
Gym S.A. (Peru) | 03/12/2013 | 06/10/2013 | 17.1 | |||||||||
Teyma Uruguay S.A. | 09/29/2011 | 09/30/2013 | 5.0 | |||||||||
Teyma Uruguay S.A. | 10/04/2011 | 09/30/2013 | 7.0 | |||||||||
Isolux Corsan Argentina S.A. | 09/15/2011 | 09/15/2023 | 34.7 | |||||||||
H2Olmos S.A. | 10/24/2012 | 10/25/2032 | 25.6 | |||||||||
Termochilca S.A.C. | 12/21/2011 | 12/21/2021 | 15.4 |
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$2,500,000,000
CORPORACIÓN ANDINA DE FOMENTO
, 2013
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PART II
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate of the Registrant’s expenses in connection with the issuance of the Securities that are the subject of this registration statement:
Securities and Exchange Commission Registration Fee | $ | 272,800 | ||
Fiscal and Paying Agent Fees | $ | 10,000 | ||
Fees of rating agencies | $ | 350,000 | ||
Legal fees | $ | 325,000 | ||
Printing of registration statement, prospectus and other documents | $ | 75,000 | ||
Blue Sky expenses (including counsel fees) | $ | 10,000 | ||
Other | $ | 70,000 | ||
|
| |||
Total | $ | 1,112,800 | ||
|
|
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UNDERTAKINGS
The Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;
provided, however, that paragraphs (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement.
(b) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(d) That, for purposes of determining any liability under the Securities Act of 1933 to any purchaser:
If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to the purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(e) That, for purposes of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
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(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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CONTENTS
The registration statement comprises:
(1) | The facing sheet. |
(2) | The prospectus. |
(3) | Part II consisting of pages II-1 to II-7. |
(4) | The following exhibits: |
1.1 | Underwriting Agreement for Debt Securities, dated May 24, 2000 (incorporated by reference to our registration statement No. 333-180499) |
1.2 | Form of Underwriting Agreement Pertaining to Guarantees (1) |
1.3 | Form of Pricing Agreement (incorporated by reference to our registration statement No. 333-167348) |
4.1 | Fiscal Agency Agreement, including form of certain Debt Securities, dated March 17, 1998 (incorporated by reference to our registration statement No. 333-180499) |
4.2 | Form of Guarantee Agreement, including the form of Guarantee (1) |
5.1 | Opinion and consent of Jacobo Kiriaty, Acting General Counsel to CAF |
8.1 | Opinion and consent of Sullivan & Cromwell LLP |
23.1 | Consent of Lara Marambio & Asociados, a member firm of Deloitte Touche Tohmatsu Limited |
23.2 | Consent of CAF’s Acting General 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 99.1 to our registration statement No. 333-180499) |
99.2 | List of names and addresses of the underwriters for Guarantees (1) |
(1) | To be filed by post-effective amendment. |
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SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant, Corporación Andina de Fomento, has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Caracas, Venezuela, on the 7th day of June, 2013.
CORPORACIÓN ANDINA DE FOMENTO | ||
By: | /s/ L. ENRIQUE GARCÍA | |
Name: L. Enrique García | ||
Title: Executive President |
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SIGNATURE OF AUTHORIZED AGENT IN THE UNITED STATES
Pursuant to the requirements of the Securities Act of 1933, as amended, appearing below is the signature of Corporación Andina de Fomento’s authorized agent in the United States, thereunto duly authorized, in Newark, Delaware, on the 7th day of June, 2013.
PUGLISI & ASSOCIATES | ||
By: | /s/ Donald J. Puglisi | |
Name: Donald J. Puglisi | ||
Title: Managing Director |
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EXHIBITS
Exhibit | Exhibits | Sequentially Numbered Page | ||||
1.1 | Underwriting Agreement for Debt Securities, dated May 24, 2000 (incorporated by reference to our registration statement No. 333-180499) | |||||
1.2 | Form of Underwriting Agreement pertaining to Guarantees | * | ||||
1.3 | Form of Pricing Agreement (incorporated by reference to our registration statement No. 333-167348) | |||||
4.1 | Fiscal Agency Agreement, including form of certain Debt Securities, dated March 17, 1998 (incorporated by reference to our registration statement No. 333-180499) | |||||
4.2 | Form of Guarantee Agreement, including the form of Guarantee | * | ||||
5.1 | Opinion and consent of Jacobo Kiriaty, Acting General Counsel to CAF | |||||
8.1 | Opinion and consent of Sullivan & Cromwell LLP | |||||
23.1 | Consent of Lara Marambio & Asociados, a member firm of Deloitte Touche Tohmatsu Limited | |||||
23.2 | Consent of CAF’s Acting General 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 99.1 to our registration statement No. 333-180499) | |||||
99.2 | List of names and addresses of the underwriters for Guarantees | * |
* | To be filed by post-effective amendment. |
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