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As filed with the Securities and Exchange Commission on, July 29, 2024
Registration No. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT
UNDER SCHEDULE B
OF
THE U.S. 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:
Gabriel Felpeto Chief Financial Officer Corporación Andina de Fomento Torre CAF Avenida Luis Roche, Altamira Caracas, Venezuela | Roderick O. Branch Paul M. Dudek Latham & Watkins LLP 1271 Avenue of the Americas New York, New York 10020 |
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
| ||||
Title of Each Class of Securities to be Registered | Proposed Maximum Aggregate Offering Price(1) | Amount of Registration Fee | ||
Debt Securities | (1) | — | ||
Guarantees | (1) | — | ||
Total | USD 4,000,000,000(2) | USD 590,400 | ||
|
(1) | The securities registered hereunder shall not have an aggregate offering price which exceeds USD 4,000,000,000 in United States Dollars or the equivalent in any other currency. |
(2) | Exclusive of accrued interest, if any. |
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 U.S. 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 U.S. Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell and does not seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 29, 2024
USD 4,000,000,000
CORPORACIÓN ANDINA DE FOMENTO
Debt Securities
Guarantees
Corporación Andina de Fomento (“CAF”) may from time to time offer up to USD 4,000,000,000 (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, CAF may issue a higher principal amount up to an initial public offering price of USD 4,000,000,000 (or its equivalent in other currencies).
The securities may be offered from time to time as separate issues. In connection with any offering, CAF will provide a prospectus supplement describing the amounts, prices, maturities, rates, and other terms of the securities it is offering in each issue.
CAF may sell the securities directly to or through underwriters, and may also sell securities directly to other purchasers or through agents.
Neither the U.S. 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 , 2024
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This prospectus is part of a registration statement that CAF filed with the U.S. Securities and Exchange Commission (the “SEC”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”) using a “shelf” registration process. Under the shelf registration process, CAF 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 USD 4,000,000,000 or the equivalent of this amount in foreign currencies or foreign currency units.
This prospectus provides you with a general description of CAF’s business and of the securities it may offer. Each time CAF sells securities, it 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 CAF’s 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 CAF, the securities it may issue and other matters. All of these documents may be inspected at the offices of the SEC.
You should rely only on the information in this prospectus or in other documents to which CAF has referred you in making your investment decision. CAF has 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 prospectus.
Except as otherwise specified, all amounts in this prospectus are expressed in United States Dollars (“dollars,” “$,” “U.S.$”, “USD”, “US Dollars” or “U.S. dollars”).
All discrepancies between totals and the sums of the amounts appearing in this prospectus are due to rounding.
This prospectus may contain forward-looking statements. Statements that are not historical facts are statements about CAF’s 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 CAF’s shareholder countries.
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CAF was established in 1968 pursuant to a Constitutive 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 (each a “full member shareholder country” and collectively, the “full member shareholder countries”):
• | the Argentine Republic (“Argentina”); |
• | the Plurinational State of Bolivia (“Bolivia”); |
• | the Federative Republic of Brazil (“Brazil”); |
• | the Republic of Chile (“Chile”); |
• | the Republic of Colombia (“Colombia”); |
• | the Dominican Republic (“Dominican Republic”); |
• | the Republic of Ecuador (“Ecuador”); |
• | the Republic of El Salvador (“El Salvador”); |
• | the Republic of Honduras (“Honduras”); |
• | the Republic of Panama (“Panama”); |
• | the Republic of Paraguay (“Paraguay”); |
• | the Republic of Peru (“Peru”); |
• | the Republic of Trinidad and Tobago (“Trinidad and Tobago”); |
• | the Oriental Republic of Uruguay (“Uruguay”); and |
• | the Bolivarian Republic of Venezuela (“Venezuela”). |
The other shareholder countries of CAF are (each an “associated shareholder country” and collectively, the “associated shareholder countries”):
• | Barbados; |
• | the Republic of Costa Rica (“Costa Rica”); |
• | Jamaica; |
• | the United Mexican States (“Mexico”); |
• | the Portuguese Republic (“Portugal”); and |
• | the Kingdom of Spain (“Spain”). |
The full member shareholder countries and the associated shareholder countries are referred to collectively as “shareholder countries.”
As of March 31, 2024:
• | the full member shareholder countries collectively accounted for 91.5% of the nominal value of CAF’s paid-in capital; |
• | the associated shareholder countries collectively accounted for 8.5% of the nominal value of CAF’s paid-in capital; and |
• | thirteen (13) financial institutions based in the full member shareholder countries collectively accounted for 0.05% of the nominal value of CAF’s paid-in capital. |
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As of December 31, 2023:
• | the full member shareholder countries collectively accounted for 90.6% of the nominal value of CAF’s paid-in capital; |
• | the associated shareholder countries collectively accounted for 9.3% of the nominal value of CAF’s paid-in capital; and |
• | thirteen (13) financial institutions based in the full member shareholder countries collectively accounted for 0.05% of the nominal value of CAF’s paid-in capital. |
CAF commenced operations in 1970. CAF is headquartered in Caracas, Venezuela and has offices in Asunción, Paraguay; Bogotá, Colombia; Brasilia and São Paulo, Brazil; Buenos Aires, Argentina; Mexico City, Mexico; Panama City, Panama; La Paz, Bolivia; Lima, Peru; Madrid, Spain; Montevideo, Uruguay; Port of Spain, Trinidad and Tobago; Quito, Ecuador; San Salvador, El Salvador; Santiago de Chile, Chile; and Santo Domingo, Dominican Republic.
CAF offers financial and related services to the governments of, and public and private institutions, corporations and joint ventures operating in, its shareholder countries. Primarily, CAF provides short-, medium- and long-term loans and guarantees. To a lesser extent, CAF also participates 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 the Board of Directors of CAF (the “Board of Directors”) the power to establish and direct CAF’s financial, credit and economic policies. The Board of Directors has adopted a formal statement of CAF’s financial and operational policies. These operational policies provide CAF’s 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.
CAF promotes a sustainable development model through credit, non-refundable resources, and support in the technical and financial structuring of projects in the public and private sectors of Latin America and the Caribbean.
CAF offers financial and related services to the governments of its shareholder 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 shareholder countries. Furthermore, CAF manages and supervises third-party cooperation funds owned and sponsored by other countries and organizations, destined to finance programs agreed upon with donor countries and organizations which are in line with CAF’s policies and strategies.
CAF raises funds to finance its operations from sources both within and outside its shareholder countries.
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As an international treaty organization, CAF is a legal entity under public international law. CAF has international legal personality with full legal capacity, which permits it 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. In addition, CAF has been granted the following immunities and privileges in each full member shareholder country:
• | immunity from expropriation, search, requisition, confiscation, seizure, sequestration, attachment, retention, or any other form of forceful seizure by reason of executive or administrative action and immunity from enforcement of judicial proceedings by any party prior to final judgment; |
• | free convertibility and transferability of CAF’s assets; |
• | exemption from all taxes and tariffs on income, properties, or assets, and from any liability involving payment, withholding or collection of any taxes; and |
• | exemption from any restrictions, regulations, controls, or moratoria with respect to CAF’s property or assets. |
In addition, CAF has entered into agreements with each of its associated shareholder countries. Pursuant to these agreements, each country has agreed to extend immunities and privileges to CAF with respect to its activities in and concerning such country, these immunities and privileges are similar to those granted by the full member shareholder countries. CAF may also enjoy immunities and privileges under the laws of countries other than the full member shareholder countries and associated shareholder countries by virtue of its status as an international treaty organization or the identity of its shareholders.
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, CAF has not been adversely affected by these actions.
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Unless otherwise specified in the accompanying prospectus supplement, CAF will use the net proceeds of the sale of the securities for general corporate purposes.
Short-Term Loan Approved for Argentina
In December 2023, the Board of Directors approved a short-term bridge loan for USD 960.0 million to Argentina to support the country’s debt service payment to the International Monetary Fund, which has already been repaid.
The Commonwealth of the Bahamas and Grenada Joined CAF as Series “C” Shareholders
On April 17, 2024, The Commonwealth of the Bahamas subscribed for 3,521 Series “C” shares of CAF to become an associated shareholder country, for total amount of USD 49.9 million. Grenada subscribed for 352 Series “C” shares of CAF to become an associated shareholder country, for total amount of USD 4.9 million.
Short-Term Loan Approved for Ecuador
On April 25, 2024, the Shareholders’ Assembly of CAF (the “Shareholders’ Assembly”) approved a short-term loan for USD 800.0 million in favor of the Republic of Ecuador, to support this country’s public account management efforts. This loan was repaid in June 2024.
Uruguay Subscribed for Additional Series “B” Shares
On July 3, 2024, Uruguay subscribed for an additional USD 269.2 million in Series “B” shares, to be paid in eight annual installments, commencing in 2025.
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CAPITALIZATION AND INDEBTEDNESS
The following table sets forth CAF’s capitalization and indebtedness as of March 31, 2024, and does not give effect to any transaction since that date
As of March 31, 2024(4) | ||||
(in USD millions) | ||||
Total liabilities(1)(3) | 40,098.4 | |||
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Shareholders’ equity | 15,110.2 | |||
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Capital | ||||
Subscribed and paid-in capital (authorized capital USD 25.0 billion)(2)(4) | 5,670.6 | |||
Additional paid-in capital | 4,513.5 | |||
Total capital | 10,184.1 | |||
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Reserves | ||||
Mandatory reserve pursuant to Article 42 of the Constitutive Agreement | 681.1 | |||
General reserve | 4,070.0 | |||
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Total reserves | 4,751.0 | |||
Retained earnings | 175.1 | |||
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Total shareholders’ equity | 15,110.2 | |||
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Total liabilities and shareholders’ equity | 55,208,6 |
(1) | Commercial paper, deposits, bonds, and borrowings from other financial institutions, accrued interest payable, accrued expenses and other liabilities and derivative financial instruments. |
(2) | Authorized capital also includes callable capital of USD 7.0 billion as of March 31, 2024. Subscribed capital of USD 10.0 billion less callable capital portion of USD 1.8 billion and less capital subscriptions receivable USD 2.5 billion. |
(3) | After March 31, 2024, there have been issuances of bonds. See “Supplementary Information (Unaudited).” |
(4) | See “Recent Developments” for more information on the most recent changes to CAF’s capital since March 31, 2024. |
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General
As of March 31, 2024, CAF’s total authorized capital was USD 25.0 billion, of which USD 18.0 billion was ordinary capital shares and USD 7.0 billion was callable capital shares. On March 8, 2022, the Shareholder Assembly approved a general paid-in capital increase for a total amount of USD 7.0 billion. Several bilateral subscription agreements with each shareholder country have already been negotiated and signed. See “Capital Structure — Paid-in Capital and Unpaid Capital” for recent capital subscriptions as of March 31, 2024.
CAF’s 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 (1) Director and one (1) Alternate Director to the Board of Directors.
Series “B” shares are currently owned by the full member shareholder countries and are held by their governments either directly or through designated governmental entities, except for certain Series “B” shares constituting approximately 0.05% of the outstanding shares of CAF as of March 31, 2024, which are owned by thirteen (13) private sector financial institutions of certain full member shareholder countries. CAF offered and sold Series “B” shares to private sector financial institutions in 1989 to obtain the benefit of their views in the deliberations of the Board of Directors. As owners of Series “B” shares, the full member shareholder countries collectively are entitled to elect five (5) additional Directors and five (5) additional Alternate Directors through cumulative voting, and the 13 private sector financial institutions collectively are entitled to elect one (1) Director and one (1) Alternate Director.
Series “C” shares are currently owned by six (6) associated shareholder countries. CAF makes Series “C” shares available for subscription by countries that are not full member shareholder countries to strengthen relationships between these countries and the full member shareholder countries. Ownership of Series “C” shares makes these countries eligible to receive loans from CAF. Holders of Series “C” shares collectively are entitled to elect two (2) Directors and two (2) 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 of full member shareholder countries. 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 CAF shareholder country withdraws, Series “A” and Series “B” shares may only be transferred within such country.
The Constitutive Agreement (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) includes a formal purpose of supporting sustainable development and economic integration within all of Latin America and the Caribbean, as opposed to within only the Andean region.
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Process to Become a Full Member Shareholder Country
To become a full member shareholder country, an applicant must fulfill the following conditions precedent:
• | subscribe, directly or indirectly, for ownership of a Series “A” share, |
• | exchange all or any of its callable Series “C” capital shares for Series “B” share equivalents, |
• | meet any additional conditions for accession to full member shareholder country status as determined by the Shareholders Assembly, in its sole discretion (such as the amount of guaranteed capital that the country must subscribe for or the date of the first capital payment), and |
• | deposit an instrument of adhesion with the Ministry of Foreign Affairs of Venezuela. |
After it has fulfilled the above conditions, an applicant is deemed to have become a full member shareholder country 30 days following a determination of such compliance and fulfillment of all conditionals for accession by the Shareholders’ Assembly.
Liquidity Management in Exceptional Situations Program
On March 31, 2020, CAF implemented the Support Program for the Liquidity Management in Exceptional Situations (the “Support Program”). The Support Program was formally approved by the Shareholders’ Assembly meeting held on March 3, 2020. The Program was created in order to provide shareholder countries with flexibility, resources, and support in the repayment of outstanding debt obligations, particularly for shareholder countries whose economies were expected to be materially and adversely impacted by the COVID-19 pandemic. As such, the Support Program allows CAF to repurchase outstanding shares of shareholder countries and apply the proceeds to service such country’s debt. In order to qualify for the Support Program, shareholders countries were required to have met at least two of the following indicators during at least three consecutive years immediately prior to the Support Program approval:
• | a gross domestic product decline of more than 15% per year; |
• | annual inflation rate above 100%; and |
• | less than six months of total international reserves of imports of goods and services. |
In September 2020, new admissions to the Program were terminated as no shareholder country, other than Venezuela, met the requirements to qualify for the Support Program. Venezuela was the only shareholder country admitted into the Support Program.
Paid-in Capital and Unpaid Capital
As of March 31, 2024, CAF’s subscribed paid-in and unpaid capital (excluding callable capital) was USD 8.14 billion, of which USD 5.67 billion was paid-in capital and USD 2.47 billion was unpaid capital. The unpaid capital is receivable in installments according to the agreements subscribed with the shareholder countries. Over the years, CAF has had several increases of subscribed capital.
Since 1990, capital contributions made to CAF (valor patrimonial) comprise a premium paid on each Series “B” and Series “C” share purchased and the nominal USD 5,000 per share value established by CAF’s by-laws. The premium component of such capital contributions is determined at the beginning of each subscription and applies to all payments under that subscription.
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Information regarding recent capital subscriptions and annual capital contributions made by shareholder countries as of March 31, 2024, is as follows:
Argentina
In March 2016, Argentina subscribed for an additional USD 572.0 million in Series “B” shares to be paid in seven installments. The final installment was paid in 2023.
In July 2022, Argentina subscribed for an additional USD 807.7 million in Series “B” shares to be paid in ten annual installments, of which it paid USD 5.0 million in 2023.
Bolivia
In October 2009, Bolivia subscribed for an additional USD 105.0 million in Series “B” shares, to be paid in eight installments. The final installment was paid in 2017.
In March 2016, Bolivia subscribed for an additional USD 190.0 million in Series “B” shares, to be paid in six installments, the final installment was paid in 2022.
In July 2022, Bolivia subscribed for an additional USD 269.2 million in Series “B” shares, to be paid in eight annual installments, of which it paid USD 25.0 million in 2023.
Brazil
In July 2017, Brazil subscribed for an additional USD 572.0 million in Series “B” shares, to be paid in eight annual installments, of which it paid USD 20.1 million in 2018, USD 45.0 million in 2020, USD 26.2 million in 2021, USD 124.8 million in 2022 and USD 178.0 million in 2023.
Chile
In June 2022, Chile subscribed for an additional USD 1,457.8 million in Series “C” shares, to be paid in fourteen annual installments, of which it paid USD 30.0 million in 2023.
In June 2022, Chile subscribed for USD 122.0 million in callable capital.
In March 2023, Chile became a full member shareholder country after fulfilling all the necessary conditions and obtaining all necessary approvals, converting its Series “C” shares to Series “B” shares, and acquiring a Series “A” share for USD 1.2 million.
Colombia
In June 2012, Colombia subscribed for an additional USD 210.0 million in Series “B” shares to be paid in three installments. The final installment was paid in 2018.
In July 2016, Colombia subscribed for an additional USD 572.0 million in Series “B” shares, to be paid in eight installments, of which it paid USD 5.0 million in 2017, USD 5.0 million in 2018, USD 93.7 million in 2019, USD 93.7 million in 2020, USD 93.7 million in 2021, USD 93.7 million in 2022 and USD 93.7 million in 2023.
In July 2022, Colombia subscribed for an additional USD 807.7 million in Series “B” shares to be paid in ten annual installments, of which it paid USD 3.0 million in 2023, and USD 107.7 million in 2024.
Costa Rica
In September 2019, Costa Rica subscribed for USD 110.0 million in Series “C” shares, which it paid in full in 2019.
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The Dominican Republic
In February 2016, the Dominican Republic subscribed for an additional USD 50.0 million in Series “C” shares, to be paid in four installments. The final installment was paid in 2020.
In December 2021, the Dominican Republic subscribed for an additional USD 310.1 million in Series “C” shares to be paid in six annual installments starting in 2022, of which it paid USD 46.0 million in 2022 and USD 48.0 million in 2023.
On September 14, 2023, the Board of Directors approved the incorporation of the Dominican Republic as a full member shareholder country.
On October 15, 2023, it became a full member shareholder country. Its series “C” shares were exchanged into series “B” shares, and acquired a Series “A” share for USD 1.2 million.
Ecuador
In June 2016, Ecuador subscribed for an additional USD 190.0 million in Series “B” shares, to be paid in six installments. The final installment was paid in 2020.
In July 2022, Ecuador subscribed for an additional USD 269.2 million in Series “B” shares to be paid in eleven annual installments starting in 2022, of which it paid USD 53.8 million in 2022 and USD 22.1 million in 2023.
El Salvador
In December 2021, El Salvador began its process to become a full member shareholder country, subscribed for USD 460.0 million in Series “B” shares to be paid in seven annual installments, of which it paid USD 65.7 million in 2022.
In December 2021, El Salvador subscribed for USD 36.0 million in callable capital.
In July 2022, El Salvador became a full member shareholder country after fulfilling all the necessary conditions and obtaining all necessary approvals, including acquiring a Series “A” share of USD 1.2 million.
Honduras
In July 2022, Honduras subscribed for USD 460.0 million in Series “B” shares to be paid in eight annual installments starting in 2023, of which it paid USD 38.2 million in 2023.
On September 14, 2023, the Board of Directors approved the incorporation of Honduras as a full member shareholder country.
On October 15, 2023, Honduras became a full member shareholder country, and acquired a Series “A” share of USD 1.2 million.
Panama
In February 2016, Panama subscribed for an additional USD 190.0 million in Series “B” shares, to be paid in six installments beginning in 2017. The final installment was paid in 2022.
In October 2022, Panama subscribed for an additional USD 269.2 million in Series “B” shares, to be paid in eight annual installments, of which it paid USD 25.0 million in 2023.
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Paraguay
In December 2009, Paraguay subscribed for an additional USD 55.0 million in Series “C” shares to be paid in seven installments. The final installment was paid in 2017.
In May 2012, Paraguay subscribed for an additional USD 91.5 million in Series “B” shares, to be paid in five installments. The final installment was paid in 2017.
In March 2016, Paraguay subscribed for an additional USD 190.0 million in Series “B” shares, to be paid in six installments. The final installment was paid in 2022.
In March 2022, Paraguay subscribed for an additional USD 269.2 million in Series “B” shares, to be paid in eight annual installments, of which it paid USD 14.2 million in 2023.
Peru
In March 2016, Peru subscribed for an additional USD 572.0 million in Series “B” shares, to be paid in eight installments. The final installment was paid in 2022.
In June 2023, Peru subscribed for an additional USD 807.7 million in Series “B” shares, to be paid in eight annual installments, commencing in 2024.
Portugal
In 2017, Portugal subscribed for USD 6.4 million in Series “C” shares to be paid in three equal installments. The final installment was paid in 2019.
Spain
In 2017, Spain subscribed for an additional USD 173.2 million of paid-in capital to be paid in five installments. The final installment was paid in 2021.
In September 2023 Spain subscribed for an additional USD 302 million in Series “C” shares to be paid in five annual installments, of which it paid USD 152.1 million in 2024.
Trinidad and Tobago
In December 2018, Trinidad and Tobago subscribed for an additional USD 190.0 million of paid-in capital to be paid in eight annual installments, of which it paid USD 20.0 million in 2019, USD 20.0 million in 2020, USD 25.0 million in 2021, USD 31.2 million in 2022, and USD 31.2 million in 2024.
In July 2022, Trinidad and Tobago subscribed for an additional USD 269.2 million of paid-in capital to be paid in eight annual installments, of which it paid USD 5.0 million in 2024.
Uruguay
In March 2016, Uruguay subscribed for an additional USD 190.0 million in Series “B” shares, to be paid in six installments. The final installment was paid in 2022.
Venezuela
In August 2009, Venezuela subscribed for an additional USD 380.0 million in Series “B” shares to be paid in eight installments. In December 2016, the agreement was amended to provide for payment in nine installments.
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Venezuela had paid a total of USD 268.2 million as of September 30, 2017. In March 2018, the agreement was amended to provide for payment in three installments, with the final installment scheduled to be paid in 2020. As of the date of this prospectus, USD 111.8 million to be paid under the agreement, as amended in March 2018, are past due.
In March 2016 and May 2016, Venezuela subscribed for an additional USD 572.0 million in Series “B” shares. In March 2018, the agreement was amended to provide for payment in eight annual installments, with the final installment scheduled to be paid in 2025. As of March 31, 2024, USD 389.3 million to be paid under the agreement, as amended in March 2018, was past due.
On March 31, 2020, CAF implemented a Support Program for liquidity management in exceptional situations, following formal approval by the Shareholders’ Assembly on March 3, 2020. The Program was created in order to provide shareholder countries with flexibility, resources, and support in the repayment of outstanding debt obligations, particularly for shareholder countries whose economies were expected to be materially and adversely impacted by the COVID-19 pandemic. The Support Program allowed CAF to repurchase the shares of a shareholder country that fulfilled the requirements of the Support Program and apply the proceeds to that country’s debt service. CAF notified Venezuela that it had fulfilled the requirements and Venezuela was admitted to the Support Program. From the inception of the Support Program through July 4, 2024, CAF repurchased a total of 168,573 shares totaling USD 2,393,737 thousand (USD 842,865 thousand of paid-in capital and USD 1,550,872 thousand of additional paid-in capital) and applied this amount to repay due and overdue amounts of principal, interests, and fees. As a result of the Support Program, Venezuela was current with its loans with CAF until the majority of its series “B” shares were depleted on July 4, 2024. Currently, Venezuela maintains 105 Series “B” shares and its Series “A” share.
The following table sets out the nominal value of CAF’s subscribed paid-in capital and unpaid capital as of March 31, 2024:
Shareholders | Paid-in Capital | Unpaid Capital | ||||||
(in USD thousands) | ||||||||
Series “A” Shares: | ||||||||
Argentina | 1,200 | — | ||||||
Bolivia | 1,200 | — | ||||||
Brazil | 1,200 | — | ||||||
Chile | 1,200 | — | ||||||
Colombia | 1,200 | — | ||||||
Dominican Republic | 1,200 | — | ||||||
Ecuador | 1,200 | — | ||||||
El Salvador | 1,200 | — | ||||||
Honduras | 1,200 | — | ||||||
Panama | 1,200 | — | ||||||
Paraguay | 1,200 | — | ||||||
Peru | 1,200 | — | ||||||
Trinidad and Tobago | 1,200 | — | ||||||
Uruguay | 1,200 | — | ||||||
Venezuela | 1,200 | — |
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Shareholders | Paid-in Capital | Unpaid Capital | ||||||
(in USD thousands) | ||||||||
Series “B” Shares: | ||||||||
Argentina | 659,380 | 282,640 | ||||||
Bolivia | 332,775 | 86,000 | ||||||
Brazil | 578,035 | 62,680 | ||||||
Chile | 74,180 | 466,820 | ||||||
Colombia | 1,087,995 | 278,410 | ||||||
Dominican Republic | 85,885 | 76,100 | ||||||
Ecuador | 352,235 | 68,145 | ||||||
El Salvador | 46,280 | 115,705 | ||||||
Honduras | 13,455 | 148,530 | ||||||
Panama | 209,940 | 86,000 | ||||||
Paraguay | 203,735 | 89,805 | ||||||
Peru | 1,084,175 | 284,400 | ||||||
Trinidad and Tobago | 163,945 | 115,050 | ||||||
Uruguay | 207,300 | — | ||||||
Venezuela | 71,320 | 240,780 | ||||||
Commercial Banks | 2,715 | 225 | ||||||
Series “C” Shares: | ||||||||
Barbados | 23,480 | 11,740 | ||||||
Costa Rica | 55,190 | — | ||||||
Jamaica | 910 | — | ||||||
Mexico | 76,835 | — | ||||||
Portugal | 9,600 | — | ||||||
Spain | 313,255 | 52,780 | ||||||
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Total | 5,670,620 | 2,465,810 |
Reserves
Article 42 of the Constitutive Agreement requires that at least 10% of CAF’s 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. The mandatory reserve is an accounting reserve. CAF also maintains 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 unavailable or impractical.
As of March 31, 2024, CAF’s reserves totaled USD 4.8 billion. At such date, the mandatory reserve pursuant to Article 42 of the Constitutive Agreement amounted to USD 0.7 billion, or 8.4%, of subscribed paid-in and capital subscriptions receivable, and the general reserve amounted to USD 4.1 billion.
Callable Capital
In addition to CAF’s subscribed paid-in and un-paid capital, CAF’s shareholder countries have subscribed for callable capital totaling USD 1.8 billion as of March 31, 2024. CAF’s callable capital may be called by the Board of Directors to meet the obligations of CAF only to the extent that CAF is unable to meet such obligations with its own resources. See Note 15 to CAF’s audited financial statements included elsewhere in this prospectus.
The Constitutive Agreement provides that the obligation of CAF’s shareholder countries 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, CAF considers 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 CAF’s shareholder countries 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, 2023, 2022, and 2021 has been derived from the audited financial statements of CAF for those periods, which are included elsewhere in this prospectus. The financial statements of CAF have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The following selected financial information as of and for the three-month periods ended March 31, 2024 and 2023 (balance sheet as of March 31, 2023 not included therein) has been derived CAF’s unaudited condensed interim financial information and includes all adjustments, consisting of normal recurring adjustments, that CAF considers necessary for a fair presentation of its financial position at such dates and its results of operations for such periods. The results of the three-month period ended March 31, 2024, are not necessarily indicative of results to be expected for the full year. The selected financial information should be read in conjunction with CAF’s audited financial statements and notes thereto, its unaudited condensed interim financial information and the notes thereto and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere in this prospectus.
Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||
2023 | 2022 | 2021 | 2024 | 2023 | ||||||||||||||||
(in USD thousands, except ratios) | ||||||||||||||||||||
Statements of Comprehensive Income | ||||||||||||||||||||
Interest income | 3,302,423 | 1,315,283 | 671,991 | 885,381 | 757,644 | |||||||||||||||
Interest expense | 2,199,286 | 854,733 | 371,275 | 626,464 | 481,157 | |||||||||||||||
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Net interest income | 1,103,137 | 460,550 | 300,716 | 258,917 | 276,487 | |||||||||||||||
Provision (credit) for loan losses | 439 | (3,287 | ) | 29,869 | (6,304 | ) | 3,754 | |||||||||||||
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Net interest income after provision (credit) for loan losses | 1,102,698 | 463,837 | 270,847 | 265,221 | 272,733 | |||||||||||||||
Non-interest income | 58,286 | 18,941 | 38,957 | 7,165 | 5,639 | |||||||||||||||
Non-interest expenses | 210,797 | 203,614 | 171,401 | 64,430 | 55,524 | |||||||||||||||
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Income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds | 950,187 | 279,164 | 138,403 | 207,956 | 222,848 | |||||||||||||||
Unrealized changes in fair value related to other financial instruments | (20,139 | ) | (21,195 | ) | (3,388 | ) | 2,828 | 10,654 | ||||||||||||
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Income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds | 930,048 | 257,969 | 135,015 | 210,784 | 233,502 | |||||||||||||||
Contributions to Shareholders’ Special Funds | 120,000 | 89,000 | 30,000 | 35,673 | 30,000 | |||||||||||||||
Net income and total comprehensive income | 810,048 | 168,969 | 105,015 | 175,111 | 203,502 | |||||||||||||||
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Summarized Balance Sheet Data (end of period) | ||||||||||||||||||||
Total assets | 53,814,263 | 50,376,742 | 47,592,350 | 55,208,614 | 50,802,283 | |||||||||||||||
Total liabilities | 39,084,543 | 36,657,425 | 34,292,711 | 40,098,423 | 36,842,083 | |||||||||||||||
Total shareholders’ equity | 14,729,720 | 13,719,317 | 13,299,639 | 15,110,191 | 13,960,200 | |||||||||||||||
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Total liabilities and shareholders’ equity | 53,814,263 | 50,376,742 | 47,592,350 | 55,208,614 | 50,802,283 | |||||||||||||||
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Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||
2023 | 2022 | 2021 | 2024 | 2023 | ||||||||||||||||
(in USD thousands, except ratios) | ||||||||||||||||||||
Loan Portfolio and Equity Investments | ||||||||||||||||||||
Loans before allowance for loan losses and loan commissions, net of origination cost | 33,479,085 | 30,622,324 | 29,595,386 | 33,027,390 | 30,897,257 | |||||||||||||||
Allowance for loan losses | 56,913 | 63,192 | 76,650 | 50,683 | 66,946 | |||||||||||||||
Equity investments | 392,184 | 381,779 | 433,350 | 390,867 | 378,605 | |||||||||||||||
Selected Financial Ratios | ||||||||||||||||||||
Return on average total shareholders’ equity(1) | 5.7 | % | 1.9 | % | 1.0 | % | 1.2 | % | 1.5 | % | ||||||||||
Return on average paid-in capital(2) | 14.6 | % | 5.1 | % | 2.6 | % | 3.1 | % | 3.7 | % | ||||||||||
Return on average assets(3) | 1.6 | % | 0.6 | % | 0.3 | % | 0.3 | % | 0.4 | % | ||||||||||
Administrative expenses divided by average total assets | 0.4 | % | 0.4 | % | 0.3 | % | 0.1 | % | 0.1 | % | ||||||||||
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 | 0.3 | % | 0.4 | % | 0.4 | % | 0.2 | % | 0.2 | % | ||||||||||
Allowance for loan losses as a percentage of loan portfolio | 0.2 | % | 0.2 | % | 0.3 | % | 0.2 | % | 0.2 | % |
(1) | In March 2014, the Shareholders’ Assembly authorized, effective 2015, to approve the maximum annual amount that management is authorized to contribute to Shareholders’ Special Funds during the fiscal year and to recognize these contributions as expenses. See Note 21 to CAF’s audited financial statements included elsewhere in this prospectus. |
Income before unrealized changes in fair value related to financial instruments and Contributions to Shareholders’ Special Funds divided by annual average total shareholders’ equity. Annual average total shareholders’ equity is computed as the arithmetic average of total shareholders’ equity as of the beginning and the end of each period. Data for interim periods has been annualized.
(2) | Income before unrealized changes in fair value related to financial instruments and Contributions to Shareholders’ Special Funds divided by annual average subscribed and paid-in capital. Annual average subscribed and paid-in capital is computed as the arithmetic average of subscribed and paid-in capital as of the beginning and the end of each period. Data for interim periods has been annualized. |
(3) | Income before unrealized changes in fair value related to financial instruments and Contributions to Shareholders’ Special Funds divided by annual average total assets. Annual average total assets is computed as the arithmetic average of total assets as of the beginning and the end of each period. Data for interim periods has been annualized. |
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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 CAF’s audited financial statements and notes thereto, included elsewhere in this prospectus.
Market Overview and Portfolio Trends
During the last year, important global developments have occurred, including:
• | low growth rates in Latin America and the risk of a recession; |
• | elevated funding cost for member shareholder countries; |
• | local currency depreciation in part due to the increase in global interest rates and the high level of inflation; |
• | the rise in geopolitical risk; and |
• | the various presidential elections to be held in 2024 in associated shareholder countries and non-shareholder countries. |
Both 2023 and 2022 were characterized by growth in CAF’s loan portfolio as a result of its strategy to expand its shareholder base without affecting its capitalization ratios in Central America and the Caribbean, principally through additional paid-in capital contributions by several of its existing shareholder countries, as well as the issuance of shares to new shareholder countries. These two main drivers have led CAF’s loan portfolio to grow 9.3% in 2023, 3.5% in 2022 and 5.3% in 2021.
As of March 31, 2024, CAF’s loan portfolio was distributed by country as follows:
Argentina | 13.2 | % | ||
Ecuador | 12.8 | % | ||
Colombia | 11.4 | % | ||
Brazil | 9.1 | % | ||
Bolivia | 8.9 | % | ||
Panama | 7.7 | % | ||
Paraguay | 7.1 | % | ||
Venezuela | 6.2 | % | ||
Peru | 5.9 | % | ||
Uruguay | 5.1 | % | ||
Mexico | 3.9 | % | ||
Trinidad & Tobago | 3.9 | % | ||
Costa Rica | 1.4 | % | ||
Dominican Republic | 1.3 | % | ||
El Salvador | 0.9 | % | ||
Chile | 0.7 | % | ||
Barbados | 0.5 | % |
Notwithstanding the presence of other state-sponsored development banks in the regions in which CAF operates, CAF does not expect that the growth of its loan portfolio will be materially affected by the activities of other development banks in these regions, since the financing needs of its shareholder countries exceed the current supply of lending resources. CAF believes that the activities of other development banks in the regions in which it operates are complementary to its lending operations.
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LIBOR Replacement
The replacement of the LIBOR rates with a new reference rate or rates can be considered an industry risk due to the implications the replacement may have on the assets and the liabilities of financial institutions. CAF has been closely monitoring the developments and announcements from groups and organizations that are most closely involved with the phasing out of the LIBOR rate that affect the loan and derivatives markets, including the International Swaps and Derivatives Association (ISDA) and its publication of the ISDA 2020 IBOR Fallbacks Protocol, to which CAF adhered in January 2021. In addition, CAF has established an interdepartmental task force that is in charge of preparing CAF for the change in reference rates, including the adoption of measures such as the incorporation of fallback provisions on loans in order to mitigate any possible impact the replacement of the LIBOR rate may have. This task force, in coordination with management, recommended and approved that starting January 1, 2022, all loans originated will use the reference rate based on the Secured Overnight Financing Rate (“Term SOFR”). New financial liabilities have also been hedged to SOFR. Legacy loans, borrowings, derivatives, and other instruments that are referenced to LIBOR rate were converted to Term SOFR or another SOFR linked rate after June 2023, when LIBOR rate ceased to be representative. On April 3, 2023, the United Kingdom Financial Conduct Authority (“FCA”) announced that LIBOR rates of one, three and six months would be published using a representative “synthetic” methodology starting from July 1, 2023 to September 30, 2024. These synthetic rates are intended for use in legacy contracts only, to help ensure the incorporation of fallback language in the remaining legacy contracts.
If SOFR or another alternative reference rate does not achieve wide acceptance as the alternative to LIBOR, there may be disruption to financial markets. In the event that SOFR or another alternative reference rate is widely accepted, risks will remain in relation to outstanding loans, borrowings, derivatives, and other instruments using LIBOR in relation to transitioning those instruments to a new reference rate and the corresponding value transfer that may occur in connection with that transition, as the new reference rate will not exactly mimic LIBOR.
On the funding side, since December 2020, CAF ceased issuance of Floating Rate Notes (“FRN”) linked to LIBOR, and all previous LIBOR FRNs have matured as of the date of this prospectus. On June 15, 2021, CAF issued its first FRN bond that is linked to the SOFR rate for USD 400 million, an important step in the LIBOR transition process. As of March 31, 2024, CAF has issued seven (7) other FRN bonds linked to the SOFR rate for a total amount of USD 340.0 million.
Venezuela-Related Sanctions of the United States
The Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) administers sanctions in respect of the Government of Venezuela and certain Venezuelan-related individuals and entities, including certain Venezuelan government officials. CAF is not a U.S. Person (as defined by the laws and regulations administered by OFAC, 31 CFR Parts 500-598) and has not been sanctioned; however, the following discussion of the current sanctions administered by OFAC is included because Venezuela is a member shareholder country and minority shareholder of CAF, with which CAF has had transactional activity, including loans to Venezuela.
With regard to any individual or entity who has been added to OFAC’s list of Specially Designated Nationals and Blocked Persons (“SDN List”) under Venezuela-related sanctions, U.S. persons may not make to such listed persons, or receive from such listed persons, any contribution or provision of funds, goods, or services, or otherwise deal in property or interests in property of such persons. The OFAC-administered sanctions also prohibit, among other things and with certain limited exceptions:
• | transactions by a U.S. person or within the United States relating to new debt with a maturity greater than 30 days or new equity, of the Government of Venezuela, bonds issued by the Government of Venezuela prior to August 25, 2017, and dividend payments or other distributions of profits to the Government of Venezuela from its controlled entities, and |
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• | direct or indirect purchases by a U.S. person or within the United States of securities from the Government of Venezuela (other than new debt with a maturity of 30 days or less). |
For purposes of these sanctions, certain amendments to outstanding debt of the Government of Venezuela, such as an extension of the maturity date, could be considered a “new debt” or other prohibited extension of credit. Unless otherwise specified in the relevant prospectus supplement, CAF will use the net proceeds of securities issued under this prospectus to fund its lending operations. CAF will not earmark the proceeds of particular issuances of securities to fund specific loan commitments or purchase specific investments. Accordingly, CAF believes that purchasers of securities will not acquire a direct or indirect interest in CAF’s loans to Venezuela, or any other specific assets of CAF, for purposes of the OFAC sanctions.
Although Venezuela is a member shareholder country and minority shareholder of CAF and two Venezuelan nationals designated by Venezuela serve as directors on the Board of Directors of CAF, neither the Government of Venezuela nor any member of the Board of Directors (whether or not a Venezuelan national) exercises control over CAF, has any operational or management role in CAF, or has any authority to negotiate on behalf of CAF or make binding commitments on behalf of CAF.
Although CAF generally is not required to comply with the OFAC sanctions outlined above because CAF is not a U.S. person and does not generally operate in or from the United States, CAF also transacts in the ordinary course with various commercial counterparties in the United States that are required to comply with OFAC sanctions. Some of these U.S. counterparties may serve as correspondent banks or as other intermediaries with potential involvement in funds flows in respect of CAF’s loan operations, including CAF’s loans to the Government of Venezuela, and to the extent that they are so involved, would be required to comply with the Venezuela-related sanctions of the United States. In addition, U.S. persons may purchase CAF’s debt securities. CAF has been monitoring and will continue to monitor OFAC sanctions and restrictions thereunder as applied to U.S. persons insofar as such sanctions and restrictions may have an effect on CAF’s business and operations.
The OFAC sanctions on Venezuela, and any additional sanctions that may be imposed in the future, could make it more difficult for Venezuela to service or renegotiate its outstanding debt, including its outstanding loans from CAF.
In light of the November 2017 downgrade in Venezuela’s long-term foreign ratings by Standard & Poor’s and Fitch, to selective default (“SD”) from CC and to restricted default (“RD”) from C, respectively, CAF increased its provisions for loan losses with respect to loans made to Venezuela to USD 28.3 million as of March 31, 2019 from the USD 19.8 million reported in September 2017. The provision for loan losses for Venezuela as of each of March 31, 2024 and December 31, 2023 was USD 0.0. See Note 2(h) and Note 6 to CAF’s audited financial statements included elsewhere in this prospectus for further information regarding allowance for loan loss calculations.
On December 14, 2018, CAF granted to the Central Bank of Venezuela a credit facility in a total amount of USD 500.0 million. As of December 31, 2019, the credit facility was disbursed in full.
On January 25, 2019, President Trump signed an Executive Order amending prior economic sanctions targeting the Maduro government, and on January 28, 2019, Petróleos de Venezuela S.A. (“PDVSA”) and certain of its affiliates were designated under Executive Order 13850 and added to the SDN List.
CAF does not have direct lending relationships with PDVSA or its subsidiaries. The sanctions on PDVSA and its affiliates, however, may adversely affect the ability of the Maduro government to receive payment for PDVSA’s production and sale of oil and related products and may therefore adversely affect macroeconomic conditions in Venezuela. As a result, Venezuela may find it more difficult to service its outstanding debt, including its outstanding loans from CAF.
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On March 22, 2019, OFAC designated the Economic and Social Development Bank of Venezuela (“BANDES”) under Executive Order 13850 for operating in the financial sector of the Venezuelan economy and added it to the SDN List. As a result of that designation, all property and interests in property of BANDES, including any entity that is owned, directly or indirectly, 50% or more by BANDES, located in the United States or in the possession or control of U.S. persons, are blocked and must be reported to OFAC by persons subject to OFAC jurisdiction. BANDES holds series “B” shares of CAF and holds approximately 3.43% of CAF’s equity. The designation of BANDES therefore does not extend to CAF. Moreover, CAF is not a U.S. person and, therefore, the current sanctions regulations do not prevent CAF from engaging in transactions or dealings with BANDES that occur outside of U.S. jurisdiction. CAF continues to maintain a control framework aimed at verifying its counterparties against OFAC’s SDN List and other applicable sanctions lists.
On April 17, 2019, OFAC designated the Central Bank of Venezuela under Executive Order 13850 for operating in the financial sector of the Venezuelan economy and added it to the SDN List. At the same time, OFAC issued General License 20 (“GL 20”), which authorizes certain transactions and activities that are for the official business of certain international organizations, including CAF. OFAC has since issued the Venezuela Sanctions Regulations, 31 CFR part 591 (“VSR”), and has included an authorization for the conduct of the official business of CAF and other international organizations and entities, at 31 CFR § 591.510 (Official business of certain international organizations and entities). This provision of the VSR authorizes CAF to conduct transactions and activities involving the Central Bank of Venezuela to the extent they are subject to U.S. jurisdiction and are for CAF’s official business, subject to the terms of the authorization. Accordingly, the designation of the Central Bank of Venezuela has not had a material impact on CAF or its relationship with the Central Bank of Venezuela.
On August 5, 2019, President Donald Trump signed Executive Order 13884, which blocks all property and interests in property of the Government of Venezuela that are in or come within the United States or the possession or control of a U.S. person. For purposes of the Executive Order, the term “Government of Venezuela” is defined to include, among others, any person who has acted or purported to act directly or indirectly for or on behalf of the Government of Venezuela or of any political subdivision, agency, or instrumentality thereof, including the Central Bank of Venezuela. The CAF directors appointed by Venezuela as a Series “A” shareholders and by BANDES as a Series “B” shareholders may be considered to fall within the definition of “Government of Venezuela” in the Executive Order. The authorization at 31 CFR § 591.510 of the VSR (Official business of certain international organizations and entities), however, by its terms does not authorize transactions or dealings with any person other than the Central Bank of Venezuela whose property and interests in property are blocked under Executive Order 13850. Nevertheless, CAF has not observed any material adverse effects on CAF following the issuance of Executive Order 13884. CAF does not anticipate that the blocking of the Government of Venezuela will have a material adverse effect on CAF in the future.
When appropriate, CAF consults with OFAC regarding its activities related to Venezuela and believes that CAF is in compliance with U.S. sanctions, to the extent CAF is subject to U.S. jurisdiction. CAF understands that any repurchase of securities of Venezuela under the Support Program should not be affected by sanctions or risk direct or indirect violations of sanctions. Should the repurchase of shares of Venezuela under the Support Program be considered subject to U.S. jurisdiction, CAF believes that the authorization at 31 CFR §591.510 of the VSR (Official business of certain international organizations and entities) may be available to authorize such activity. CAF has also implemented measures to segregate its U.S. Dollar treasury, including funds from the offering, from funds used for distributions to Venezuela, which distributions are made only in non-U.S. currencies. CAF does not source any funds for distribution to Venezuela through any transactions involving U.S. persons, so CAF does not believe that the purchasers of the securities that may be offered by CAF under this prospectus and the applicable prospectus supplement face the risk of violating U.S. sanctions as a result of such purchases. CAF has not observed any material adverse effects on CAF following the issuance of Executive Order 13884. CAF does not anticipate that the blocking of the Government of Venezuela will have a material adverse effect on CAF in the future.
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Venezuela Loan Portfolio
On March 31, 2020, CAF implemented the Support Program following formal approval by the Shareholders’ Assembly. The Support Program allowed CAF to repurchase the shares of a shareholder country that fulfilled the requirements and applied the proceeds to that country’s outstanding loans once a debt payment had not been made. The time frame to apply to the Support Program was six months. The only shareholder country that met the necessary requirements to apply to the Support Program was Venezuela. As part of the Support Program, Venezuela, maintained its representation on the Board of Directors, but was not allowed to have any new loans approved. From the inception of the Support Program through July 4, 2024, CAF repurchased a total of 168,573 shares totaling USD 2,393,737 thousand (USD 842,865 thousand of paid-in capital and USD 1,550,872 thousand of additional paid-in capital) and applied this amount to repay due and overdue amounts of principal, interests, and fees. As a result of the Support Program, Venezuela was current with its loans with CAF until the majority of its series “B” shares were depleted on July 4, 2024. Currently, Venezuela maintains 105 Series “B” shares and its Series “A” share.
As of July 10, 2024, CAF’s loan exposure to Venezuela, the entirety of which is classified as public sector, amounted to USD 1,939,316 thousand of which USD 32,598 thousand were overdue up to five (5) days. In accordance with CAF’s policies, a loan is considered to be in non-accrual status when a payment is more than 180 days overdue in the case of public sector loans. CAF expects to collect all amounts due, including interest and fees. Venezuela is one of the founding shareholders of CAF and has reiterated its commitment and its intention to undertake payments.
Critical Accounting Policies
General
The financial statements of CAF are prepared in accordance with U.S. GAAP, which requires it in some cases to use estimates and assumptions that may affect its reported results and disclosures. CAF describes its significant accounting policies in Note 2 to its audited financial statements included elsewhere in this prospectus. Some of the more significant accounting policies CAF uses to present its financial results involve the use of accounting estimates that CAF considers to be critical because they require (1) 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 CAF’s reported results of operations or financial condition. Specifically, the estimates CAF uses to determine the allowance for loan losses are critical accounting estimates.
Additionally, other important estimates related to the preparation of CAF’s financial statements are those related to revenue recognition and the valuation and classification at fair values of financial instruments. 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, CAF has not changed or reclassified any asset or liability 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.
Statements of Comprehensive Income
Interest Income
Three Months Ended March 31, 2024 and 2023. For the three-month period ended March 31, 2024, CAF’s interest income was USD 885.4 million, representing an increase of USD 127.8 million, or 16.9%, compared to interest income of USD 757.6 million for the corresponding period in 2023. This increase resulted mainly from the 6.88% growth of CAF’s loan portfolio and higher interest rates charged on loans that accrued interest based on six-month Term SOFR and the spread differential. Average market interest rates were higher in the first three months of 2024, when six-month Term SOFR averaged 5.21%, a higher rate than that which existed during the first three months of 2023, when six-month Term SOFR averaged 4.92%.
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2023, 2022, and 2021. For the year ended December 31, 2023, CAF’s interest income was USD 3,302.4 million, representing an increase of USD 1,987.1 million, or 151.1%, compared to interest income of USD 1,315.3 million for the year ended December 31, 2022. This increase resulted primarily from higher interest rates charged on loans that accrue interest based on six-month Term SOFR and the spread differential, an 8.92% growth in CAF’s loan portfolio, and an increase in investment income from the liquidity portfolio during 2023. Average market interest rates were higher during 2023, when six-month Term SOFR averaged 5.22%, than in 2022, when six-month Term SOFR averaged 2.52%. Interest income for the year ended December 31, 2022 was USD 1,315.3 million, representing an increase of USD 643.3 million, or 95.7%, compared to interest income of USD 672.0 million for the year ended December 31, 2021. This increase resulted from higher interest rates charged on loans that accrued interest based on six-month SOFR and the spread differential. Average market interest rates were lower in 2021 than in 2022; in 2021 the six-month Term SOFR averaged 0.056% compared to 2.52% in 2022.
Interest Expense
Three Months Ended March 31, 2024 and 2023. For the three-month period ended March 31, 2024, CAF’s interest expense was USD 626.5 million, representing an increase of USD 145.3 million, or 30.2%, compared to interest expense of USD 481.2 million for the corresponding period in 2023. This increase resulted from an increase of 7.6% in the bond portfolio and higher interest rates, specifically the six-month Term SOFR. Average market interest rates were higher in the first three months of 2024, when six-month Term SOFR averaged 5.21%, a higher rate than that which existed during the first three months of 2023, when six-month Term SOFR averaged 4.92%.
2023, 2022 and 2021. For the year ended December 31, 2023, CAF’s interest expense was USD 2,199.3 million, representing an increase of USD 1,344.6 million, or 157.3%, compared to interest expense of USD 854.7 million for the corresponding period in 2022. This increase resulted from higher overall funding costs due to the increase in six-month Term SOFR and the spread differential. Average market interest rates were higher during 2023, when six-month Term SOFR averaged 5.22%, than in 2022, when six-month Term SOFR averaged 2.52%. Interest expense for the year ended December 31, 2022 was USD 854.7 million, representing an increase of USD 483.5 million, or 130.2%, from CAF’s interest expense of USD 371.3 million for the year ended December 31, 2021. This increase resulted from higher overall funding costs associated with an increase in six-month Term SOFR and the spread differential.
Net Interest Income
Three Months Ended March 31, 2024 and 2023. For the three-month period ended March 31, 2024, CAF’s net interest income was USD 258.9 million, representing a decrease of USD 17.6 million, or 6.4%, compared to net interest income of USD 276.5 million for the corresponding period in 2023. This decrease resulted primarily from higher overall funding costs due to the increase in six-month Term SOFR and the spread differential. The net interest income margin was 2.05% for the three-month period ended March 31, 2024, as compared to 2.44% for the corresponding period in 2023.
2023, 2022, and 2021. For the year ended December 31, 2023, CAF’s net interest income was USD 1,103.2 million, representing an increase of USD 642.6 million, or 139.5%, compared to net interest income of USD 460.6 million for the year ended December 31, 2022. This increase resulted primarily from higher interest rates, growth in CAF’s loan portfolio, and an increase in investment income from the liquidity portfolio explained above. For the year ended December 31, 2022, CAF’s net interest income was USD 460.6 million, representing an increase of USD 159.8 million, or 53.2%, over net interest income of USD 300.7 million for the year ended December 31, 2021. This increase resulted from higher average market rates.
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Provision (Credit) for Loan Losses
Three Months Ended March 31, 2024 and 2023. For the three-month period ended March 31, 2024, CAF recorded a credit for loan losses of USD 6.3 million, compared to a provision for loan losses of USD 3.8 million for the corresponding period in 2023. This credit for loan losses was mainly due to collection of non-accrual interest loans during the period.
2023, 2022 and 2021. For the year ended December 31, 2023, CAF recorded a provision for loan losses of USD 0.4 million due to an increase in non-sovereign loans and adjustments related to recoveries and write-offs of non-accrual interest loans during the year. For the year ended December 31, 2022, CAF recorded a credit for loan losses of USD 3.3 million. This was due to a decrease in private sector loans and improvements in the credit ratings of some shareholder countries, compared to a provision for loan losses of USD 29.9 million recorded for the year ended December 31, 2021. The provision for loan losses for the year ended December 31, 2021, decreased by USD 27.0 million, primarily due to a reduction in loan loss provisions related to sovereign credit risk.
Non-Interest Income
CAF’s non-interest income consists mainly of commissions, dividends arising from equity investments not accounted for using the equity method, its corresponding share of earnings or losses on equity investments, which are accounted for using the equity method, and other income.
Three Months Ended March 31, 2024 and 2023. For the three-month period ended March 31, 2024, CAF’s non-interest income was USD 7.2 million, representing an increase of USD 1.5 million, or 27.1%, compared to non-interest income of USD 5.6 million for the corresponding period in 2023. This increase was mainly due to an increase in dividends and equity in earnings of investees.
2023, 2022 and 2021. For the year ended December 31, 2023, CAF’s non-interest income was USD 58.3 million, representing an increase of USD 39.3 million, or 207.7%, compared to non-interest income of USD 18.9 million for the corresponding period in 2022. This increase was mainly due to unrealized changes in fair value related to equity investments. For the year ended December 31, 2022, CAF’s non-interest income was USD 18.9 million, representing a decrease of USD 20.0 million, or 51.4%, from the non-interest income of USD 39.0 million for the previous year. This decrease was mainly due to a reduction in other income, which decreased from USD 31.8 million in the prior year to USD 7.3 million, as a result of changes in fair value measurements in equity investments.
Non-Interest Expenses
CAF’s non-interest expenses consist mainly of administrative expenses, representing 97.3% and 87.3% of non-interest expenses for the years ended December 31, 2023 and December 31, 2022, respectively.
Three Months Ended March 31, 2024 and 2023. For the three-month period ended March 31, 2024, CAF’s non-interest expenses were USD 64.4 million, representing an increase of USD 8.9 million, or 16.0%, compared to non-interest income of USD 55.5 million for the corresponding period in 2023. This increase was due to an increase in other expenses and administrative expenses. Other expenses were USD 5.1 million in the three-month period ended March 31, 2024, representing an increase of USD 4.4 million or 659.6%, compared to other expenses of USD 0.7 million for the corresponding period in 2023, which was due to exchange rate differences. Administrative expenses were USD 59.4 million in the three-month period ended March 31, 2024, compared to administrative expenses of USD 54.8 million for the corresponding period in 2023, representing an increase of 8.2%, which was mainly due to new hires.
2023, 2022 and 2021. For the year ended December 31, 2023, CAF’s non-interest expenses were USD 210.8 million, representing an increase of USD 7.2 million, or 3.5%, compared to non-interest expenses of USD 203.6 million for the corresponding period in 2022. This increase resulted mainly from an increase in
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administrative expenses. For the year ended December 31, 2022, CAF’s non-interest expenses were USD 203.6 million, representing an increase of USD 32.3 million, or 18.8%, over non-interest expenses of USD 171.4 million for the year ended December 31, 2021. This increase was mainly due to a 13.0% growth in administrative expenses.
For the year ended December 31, 2023, administrative expenses were USD 205.2 million, or 0.39% of CAF’s average total assets, representing an increase of USD 27.4 million, compared to administrative expenses of USD 177.8 million for the year ended December 31, 2022. The increase was mainly due to several corporate actions that were taken, such as the decentralization process of employees and new hires. For the year ended December 31, 2022, administrative expenses were USD 177.8 million, or 0.35% of CAF’s average total assets, representing an increase of USD 20.5 million, compared to administrative expenses of USD 157.4 million for the year ended December 31, 2021. This increase was mainly due to new hires.
Income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds
Three Months Ended March 31, 2024 and 2023. For the three-month period ended March 31, 2024, CAF’s income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds was USD 207.9 million, representing a decrease of USD 14.9 million, or (6.7%), compared to an income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds of USD 222.8 million for the corresponding period in 2023. This decrease resulted primarily from the increase in funding costs due to higher interest rates.
2023, 2022 and 2021. For the year ended December 31, 2023, income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds was USD 950.2 million, representing an increase of USD 671.0 million, or 240.4%, compared to income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds of USD 279.2 million for the year ended December 31, 2022. This increase was mainly due to the rise in interest income, as a result of higher average market interest rates and the growth in CAF’s loan portfolio. Income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds for the year ended December 31, 2022 was USD 279.2 million, representing an increase of USD 140.8 million, or 101.7%, compared to income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds of USD 138.4 million for 2021. This increase was mainly due to higher average market interest rates, which generated higher income in CAF’s loan and investment portfolios.
Net Income
Three Months Ended March 31, 2024 and 2023. For the three-month period ended March 31, 2024, CAF’s net income was USD 175.1 million, representing a decrease of USD 28.4 million, or (13.9%), compared to net income of USD 203.5 million for the corresponding period in 2023. This decrease resulted primarily from the increase in funding costs due to higher interest rates.
2023, 2022 and 2021. For the year ended December 31, 2023, CAF’s net income was USD 810.0 million, representing an increase of USD 641.1 million, or 379.4%, compared to net income of USD 169.0 million for the corresponding period in 2022. This increase was mainly due to an increase in interest income as a result of higher average market rates that generated higher income in CAF’s loan portfolio and investment portfolio. For the year ended December 31, 2022, CAF recognized USD 89.0 million as a contribution to Shareholders’ Special Funds, resulting in net income of USD 169.0 million, representing an increase of USD 60.4 million, or 60.9%, compared to net income of USD 105.0 million for 2021. See Note 21 to CAF’s audited financial statements included elsewhere in this prospectus.
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Balance Sheet
Assets
March 31, 2024. As of March 31, 2024, CAF’s total assets were USD 55.2 billion, representing an increase of USD 1.4 billion, or 2.6%, compared to total assets of USD 53.8 billion as of December 31, 2023. The increase in assets resulted primarily from an increase in liquidity assets, specifically marketable securities that grew by 20.0% compared to December 31, 2023.
2023 and 2022. As of December 31, 2023, CAF’s total assets were USD 53.8 billion, representing an increase of USD 3.4 billion, or 6.8%, compared to total assets of USD 50.4 billion as of December 31, 2022. This increase in total assets was mainly due to a 9.3% growth in the outstanding amount of total loans compared to December 31, 2022.
Liabilities
March 31, 2024. As of March 31, 2024, CAF’s total liabilities were USD 40.1 billion, representing an increase of USD 1.0 billion or 2.6%, compared to total liabilities of USD 39.1 billion as of December 31, 2023. The increase in liabilities resulted mainly from an increase in the outstanding amounts of bonds, which grew by 8.0% compared to December 31, 2023.
2023 and 2022. As of December 31, 2023, CAF’s total liabilities were USD 39.1 billion, representing an increase of USD 2.4 billion or 6.6%, compared to total liabilities of USD 36.7 billion as of December 31, 2022. The increase in total liabilities resulted mainly from an increase in the outstanding amount of bonds, which increased by 16.5% compared to December 31, 2022.
Shareholders’ Equity
March 31, 2024. As of March 31, 2024, CAF’s total shareholders’ equity was USD 15.1 billion, representing an increase of USD 380.5 million, or 2.6%, compared to total shareholders’ equity of USD 14.7 billion as of December 31, 2023. The increase in CAF’s total shareholders’ equity resulted mainly from an increase in reserves.
2023 and 2022. As of December 31, 2023, CAF’s total shareholders’ equity was USD 14.7 billion, representing an increase of USD 1.0 billion, or 7.4%, compared to total shareholders’ equity of USD 13.7 billion as of December 31, 2022. The increase in CAF’s total shareholders’ equity resulted mainly from an increase in retained earnings, reserves, and additional paid-in capital.
Asset Quality
Overdue Loans
March 31, 2024. As of March 31, 2024, there were no overdue loans (not including non-accrual loans in overdue status).
2023 and 2022. As of each of December 31, 2023 and December 31, 2022 there were no overdue loans (not including non-accrual loans in overdue status).
Impaired Loans and Non-accrual Loans
March 31, 2024. As of March 31, 2024 the total principal amount of CAF’s impaired loans was USD 50.3 million, or 0.2% of the total loan portfolio, showing no variation compared to December 31, 2023. CAF considers a loan to be impaired when it is in non-accrual status.
2023 and 2022. As of December 31, 2023, the total principal amount of CAF’s impaired loans was USD 50.3 million or 0.15% of the total loan portfolio, representing a decrease of USD 57.6 million compared to impaired loans of USD 107.9 million as of December 31, 2022. This decrease was due to recoveries and write-offs of the impaired loans during the period. CAF considers a loan to be impaired when it is in non-accrual status.
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Restructured Loans
March 31, 2024. As of March 31, 2024, there were no restructured loans.
2023 and 2022. As of December 31, 2023, there were no outstanding restructured loans. As of December 31, 2022, the total principal amount of outstanding restructured loans was USD 23.1 million, or 0.07% of the total loan portfolio. This variation resulted from the repayment of the only restructured loan in the portfolio.
Loan Write-offs and Recoveries
March 31, 2024. There were no loans written-off during the three-month period ended March 31, 2024 or during the three-month period ended March 31, 2023. As of December 31, 2023, the remaining amount of the restructured loans was collected, including principal and interest, as a result of which CAF recognized a net gain of USD 16.4 million in the statement of income under Other Income.
2023 and 2022. There were USD 34.5 million of loans written-off during the year ended December 31, 2023 and USD 11.1 million of loans written-off in the same period of 2022.
See “Operations of CAF — Asset Quality” and “Operations of CAF — Loan Portfolio” for details regarding CAF’s asset quality and the distribution of CAF’s loans by country and economic sector, respectively.
Liquidity
CAF’s liquidity policy requires it to maintain sufficient liquid assets to cover at least 12 months of net cash requirements.
Net cash requirements under this new policy are calculated as follows:
(+) | Scheduled loan collections |
(+) | Committed paid-in capital payments |
(-) | Scheduled debt service |
(-) | Committed disbursements |
CAF’s investment policy requires that at least 90% of CAF’s 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 CAF’s 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. CAF’s investment policy emphasizes security and liquidity over yield.
As of March 31, 2024, CAF’s liquid assets consisted of USD 17.9 billion of cash, deposits with banks, marketable securities and other investments, of which 95.6% were invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization; 33.4% of CAF’s liquid assets were invested in time deposits in financial institutions, 21.1% in commercial paper, 16.0% in certificates of deposit, 16.0% in U.S. Treasury Notes, 9.9% in corporate and financial institution bonds and 3.5% in other instruments, including deposits in cash.
As of December 31, 2023, CAF’s liquid assets consisted of USD 16.3 billion of cash, deposits with banks, marketable securities and other investments, of which 94.5% were invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization; 30.5% were invested in time deposits in financial institutions, 16.0% in commercial paper, 11.7% in corporate and financial institution bonds, 12.9% in certificates of deposit, 15.6% in U.S. Treasury Notes and 13.8% in other instruments.
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As of December 31, 2023, CAF’s liquid assets were distributed by country as follows:
United States | 29.7 | % | ||
Supranationals | 14.0 | % | ||
Switzerland | 8.4 | % | ||
United Arab Emirates | 7.4 | % | ||
Chile | 5.2 | % | ||
Japan | 5.2 | % | ||
China | 5.1 | % | ||
Germany | 4.4 | % | ||
France | 4.3 | % | ||
Qatar | 3.3 | % | ||
Canada | 3.1 | % | ||
South Korea | 2.3 | % | ||
Kuwait | 1.9 | % | ||
United Kingdom | 1.8 | % | ||
Denmark | 1.2 | % | ||
Australia | 0.7 | % | ||
Others | 2.0 | % |
As of December 31, 2022, CAF’s liquid assets consisted of USD 15.3 billion of cash, deposits with banks, marketable securities and other investments, of which 94.5% were invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization; 6.4% of CAF’s liquid assets were invested in time deposits in financial institutions, 8.9% in commercial paper, 11.6% in corporate and financial institution bonds, 28.2% in certificates of deposit, 41.0% in U.S. Treasury Notes and 3.8% in other instruments, including deposits in cash.
As of December 31, 2022, CAF’s liquid assets were distributed by country as follows:
United States | 29.6 | % | ||
Japan | 4.7 | % | ||
France | 5.0 | % | ||
China | 8.2 | % | ||
Australia | 1.1 | % | ||
Canada | 3.2 | % | ||
Switzerland | 9.4 | % | ||
South Korea | 1.0 | % | ||
Spain | 0.7 | % | ||
Chile | 7.1 | % | ||
Germany | 2.8 | % | ||
Netherlands | 0.1 | % | ||
United Arab Emirates | 1.1 | % | ||
United Kingdom | 0.7 | % | ||
Qatar | 2.9 | % | ||
Ireland | 0.9 | % | ||
Supranationals | 15.8 | % | ||
Kuwait | 2.9 | % | ||
Hong Kong | 0.2 | % | ||
Others | 2.6 | % |
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Commitments and Contingencies
CAF enters into commitments and contingencies in the normal course of business to facilitate its business and objectives. Commitments and contingencies include:
• | credit agreements subscribed and pending loan disbursements, |
• | lines and letters of credit for foreign trade, |
• | equity investment agreements subscribed, and |
• | partial credit guarantees. |
See Note 20 to CAF’s audited financial statements included elsewhere in this prospectus.
Strategy and Capital Resources
CAF’s business strategy is to provide financing for projects, trade, and investment in the shareholder countries. Management expects CAF’s assets to grow in the future, which will increase its need for additional funding. Likewise, maturing debt obligations will need to be replaced. In addition to scheduled capital increases, CAF’s 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 CAF’s equity will continue to be held by full member shareholder countries, CAF intends to continue offering equity participation to associated shareholder countries through the issuances of Series “C” shares to such countries. See “Capital Structure.”
CAF intends to continue its programs to foster sustainable growth within the shareholder countries, and to increase its support for the private sector within their markets, either directly or through financial intermediaries. See “Operations of CAF.”
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The purpose of CAF is to foster and promote economic and 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 its objective, CAF primarily engages in short-, medium- and long-term loans and guarantees. To a lesser extent, CAF makes limited equity investments in funds and companies, and provides 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
CAF’s business management is composed of client relationship management and financial management.
Client Relationship Management
CAF’s 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 its lending activities. Clients are identified through direct contact, referrals from CAF’s representative offices and referrals from third parties such as shareholders, multilateral institutions, international financial institutions, and other clients.
CAF’s client relationship management function is currently fulfilled by the following Vice- Presidencies and management group:
• | The Corporate Vice Presidency of Strategic Programming; |
• | The Private Sector Vice Presidency; and |
• | The Resource Mobilization and Global Partnerships Management. |
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 the Credit Administration Office and the Corporate Comptroller Office.
Financial Management
CAF’s financial management group is responsible for managing its funded debt, as well as its liquid assets. This group is responsible for developing, structuring, appraising, and implementing CAF’s borrowing activities. It is also responsible for reviewing and developing policies and procedures for the monitoring of CAF’s 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 has two basic responsibilities:
• | structuring “A/B” loan transactions in which CAF lends a portion of the total amount and other financial institutions loan the remainder; and |
• | selling loans to international banks interested in increasing their exposure in the shareholder countries. |
The staff of the financial management group works in close coordination with the client relationship managers. The client relationship management group and financial management group are supported by the financial control and budget, human resources, information systems and legal departments.
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Loan Portfolio
CAF extends 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 institution in a shareholder country that lends the funds to the appropriate project. To a lesser extent, CAF also provides 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. CAF endeavors to concentrate CAF’s 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.
CAF provides 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 CAF’s overall objectives, but that are not sufficiently large to justify CAF 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 CAF. Under such multi-sectoral credit lines, CAF takes the credit risk of the financial intermediary and also has recourse to the underlying borrowers. The financial intermediaries are responsible for repayment of their loans from CAF regardless of whether the underlying borrower repays the financial intermediary.
CAF endeavors to strengthen trade by and among shareholder countries and to assist companies in the shareholder countries to access world markets. CAF’s trade-financing activities are complementary to those of the export credit agencies of shareholder countries because it finances 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, CAF finances the movement of merchandise. CAF also provides 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.
In 1997, CAF began making a portion of its loans through an “A/B” loan program, where it acts as lender of record for the entire loan and sells non-recourse participations in the “B” portion of the loan to financial institutions. The “A” portion of the loan is made directly to the borrower by CAF. Under the “B” portion, other financial institutions 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 CAF acts as the lender of record for the entire loan, thereby operating as the one official lender in the transaction, 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 CAF’s status as a multilateral financial institution.
CAF’s loan pricing is typically based on its 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, CAF’s 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. CAF generally charges 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.
CAF generally requires that the majority of loans to public sector entities have the benefit of sovereign guarantees. Loans to private sector entities other than banks generally must have the benefit of bank or other guarantees, or other collateral acceptable to CAF.
As of December 31, 2023, CAF’s total assets were USD 53.8 billion, of which USD 33.5 billion, or 62.2%, were disbursed and are outstanding loans. As of December 31, 2023, the “B” loan portion of CAF’s “A/B” loan transactions totaled USD 364.7 million. The tables on loan exposure that follow reflect only the “A” portion of the respective “A/B” loan transactions since CAF only assumes the credit risk of the “A” loan portion. CAF’s management expects further loan growth to be funded by additional borrowings and deposits, retained earnings, and planned capital increases.
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Loans to Public and Private Sector Borrowers
CAF’s total loan portfolio outstanding, classified by public sector and private sector borrowers, was as follows:
As of December 31, | ||||||||||||||||
2023 | 2022 | 2021 | ||||||||||||||
(in USD millions) | ||||||||||||||||
Public Sector | 95.9 | % | 32,327.7 | 29,791.0 | 27,723.9 | |||||||||||
Private Sector | 4.1 | % | 1,393.9 | 1,168.1 | 1,889.8 | |||||||||||
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100 | % | 33,721.6 | 30,959.1 | 29,613.8 | ||||||||||||
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Fair value adjustments | (242.5 | ) | (336.8 | ) | (18.4 | ) | ||||||||||
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33,479.1 | 30,622.3 | 29,595.4 | ||||||||||||||
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Geographic Distribution of Loans
CAF’s total loan portfolio outstanding, classified on a country-by-country basis, according to the location of the borrower, was as follows:
As of December 31, | ||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
Public | Private | Total | Public | Private | Total | Public | Private | Total | ||||||||||||||||||||||||||||
(in USD millions) | ||||||||||||||||||||||||||||||||||||
Argentina | 5,485.3 | 18.4 | 5,503.6 | 3,961.4 | 20.0 | 3,981.4 | 3,818.9 | 23.4 | 3,842.3 | |||||||||||||||||||||||||||
Barbados | 175.0 | — | 175.0 | 181.1 | — | 181.1 | 172.7 | — | 172.7 | |||||||||||||||||||||||||||
Bolivia | 2,917.3 | 31.1 | 2,948.5 | 3,085.5 | 15.2 | 3,100.7 | 2,661.8 | 26.7 | 2,688.5 | |||||||||||||||||||||||||||
Brazil | 2,833.0 | 137.7 | 2,970.8 | 2,560.2 | 73.1 | 2,633.3 | 2,268.8 | 429.2 | 2,698.0 | |||||||||||||||||||||||||||
Chile | 100.0 | 144.0 | 244.0 | — | 192.5 | 192.5 | — | 304.2 | 304.2 | |||||||||||||||||||||||||||
Colombia | 3,667.5 | 174.9 | 3,842.4 | 3,538.6 | 187.6 | 3,726.3 | 3,123.5 | 279.9 | 3,403.4 | |||||||||||||||||||||||||||
Costa Rica | 497.6 | — | 497.6 | 533.9 | — | 533.9 | 547.1 | — | 547.1 | |||||||||||||||||||||||||||
Dominican Republic | 435.1 | 10.0 | 445.1 | 412.6 | — | 412.6 | 110.8 | — | 110.8 | |||||||||||||||||||||||||||
Ecuador | 4,147.0 | 100.0 | 4,247.0 | 4,212.2 | 20.0 | 4,232.2 | 4,187.1 | 14.3 | 4,201.4 | |||||||||||||||||||||||||||
El Salvador | 302.0 | — | 302.0 | 75.0 | — | 75.0 | — | — | — | |||||||||||||||||||||||||||
Honduras | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Mexico | 980.0 | — | 980.0 | 935.0 | 20.0 | 955.0 | 800.0 | 25.0 | 825.0 | |||||||||||||||||||||||||||
Panama | 2,345.2 | 237.5 | 2,582.7 | 2,510.3 | 181.6 | 2,691.9 | 2,379.0 | 183.1 | 2,562.1 | |||||||||||||||||||||||||||
Paraguay | 2,345.0 | 28.9 | 2,373.9 | 2,020.8 | 38.3 | 2,059.1 | 1,486.2 | 25.5 | 1,511.7 | |||||||||||||||||||||||||||
Peru | 1,492.1 | 344.7 | 1,836.9 | 1,188.6 | 285.1 | 1,473.7 | 1,288.2 | 455.7 | 1,743.9 | |||||||||||||||||||||||||||
Trinidad and Tobago | 1,305.5 | — | 1,305.5 | 1,217.2 | — | 1,217.2 | 1,164.0 | — | 1,164.0 | |||||||||||||||||||||||||||
Uruguay | 1,164.7 | 166.8 | 1,331.4 | 845.9 | 134.6 | 980.5 | 844.3 | 122.9 | 967.2 | |||||||||||||||||||||||||||
Venezuela | 2,135.4 | — | 2,135.4 | 2,512.6 | — | 2,512.6 | 2,871.5 | — | 2,871.5 | |||||||||||||||||||||||||||
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32,327.7 | 1,393.9 | 33,721.6 | 29,791.0 | 1,168.1 | 30,959.1 | 27,723.9 | 1,889.9 | 29,613.8 | ||||||||||||||||||||||||||||
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Fair value adjustments | (242.5 | ) | (336.8 | ) | (18.4 | ) | ||||||||||||||||||||||||||||||
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Total | 33,479.1 | 30,622.3 | 29,595.4 | |||||||||||||||||||||||||||||||||
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Loans Approved and Disbursed by Country
CAF’s 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.
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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(1) | Disbursed(2) | |||||||||||||||||||||||
2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |||||||||||||||||||
(in USD millions) | (in USD millions) | |||||||||||||||||||||||
Argentina | 2,815.3 | 1,468.6 | 1,377.8 | 2,078.4 | 761.5 | 699.4 | ||||||||||||||||||
Bolivia | 1,111.9 | 616.6 | 397.9 | 162.6 | 627.1 | 467.0 | ||||||||||||||||||
Brazil | 2,894.5 | 1,841.0 | 1,492.7 | 1,488.8 | 605.7 | 2,003.0 | ||||||||||||||||||
Chile | 922.9 | 580.7 | 580.2 | 394.9 | 150.5 | 548.6 | ||||||||||||||||||
Colombia | 1,743.1 | 1,784.4 | 1,712.3 | 509.1 | 1,140.5 | 1,321.8 | ||||||||||||||||||
Dominican Republic | 195.1 | 21.0 | 20.6 | 50.9 | 319.5 | — | ||||||||||||||||||
Ecuador | 2,995.5 | 967.8 | 1,159.1 | 578.4 | 610.7 | 534.4 | ||||||||||||||||||
El Salvador | 295.9 | 300.3 | — | 227.3 | 75.0 | — | ||||||||||||||||||
Mexico | 800.7 | 800.4 | 1,100.8 | 1,182.3 | 838.1 | 603.0 | ||||||||||||||||||
Panama | 480.1 | 576.0 | 511.5 | 165.4 | 480.0 | 541.5 | ||||||||||||||||||
Paraguay | 633.3 | 1,137.6 | 880.8 | 443.7 | 620.0 | 494.5 | ||||||||||||||||||
Peru | 1,964.2 | 2,416.5 | 2,061.9 | 792.2 | 308.4 | 966.3 | ||||||||||||||||||
Trinidad & Tobago | 75.5 | 195.7 | 230.8 | 135.6 | 100.8 | 160.1 | ||||||||||||||||||
Uruguay | 726.1 | 850.8 | 1,100.7 | 427.5 | 182.3 | 290.9 | ||||||||||||||||||
Venezuela | 1.5 | 0.6 | 1.1 | 14.0 | 27.8 | 29.7 | ||||||||||||||||||
Others(3) | 348.5 | 542.9 | 348.5 | 253.2 | 385.7 | 228.9 | ||||||||||||||||||
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Total | 16,261.1 | 14,100.5 | 13,192.0 | 8,904.3 | 7,233.8 | 8,888.9 | ||||||||||||||||||
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(1) | Loans approved for disbursement in a given year may be disbursed, in whole or in part, in the current year or at a later date. The amount of loans disbursed and the timing of any individual disbursement, including the quantum of disbursement, are a function of the type of project and loan being financed. |
(2) | Includes short-term loans in the amounts of USD 5,715.8 million, USD 4,060.5 million and USD 5,176.8 million for the years ended December 31, 2023, 2022, and 2021, respectively. |
(3) | Loans outside the full member shareholder countries for the years ended December 31, 2023, 2022, and 2021. |
As of December 31, 2023, the increase (decrease) of CAF’s loan portfolio by country compared to the year ended December 31, 2022 was as follows:
Argentina | 38.2 | % | ||
Barbados | (3.4 | )% | ||
Bolivia | (4.9 | )% | ||
Brazil | 12.8 | % | ||
Chile | 26.7 | % | ||
Colombia | 3.1 | % | ||
Costa Rica | (6.8 | )% | ||
Dominican Republic | 7.9 | % | ||
Ecuador | 0.3 | % | ||
El Salvador | 302.7 | % | ||
Mexico | 2.6 | % | ||
Panama | (4.1 | )% | ||
Paraguay | 15.3 | % | ||
Peru | 24.6 | % | ||
Trinidad and Tobago | 7.2 | % | ||
Uruguay | 35.8 | % | ||
Venezuela | (15.0 | )% |
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The growth of the loan portfolio reflects loan approvals as a result of higher demand from shareholder countries and its increased share of infrastructure financings in the region. Loans to associated shareholder countries holding Series “C” shares totaled USD 1,652.7 million in 2023, compared to loans to associated shareholder countries holding Series “C” shares totaling USD 1,670.0 million in 2022.
Management anticipates that CAF’s loan portfolio will continue to grow as a result of its strategy to expand its 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
As of December 31, 2023, CAF’s loan portfolio outstanding was distributed by country and industry as follows:
Sector | Argentina | Bolivia | Brazil | Colombia | Costa Rica | Dominican Republic | Ecuador | Jamaica | Mexico | Panama | Paraguay | Peru | Uruguay | Venezuela | Others(2) | Total by Sector | % of Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
Agriculture, hunting and forestry | 66,170 | 4,554 | — | — | — | — | — | — | — | — | — | — | — | — | — | 70,724 | 0.21 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Supply of electricity, gas, and water | 819,100 | 524,490 | 585,249 | 213,903 | — | 59,598 | 504,284 | — | — | 326,566 | 468,673 | 262,604 | 515,108 | 1,008,061 | 39,436 | 5,327,072 | 15.80 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Transport, warehousing and communications | 1,618,047 | 1,126,837 | 1,546,119 | 209,073 | 19,155 | — | 1,082,966 | — | — | 984,407 | 820,805 | 391,337 | 265,595 | 155,556 | 783,333 | 9,003,229 | 26.70 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Financial intermediaries(1) | — | 22,880 | 319,269 | 337,228 | 5,000 | 10,000 | 349,000 | — | 380,000 | 82,500 | 28,877 | 210,410 | — | — | 499,000 | 2,244,164 | 6.65 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Social and other infrastructure programs | 2,999,542 | 1,166,059 | 482,998 | 3,082,154 | 467,742 | 375,507 | 2,307,590 | — | 600,000 | 1,034,186 | 1,055,535 | 972,500 | 550,739 | 971,753 | 963,444 | 17,029,750 | 50.50 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other activities | 767 | 3,644 | 37,128 | — | — | — | 3,114 | — | — | — | — | — | — | — | 2,000 | 46,653 | 0.14 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 5,503,626 | 2,848,465 | 2,970,763 | 3,842,359 | 491,897 | 445,105 | 4,246,954 | — | 980,000 | 2,427,659 | 2,373,889 | 1,836,850 | 1,331,442 | 2,135,370 | 2,287,213 | 33,721,592 | 100.00 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
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(1) | Multi-sectoral credit lines to public sector development banks, private banks, and other institutions. |
(2) | This column includes loans outside the full member shareholder countries as of December 31, 2023. |
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Maturity of Loans
As of December 31, 2023, CAF’s outstanding loans were scheduled to mature as follows:
2024 | 2025 | 2026 | 2027 | 2028 | 2029 and beyond | |||||||||||||||||||
(in USD millions) | ||||||||||||||||||||||||
Principal amount | 5,715.8 | 3,175.2 | 3,079.7 | 3,211.0 | 2,936.2 | 15,603.8 |
Ten Largest Borrowers
The following table sets forth the aggregate principal amount of loans to CAF’s ten largest borrowers, and the percentage such loans represented of the total loan portfolio, as of December 31, 2023:
Borrower | Amount | As a Percentage of Total Loan Portfolio | ||||||
(in USD millions) | ||||||||
Argentine | 3,933.1 | 11.8 | ||||||
Ecuador | 3,553.5 | 10.7 | ||||||
Colombia | 3,015.3 | 9.1 | ||||||
Bolivia | 2,857.0 | 8.6 | ||||||
Panama | 2,314.4 | 7.0 | ||||||
Paraguay | 1,724.7 | 5.2 | ||||||
Venezuela | 1,521.5 | 4.6 | ||||||
Trinidad and Tobago | 1,178.3 | 3.5 | ||||||
Peru | 1,096.2 | 3.3 | ||||||
Central Bank of Venezuela | 747.0 | 2.2 | ||||||
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21,941.0 | 65.9 | |||||||
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Selected Projects
Set out below are examples of projects approved by CAF during 2023 and the respective loan approval amounts. The selected projects represent a mix of its loan portfolio in the different sectors and activities in which CAF participates, including both public and private sector projects. They have been selected based on the relevance to the shareholder countries and are representative of CAF’s lending activities in each such country.
Argentina
Aqueduct Project for the Social and Productive Development. Amount: USD 200 million.
Bolivia
Uyuni-Hito LX Highway: Sections 1, 2 and 3. Amount: USD 224 million.
Brazil
State of Bahia — Integrated Road System Project of the State of Bahia Salvador Itaparica Island Bridge. Amount: USD 150 million.
Colombia
Uncommitted and non-revolving conditional line of credit to Empresa Metro de Bogotá S.A. Amount: USD 255 million.
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Costa Rica
Financial Line of Credit to Banco Improsa S.A. Amount: USD 15 million.
Ecuador
Program for the Strengthening of the Power Distribution Network for the Water Sector Amount: USD 200 million.
El Salvador
Program for the Implementation of a Telemedicine System. Amount: USD 77 million.
Mexico
Financial Line of Credit to Nacional Financiera S.N.C. (NAFIN). Amount: USD 300 million.
Panama
Educational Access, Relevance, and Inclusion Program (PAPIE) Amount: USD 70 million.
Paraguay
Rehabilitation, improvement, and maintenance program of national route py22, Concepcion-Vallemí-San Lazaro Section and accesses (ROAD 4) Amount: USD 135 million.
Peru
Line of credit with Financiera Confianza S.A. Amount: USD 15 million.
Trinidad and Tobago
Educational Quality Improvement Program. Amount: USD 40 million.
Uruguay
Sector Program to Support the Implementation of Social Protection Tools Focusing on Education, Early Childhood and Health. Amount: USD 300 million.
Other Activities
Treasury Operations
CAF’s investment policy requires that at least 90% of its 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 non-investment grade instruments rated B-/B3/B- or better by a U.S. nationally recognized statistical rating organization. As of December 31, 2023, CAF’s liquid assets amounted to USD 16.3 billion, of which 30.5% were invested in time deposits in financial institutions, 16.0% in commercial paper, 11.7% in corporate and financial institution bonds, 12.9% in certificates of deposit, 15.6% in U.S. Treasury Notes and 13.8% in other instruments.
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Equity Shareholdings
CAF may acquire equity shareholdings in new or existing companies within the shareholder countries, either directly or through investment funds focused on Latin America. CAF’s equity participation in any one company is limited to 1% of its shareholders’ equity. CAF’s policies do not permit it to be a company’s largest individual shareholder. In addition, the aggregate amount of CAF’s equity investments cannot exceed 10% of its shareholders’ equity. As of December 31, 2023, the carrying value of CAF’s equity investments totalled USD 392.2 million, representing 2.7% of its shareholders’ equity. As of December 31, 2023, 56.6% of CAF’s equity portfolio was held through investment funds.
Credit Guarantees
CAF has developed its credit guarantee product as part of its role of attracting international financing for its shareholder countries. As such, 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 only partial credit guarantees with the intention that private lenders or holders of securities share the risk along with CAF.
The emphasis of the credit guarantees is to aid in the financing of public sector projects, though CAF does not have any internal policies limiting its credit guarantees to public sector projects. Also, although CAF generally intends to guarantee approximately 25% of the financing for a given project, it may guarantee up to the full amount of the financing, subject to its other credit policies. CAF’s internal policies limit the aggregate outstanding amount of its credit guarantees to a maximum amount equivalent to 20% of its total equity. The amount of credit guarantees outstanding was USD 83.9 million as of December 31, 2023. Those credit guarantees represented 1.0% of CAF’s total equity and included guarantees issued for a public sector project in Peru and for several private sector companies that are operating in Argentina, Mexico, and Peru.
Promotion of Regional Development
As part of CAF’s role in advancing regional integration, it evaluates on an ongoing basis new investment opportunities intended to benefit the shareholder countries. CAF also provides 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 2023, CAF acted as fund administrator for several funds funded by third parties and by CAF’s shareholders, the net assets of which totaled USD 501.3 million as of December 31, 2023. CAF has no residual interest in the net assets of the special funds.
Each year, the Shareholders’ Assembly of CAF approves a maximum amount to be contributed to Shareholders’ Special Funds during the fiscal year, which contributions are recognized as expenses.
In March 2023, the Shareholders’ Assembly of CAF approved a contribution of up to a maximum amount of USD 120.0 million to some Shareholders’ Special Funds for 2023. Subsequently, for the year ended December 31, 2023, based on the analysis of the new commitments contracted or the resources required by the Shareholders’ Special Funds, CAF’s Executive President directly or by delegation of the Shareholders’ Assembly of CAF authorized CAF to make contributions of USD 85.0 million, USD 31.5 million and USD 3.5 million to Compensatory Financial Fund (FFC), Technical Cooperation Fund (FCT) and Fund for the Development of Small and Medium Enterprises (FIDE), respectively. For the year ended December 31, 2023, CAF recognized USD 120.0 million as an expense and, as of December 31, 2023 recognized an unconditional obligation (accounts payable) of USD 13.4 million, which was paid in January 2024. In March 2022, the Shareholders’
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Assembly of CAF approved a contribution of up to a maximum amount of USD 89.0 million to some Shareholders’ Special Funds for 2022. Subsequently, for the year ended December 31, 2022, based on the analysis of the new commitments contracted or the resources required by the Shareholders’ Special Funds, CAF authorized to make contributions of USD 70.0 million, USD 15.0 million, and USD 4.0 million to FFC, FCT and Human Development Fund (FONDESHU), respectively. For the year ended December 31, 2022, CAF recognized USD 89.0 million as an expense and, as of December 31, 2022 recognized an unconditional obligation (accounts payable) for USD 42.2 million, which was paid in January 2023.
As of December 31, 2023, the principal funds to which CAF made contributions were FFC, FIDE, FCT and FONDESHU.
Compensatory Financing Fund (FFC)
As of December 31, 2023, the Compensatory Financing Fund had a balance of USD 214.2 million. This fund was created to provide interest rate compensation of certain loans granted by CAF 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 (FIDE)
As of December 31, 2023, the Fund for the Development of Small and Medium Enterprises had a balance of USD 66.4 million. The purpose of this fund is to finance and, in general, support initiatives that aid the development of an entrepreneurial class in CAF’s shareholder countries.
Technical Cooperation Fund (FCT)
As of December 31, 2023, the Technical Cooperation Fund had a balance of USD 96.4 million. The purpose of this fund is to finance research and development studies that may lead to the identification of project investment opportunities and, on occasion, to provide grants to its shareholder countries, that are typically less than USD 100,000 each, to facilitate the implementation of those projects.
Human Development Fund (FONDESHU)
As of December 31, 2023, the Human Development Fund had a balance of USD 3.1 million. This fund is devoted to assisting 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.
See Note 21 to CAF’s audited financial statements included elsewhere in this prospectus.
Credit Policies
The Constitutive Agreement limits the total amount of disbursed and outstanding loans, guarantees and equity investments to 4.0 times shareholders’ equity. CAF’s actual ratio as of December 31, 2023 was 2.3 times shareholders’ equity.
CAF applies commercial banking standards for credit approvals and maintains 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 CAF’s policies. Proposed project loans are evaluated in accordance with CAF’s 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.
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The Loans and Investments Committee (the “Committee”) recommends approvals of loans and investments. The members of this Committee are the Vice Presidents and the Chief Risk Officer. The Committee is chaired by the Executive Vice President. The Secretary of the Committee is the Corporate Manager for Countries. The Vice President of Strategic Programming, the Vice President of the Private Sector, the Vice President of Finance, and the Corporate Risk Manager have a vote in the Committee. The General Counsel, a representative from the Office of the Executive President, and the Planning and Impact on Development Manager have voice in the Committee. The Executive President, upon the recommendation of the Committee, may approve (a) loans of up to USD 75.0 million for sovereign credits, (b) loans of up to USD 50.0 million for private credits, (c) investments of up to USD 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 U.S. 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 (e) technical cooperation credits of up to USD 1.0 million. Amendments and waivers and approvals for mobilization of third party-funds connected to projects are approved by the Committee and extensions and renewals are also approved by the Committee.
CAF’s 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 CAF’s loan portfolio or 100% of its 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 CAF plus any assets entrusted by the country to it 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 CAF plus any assets entrusted to it under a fiduciary relationship may be committed to operations essentially national in character. The same limitation applies to CAF’s total loan portfolio in relation to its shareholders’ equity. Loans to a public sector or mixed-capital entity not considered a sovereign risk are limited in the aggregate to 15% of CAF’s 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 CAF’s total loan portfolio.
Operations in which CAF extends 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. Notwithstanding the above, the aggregate total of outstanding loans in all such countries may not exceed 15% of CAF’s total loan portfolio.
CAF’s policies allow it to provide up to 100% of the total project costs with respect to short-term loans. For medium- and long-term loans, CAF determines 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, CAF typically limits its loans to a smaller percentage of total project costs and generally require a larger percentage of financial support by the borrower than required by its credit policies.
Asset Quality
CAF classifies a loan as overdue whenever payment is not made on its due date. CAF charges 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 CAF.
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As of December 31, 2023, there were no loans overdue and USD 50.3 million of loans in non-accrual status. As of December 31, 2022, there were no loans overdue and USD 107.9 million of loans in non-accrual status.
For the year ended December 31, 2023, there were USD 34.5 million of loan write-offs. CAF believes it has not suffered any individually significant losses on its loan portfolio. Although CAF’s loans do not enjoy any legal preference over those of other creditors, CAF enjoys a de facto preferred creditor status arising from its status as a multilateral financial institution and from the interest of its borrowers in maintaining their credit standing with it. Although some of the shareholder countries have restructured their sovereign debt obligations, CAF has never had to declare an event of default with respect to such countries’ debt obligations to CAF.
Quality of Loan Portfolio
The following table shows CAF’s overdue loan principal, loans in non-accrual status, and the total allowance for loan losses and their percentages of its total loan portfolio at the respective dates indicated, as well as loans written-off during each period.
As of December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
(in USD millions) | ||||||||||||
Total loan portfolio | 30,721.6 | 30,959.1 | 29,595.4 | |||||||||
Overdue accrual loans | — | — | — | |||||||||
Loans in non-accrual status | 50.3 | 107.9 | 112.1 | |||||||||
Loans written-off during period | 34.5 | 11.1 | 48.2 | |||||||||
Allowance for loan losses | 56.9 | 63.2 | 76.9 | |||||||||
Troubled debt restructured | — | 23.1 | 29.2 | |||||||||
Overdue loans principal as a percentage of loan portfolio (excluding non-accrual loans) | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
Non-accrual loans as a percentage of loan portfolio | 0.15 | % | 0.35 | % | 0.38 | % | ||||||
Allowance for loan losses as a percentage of loan portfolio | 0.17 | % | 0.21 | % | 0.26 | % |
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Funding Strategy
CAF raises funds for operations primarily in the international financial markets, although a relatively small part is raised within its shareholder countries. CAF’s strategy with respect to funding, to the extent possible under prevailing market conditions, is to match the maturities of its liabilities to the maturities of its loan portfolio. In order to diversify CAF’s funding sources and to offer potential borrowers a wide range of credit facilities, it raises funds through bond issues in both the shareholder countries and the international capital markets. CAF also takes deposits and obtains loans and credit lines from central banks, commercial banks and, to the extent of imports related to projects funded by CAF, export credit agencies.
Within the shareholder countries, CAF raises funds from central banks and financial institutions and by means of regional bond issues. Outside Latin America and the Caribbean, it obtains 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.
Sources of Funded Debt
The breakdown of CAF’s outstanding funded debt, both within and outside the shareholder countries, at each of the dates indicated below, was as follows:
As of December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
(in USD millions) | ||||||||||||
Within the shareholder countries: | ||||||||||||
Deposits | 4,144.5 | 4,662.2 | 4,002.6 | |||||||||
Borrowings from other institutions | 28.7 | 27.6 | 30.8 | |||||||||
Bonds | 2,050.4 | 1,902.8 | 1,391.1 | |||||||||
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6,223.6 | 6,592.6 | 5,424.5 | ||||||||||
Outside the shareholder countries: | ||||||||||||
Deposits | — | — | — | |||||||||
Commercial papers | 4,653.5 | 4,618.8 | 2,813.6 | |||||||||
Borrowings from other institutions | 2,096.3 | 2,164.7 | 1,770.4 | |||||||||
Bonds | 24,197.9 | 22,413.2 | 23,196.5 | |||||||||
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30,947.7 | 29,196.7 | 27,780.6 | ||||||||||
Variation effect between spot and original FX rate | (556.5 | ) | (1,434.3 | ) | 746.2 | |||||||
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Fair value adjustments on hedging activities | (1,003.8 | ) | (1,742.0 | ) | 396.9 | |||||||
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Origination costs | (6.6 | ) | (5.7 | ) | (6.8 | ) | ||||||
|
|
|
|
|
| |||||||
Total | 35,605.1 | 32,607.4 | 34,341.4 | |||||||||
|
|
|
|
|
|
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Maturity of Funded Debt
The breakdown of CAF’s outstanding funded debt, by instrument and maturity, at each of the dates indicated below was as follows:
As of December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
(in USD millions) | ||||||||||||
Term deposits: | ||||||||||||
Up to 1 year | 4,144.5 | 4,662.2 | 4,002.6 | |||||||||
Acceptances, advances, and commercial paper and repurchase agreements: | ||||||||||||
Up to 1 year | 4,653.5 | 4,618.8 | 2,813.6 | |||||||||
Borrowings from other institutions: | ||||||||||||
Up to 1 year | 432.2 | 192.9 | 178.0 | |||||||||
Between 1 and 3 years | 621.0 | 832.5 | 636.8 | |||||||||
Between 3 and 5 years | 344.0 | 371.6 | 360.3 | |||||||||
More than 5 years | 727.8 | 795.3 | 626.0 | |||||||||
|
|
|
|
|
| |||||||
2,125.0 | 2,192.3 | 1,801.2 | ||||||||||
Bonds: | ||||||||||||
Up to 1 year | 3,331.9 | 4,781.8 | 3,944.5 | |||||||||
Between 1 and 3 years | 10,705.4 | 8,173.9 | 7,802.2 | |||||||||
Between 3 and 5 years | 7,576.1 | 6,256.1 | 8,044.6 | |||||||||
More than 5 years | 4,634.9 | 5,104.3 | 4,796.2 | |||||||||
|
|
|
|
|
| |||||||
26,248.3 | 24,316.1 | 24,587.6 | ||||||||||
Totals: | ||||||||||||
Up to 1 year | 12,562.1 | 14,255.1 | 10,938.7 | |||||||||
Between 1 and 3 years | 11,326.4 | 9,006.4 | 8,439.0 | |||||||||
Between 3 and 5 years | 7,921.1 | 6,627.7 | 8,404.9 | |||||||||
More than 5 years | 5,362.7 | 5,899.6 | 5,422.2 | |||||||||
|
|
|
|
|
| |||||||
37,172.3 | 35,789.4 | 33,204.8 | ||||||||||
Variation effect between spot and original FX rate | (556.5 | ) | (1,434.3 | ) | 746.2 | |||||||
Fair value adjustments on hedging activities | (1,003.0 | ) | (1,742.0 | ) | 396.9 | |||||||
Originating costs | (6.6 | ) | (5.7 | ) | (6.8 | ) | ||||||
|
|
|
|
|
| |||||||
Total | 35,606.0 | 32,607.4 | 34,341.1 | |||||||||
|
|
|
|
|
|
CAF’s financial liabilities are primarily U.S. dollar-based: 40.6% of CAF’s total financial liabilities, or 95.8% of financial liabilities after swaps, were denominated in U.S. dollars as of December 31, 2023.
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The principal amount of non-U.S. dollar financial liabilities outstanding as of December 31, 2023 included:
8,423.9 million Euros |
188,100.0 million Japanese Yen |
2,625.0 million Swiss Francs |
1,462.0 billion Colombian Pesos |
4,535.0 million Hong Kong Dollars |
23,912.7 million Mexican Pesos |
4,800.0 million Norwegian Kroner |
1,884.9 million Australian Dollars |
40.0 million Canadian dollars |
1,067.1 million Brazilian Reales |
2,025.0 million Turkish Lira |
5,359.4 million Uruguayan Pesos |
34.3 million Bolivian Bolivianos |
93.1 million New Zealand Dollars |
52,990.0 million Costa Rican Colon |
250.0 million Czech Koruna |
270.5 million Polish Zloty |
72.4 million Paraguayan Guarani |
All of these non-U.S. dollar financial liabilities are swapped or otherwise hedged into U.S. dollars
CAF has never had an event of default declared with respect to the payment of principal of, or premium or interest on, any debt security it has issued, and has always met all of its debt obligations on a timely basis.
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ASSET AND LIABILITY MANAGEMENT
CAF reduces its sensitivity to interest rate risk by extending its loans on a floating rather than a fixed interest rate basis. As of December 31, 2023, 22.1% of CAF’s outstanding loans were based on LIBOR and 77.9% based on Term SOFR and subject to interest rate adjustments at least every six months. The liabilities that fund these loans are also contracted at, or swapped into, SOFR floating interest rates. When CAF makes loans at fixed interest rates, it also obtains the corresponding funding on a fixed interest rate basis.
CAF requires that counterparties with which it enters 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 the time of entering into the swap agreement. As of December 31, 2023, CAF was party to swap agreements with an aggregate notional amount of USD 29.5 billion.
CAF seeks, to the extent possible under prevailing market conditions, to match the maturities of its liabilities to the maturities of its loan portfolio. As of December 31, 2023, the weighted average life of CAF’s financial assets was 4.4 years, and the weighted average life of its financial liabilities was 3.6 years.
CAF’s management expects the weighted average life of CAF’s financial assets to increase gradually, as it makes more long-term loans for infrastructure development and similar purposes. At the same time, CAF’s management expects that the weighted average life of its liabilities will also increase as a result of its strategy of increasing its presence in the international long-term bond market as market conditions permit.
As of December 31, 2023, 99.1% of CAF’s assets and 40.6% of its liabilities were denominated in U.S. dollars, with the remainder of its liabilities being denominated principally in Euro, Yen, Hong Kong Dollar, Australian Dollar, Norwegian Kroner, Turkish Lire, South African Rand and Swiss Francs, which liabilities were swapped. After swaps, 95.8% of CAF’s liabilities were denominated in U.S. dollars as of December 31, 2023. Generally, funding that is contracted in currencies other than the U.S. dollar is swapped into U.S. dollars. In some cases, CAF extends its loans in the same non-U.S. dollar currencies as debt is incurred in order to minimize exchange risks. CAF’s shareholders’ equity is denominated entirely in U.S. dollars.
CAF’s 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. CAF’s external asset managers use derivatives to hedge the interest and exchange rate risk exposures of its non-U.S. dollar denominated investments. CAF’s policy is that its total exposure on trade derivatives should not exceed 3% of liquid investments. See Note 17 to CAF’s audited financial statements included elsewhere in this prospectus.
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CAF is governed and administered by the bodies and officials detailed below:
Shareholders’ Assembly
The Shareholders’ Assembly is the ultimate decision-making body within CAF. Shareholders’ Assemblies can be ordinary or extraordinary and are governed by the requirement for the presence of a quorum of at least 80% Series “A” shareholders and a simple majority of the other shareholders, and compliance with other conditions set out in the Constitutive Agreement.
Ordinary Shareholders’ Assembly meetings are held once a year, within 90 days of the close of the financial year, and are convened by the Executive President. In ordinary meetings the Shareholders’ Assembly:
• | considers the Board of Directors’ annual report and CAF’s financial statements, receives the independent auditors’ report, and allocates its net income; |
• | constitutes special funds for particular purposes; |
• | elects the Board of Directors according to the Constitutive Agreement; |
• | appoints external auditors; |
• | determines compensation for the Board of Directors and the external auditors; and |
• | may consider any other matter expressly submitted to it which is not within the purview of any other body of CAF. |
Extraordinary Shareholders’ Assembly 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. In extraordinary meetings the Shareholders’ Assembly may:
• | increase, reduce or replenish CAF’s capital in accordance with the Constitutive Agreement; |
• | dissolve CAF; |
• | change the headquarters of CAF when the Board of Directors so proposes; and |
• | consider any other matter that has been expressly submitted to it that is not within the purview of any other body of CAF. |
Resolutions presented at ordinary meetings of the Shareholders’ Assembly 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 presented at extraordinary meetings of the Shareholders’ Assembly (including a decision to dissolve CAF) are passed by 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, which require the affirmative vote of all Series “A” shareholders and a majority of the votes of the other shares represented at the meeting. In the event of adjournment for lack of a quorum, 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
The Board of Directors is composed of 23 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
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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 the Board of Directors include:
• | establishing and directing CAF’s credit and economic policies; |
• | approving CAF’s budget; |
• | approving CAF’s borrowing limits; |
• | approving credits granted by CAF in excess of a specified limit; |
• | establishing or modifying internal regulations; and |
• | appointing the Executive President. |
As of the date of this prospectus, the Directors (and their Alternates) representing Series “A” shareholders are:
Argentina | Pablo Quirno (Matias Mana) | Secretary of Finance, Ministry of Economy (Subsecretary of International Financial Relations for Development) | ||
Bolivia | Sergio Cusicanqui (Antonio Mullisaca) | Minister of Development Planning (Vice Minister of Public Investment and External Financing) | ||
Brazil | Renata Vargas Amaral
(João Luís Rossi) | Secretary for International Affairs and Development, Ministry of Planning and Budget (Director of International Organizations and Development, Ministry of Planning and Budget) | ||
Chile | Mario Marcel Cullel (Heidi Berner) | Minister of Finance (Deputy Secretary of Finance) | ||
Colombia | Ricardo Bonilla (To be appointed) | Minister of Finance and Public Credit (Technical Vice-Minister-Ministry of Finance and Public Credit) | ||
Dominican Republic | José Manuel Vicente (María José Martínez) | Minister of Finance (Vice-Minister of Public Credit) | ||
Ecuador | Nelson Iván Andrade
(Virna Rossi Flores) | President of the Board of Directors of Corporación Financiera Nacional (General Manager of Corporación Financiera Nacional) | ||
El Salvador | Jerson Posada (Luis Enrique Sánchez Castro) | Minister of Finance (Vice-Minister of Finance) | ||
Honduras | Marlon Ochoa (Orlando Garner) | Secretary of Finance (Director Manager of Public Credit) | ||
Panama | Héctor Alexander (Javier Carrizo) | Minister of Economy and Finance (General Manager Banco Nacional de Panamá) |
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Paraguay | Carlos Fernández (Carlos Charotti) | Minister of Finance (Vice-Minister of Economy) | ||
Perú | José Arista (Betty Sotelo) | Minister of Economy and Finance (Vice-Minister of Finance) | ||
Trinidad and Tobago | Colm Imbert (Alvin Hilaire) | Minister of Finance (Governor of the Central Bank of Trinidad and Tobago) | ||
Uruguay | Azucena Arbeleche (Diego Labat) | Minister of Economy and Finance (President of Banco Central del Uruguay) | ||
Venezuela | José Felix Rivas (Román Maniglia) | Head of the National Office of Public Credit (President Banco de Venezuela) |
As of the date of this prospectus, the Directors (and their Alternates) representing Series “B” shareholders are:
Bolivia | Marcelo Montenegro Gómez (Juana Jiménez Soto) | Minister of Economy and Public Finance (Vice Minister of Treasury and Public Credit) | ||
Colombia | Luis Carlos Reyes
(Alexander Lopez Maya) | Minister of Commerce, Industry and Tourism (General Manager Department of Planning) | ||
Ecuador | Juan Carlos Vega (Tatiana Rodríguez) | Minister of Economy and Finance (President of Monetary and Regulation Board) | ||
Peru | Jorge Velarde
(Carlos Alberto Gonzalez) | President of the Board of Directors of Corporación Financiera de Desarrollo (COFIDE) (Vice-Minister of Economy) | ||
Venezuela | Héctor Obregon
(Luis Peréz González) | Vice-Minister of Digital Economy, Banking Insurance and Assets (Executive Vice President of Banco de Desarrollo Económico y Social of Venezuela — BANDES) | ||
Private Financial Institutions | Javier Suárez Esparragoza (Roberto Gónzalez) | President of Banco Davivienda S.A. (Executive President Banco del Pacifico) |
As of the date of this prospectus, the directors representing the Series “C” shareholders are Carlos Cuerpo, Minister of Economy and Enterprise of Spain and Rogelio Ramírez de la O, Secretary of Finance and Public Credit of Mexico. Their alternates are Róger Madrigal López, President of the Central Bank of Costa Rica, and Ryan Straughn, Minister of Finance and Economic Affairs of Barbados, respectively.
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.
The Board of Directors annually elects a Chairman to preside over the meetings of the Board of Directors and the Shareholders’ Assembly. José Manuel Vicente is the current Chairman until March 31, 2025.
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Executive President
The Executive President is CAF’s legal representative and chief executive officer. He is empowered to decide all matters not expressly reserved to the Shareholders’ Assembly and the Board of Directors. The Executive President is elected by the Board of Directors for a period of five years and may be re-elected.
In accordance with the procedures established in the Constitutive Agreement, on April 10, 2021, Mr. Renny Lopez was designated as the interim Executive President. Mr. Renny Lopez remained in such position until Mr. Sergio Diaz-Granados assumed as Executive President for the next five year period (September 2021 to August 2026), following the appointment made by the Board of Directors on July 5, 2021. In September, 2021 Mr. Diaz-Granados decided to move CAF’s executive presidency to Panama.
Officers
As of the date of this prospectus, the Executive Officers of CAF are:
Sergio Diaz-Granados | Executive President | |
Gianpiero Leoncini | Executive Vice President | |
Christian Asinelli | Corporate Strategic Programming Vice President | |
Antonio Silveira | Acting Vice President of Private Sector | |
Gabriel Felpeto | Vice President of Finance and Chief Financial Officer | |
Jorge Silva | General Counsel | |
Alejandra Claros | General Secretary | |
Iván Haas | General Auditor |
Employees
As of June 30, 2024, CAF employs 862 professionals. The senior positions of Executive Vice President, Vice President of Finance, Corporate Strategic Programming Vice President, and Vice President of Private Sector are appointed by the Executive President, subject to ratification by the Board of Directors.
CAF’s management believes that the salaries and other benefits of CAF’s professional staff are competitive and that the local support staff is paid at levels above the prevailing local rates. Although CAF is not subject to local labor laws, it provides its employees with benefits and safeguards at least equivalent to those required under the law of the country where they normally work and reside. CAF offers technical and professional training opportunities through courses and seminars for its employees. CAF’s management considers the relationship with its employees to be good. There is no employee union and there have been no strikes in the history of CAF.
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THE FULL MEMBER SHAREHOLDER COUNTRIES
Certain of the following information has been extracted from publicly available sources. CAF has not independently verified this information. 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 13.2 million square kilometers in South America (approximately 74% of the South American continent).
Selected Demographic and Economic Data(3)
The following table presents selected demographic and economic data for the full member shareholder countries for the years indicated:
Argentina | Bolivia | Brazil | Chile | Colombia | Ecuador | El Salvador | Panama | Paraguay | Peru | Trinidad and Tobago | Uruguay | Venezuela | ||||||||||||||||||||||||||||||||||||||||
Population (in millions)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 46.23 | 12.22 | 215.31 | 19.6 | 51.87 | 18 | 6.34 | 4.41 | 6.78 | 34.05 | 1.53 | 3.43 | 28.3 | |||||||||||||||||||||||||||||||||||||||
2021 | 45.81 | 12.08 | 214.33 | 19.49 | 51.52 | 17.8 | 6.31 | 4.35 | 6.7 | 33.72 | 1.53 | 3.43 | 28.2 | |||||||||||||||||||||||||||||||||||||||
2020 | 45.38 | 11.94 | 213.2 | 19.3 | 50.93 | 17.59 | 6.29 | 4.29 | 6.62 | 33.3 | 1.52 | 3.43 | 28.49 | |||||||||||||||||||||||||||||||||||||||
2019 | 44.94 | 11.78 | 211.78 | 19.04 | 50.19 | 17.34 | 6.28 | 4.23 | 6.53 | 32.82 | 1.52 | 3.43 | 28.97 | |||||||||||||||||||||||||||||||||||||||
GDP (USD in billions)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 632.77 | 43.07 | 1,920.1 | 301.03 | 343.94 | 115.05 | 32.49 | 17.358 | 41.72 | 242.63 | 27.9 | 20.795 | 93.11 | (2) | ||||||||||||||||||||||||||||||||||||||
2021 | 487.23 | 40.41 | 1,649.62 | 316.71 | 318.51 | 106.17 | 29.45 | 15.491 | 39.95 | 223.72 | 24.46 | 17.924 | 57.14 | (2) | ||||||||||||||||||||||||||||||||||||||
2020 | 385.54 | 36.63 | 1,476.11 | 254.1 | 270.15 | 99.29 | 24.93 | 13.293 | 35.43 | 201.95 | 21.06 | 15.65 | 43.78 | (2) | ||||||||||||||||||||||||||||||||||||||
2019 | 447.75 | 40.9 | 1,873.29 | 278.49 | 323.03 | 108.11 | 26.88 | 16.473 | 37.93 | 228.33 | 23.85 | 18.098 | 73 | (2) | ||||||||||||||||||||||||||||||||||||||
GDP per capita (USD) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 13,686 | 3,523 | 8,918 | 15,356 | 6,630 | 6,391 | 5,127 | 17,358 | 6,153 | 7,126 | 18,222 | 20,795 | 3,459 | (2) | ||||||||||||||||||||||||||||||||||||||
2021 | 10,636 | 3,345 | 7,697 | 16,247 | 6,183 | 5,965 | 4,664 | 15,491 | 5,959 | 6,635 | 16,033 | 17,924 | 2,071 | (2) | ||||||||||||||||||||||||||||||||||||||
2020 | 8,496 | 3,069 | 6,924 | 13,165 | 5,304 | 5,645 | 3,962 | 13,293 | 5,353 | 6,064 | 13,872 | 15,650 | 1,566 | (2) | ||||||||||||||||||||||||||||||||||||||
2019 | 9,964 | 3,472 | 8,845 | 14,627 | 6,437 | 6,233 | 4,280 | 16,473 | 5,808 | 6,956 | 15,691 | 18,098 | 2,624 | (2) | ||||||||||||||||||||||||||||||||||||||
Gross reserves (excluding gold) (USD in millions)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 41,198 | 1,275 | 317,119 | 39,088 | 56,432 | 6,491 | N/A | 6,876 | 9,041 | N/A | 6,719 | 15,121 | 5,989 | (4) | ||||||||||||||||||||||||||||||||||||||
2021 | 36,448 | 2,242 | 354,623 | 51,238 | 57,745 | 6,083 | 3,346 | 8,832 | 9,182 | N/A | 6,766 | 16,957 | 6,323 | (4) | ||||||||||||||||||||||||||||||||||||||
2020 | 35,650 | 2,662 | 351,519 | 39,151 | 58,248 | 5,236 | 2,999 | 9,614 | 8,704 | 72,671 | 6,836 | 16,244 | 1,286 | (4) | ||||||||||||||||||||||||||||||||||||||
2019 | 42,193 | 4,374 | 353,588 | 40,643 | 51,973 | 1,865 | 4,379 | 3,423 | 7,316 | 66,014 | 6,834 | 14,499 | 1,841 | (4) | ||||||||||||||||||||||||||||||||||||||
Customer price index growth | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 94.79 | 3.13 | 5.79 | 12.77 | 13.11 | 3.74 | 7.32 | 2.08 | 8.12 | 8.46 | 8.74 | 8.29 | 310 | |||||||||||||||||||||||||||||||||||||||
2021 | 50.94 | 0.9 | 10.06 | 7.14 | 5.61 | 1.94 | 6.11 | 2.62 | 6.83 | 6.43 | 3.47 | 7.97 | 656 | |||||||||||||||||||||||||||||||||||||||
2020 | 36.14 | 0.67 | 4.52 | 2.93 | 1.59 | -0.93 | -0.08 | -1.58 | 2.17 | 1.97 | 0.83 | 9.4 | 2,960 | |||||||||||||||||||||||||||||||||||||||
2019 | 53.83 | 1.47 | 4.31 | 2.95 | 3.76 | -0.07 | -0.01 | -0.06 | 2.81 | 1.9 | 0.37 | 8.8 | 9,585 | |||||||||||||||||||||||||||||||||||||||
Exports of Goods (f.o.b.) (USD in millions)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 88,515 | 13,528 | 340,328 | 98,584 | 59,764 | 33,451 | 5,723 | N/A | 12,815 | 66,235 | N/A | 17,156 | 4,762 | (3) | ||||||||||||||||||||||||||||||||||||||
2021 | 77,987 | 10,966 | 284,012 | 94,774 | 42,736 | 27,236 | 5,151 | 16,690 | 13,223 | 62,967 | 11,082 | 15,700 | 3,596 | (3) | ||||||||||||||||||||||||||||||||||||||
2020 | 54,946 | 7,013 | 210,707 | 74,024 | 32,309 | 20,591 | 3,920 | 11,601 | 10,955 | 42,826 | 6,003 | 10,057 | 4,846 | (3) | ||||||||||||||||||||||||||||||||||||||
2019 | 65,162 | 8,828 | 225,800 | 68,792 | 40,656 | 22,774 | 4,748 | 14,645 | 12,116 | 47,980 | 8,764 | 11,865 | 17,016 | (3) | ||||||||||||||||||||||||||||||||||||||
Import of Goods (f.o.b.) (USD in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 76,163 | 11,859 | 296,175 | 94,741 | 71,582 | 30,489 | 15,292 | N/A | 14,725 | 55,902 | N/A | 13,615 | 10,856 | (3) | ||||||||||||||||||||||||||||||||||||||
2021 | 59,291 | 8,740 | 247,648 | 84,304 | 56,719 | 23,975 | 13,160 | 20,281 | 12,594 | 47,990 | 6,370 | 11,211 | 8,299 | (3) | ||||||||||||||||||||||||||||||||||||||
2020 | 40,315 | 6,334 | 178,337 | 55,108 | 41,179 | 17,092 | 8,945 | 14,402 | 9,729 | 34,724 | 5,019 | 7,904 | 6,806 | (3) | ||||||||||||||||||||||||||||||||||||||
2019 | 46,928 | 9,086 | 199,253 | 65,776 | 50,518 | 21,747 | 10,457 | 22,178 | 11,913 | 41,101 | 6,032 | 8,753 | 6,178 | (3) |
1 | Source: World Development Indicators, World Bank, 2023 |
2 | Source: World Economic Outlook, International Monetary Fund, April 2023 |
3 | Source: Trademap. Mirror data |
4 | Source: CAF calculations based on Central Bank of Venezuela |
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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 the direct, unconditional, unsecured, and general obligations of CAF. The debt securities will rank equally with all of CAF’s other unsecured Indebtedness, other than such obligations as may be preferred by provisions of law that are both mandatory and of general application. “Indebtedness” means all of CAF’s indebtedness in respect of monies borrowed by CAF and guarantees given by it for monies borrowed by others.
The accompanying prospectus supplement will describe the following terms of the debt securities, as applicable:
• | the title; |
• | the price or prices at which CAF will issue the debt securities; |
• | any limit on the aggregate principal amount of the debt securities or the series of which they are a part; |
• | the currency or currency units for which the debt securities may be purchased and in which payments of principal and interest will be made; |
• | the date or dates on which principal and interest will be payable; |
• | 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; |
• | the place or places where principal and interest payments will be made; |
• | the time and price limitations on redemption of the debt securities; |
• | CAF’s obligation, if any, to redeem or purchase the debt securities at the option of the holder; |
• | the denominations in which any of the debt securities will be issuable, if other than denominations of USD 1,000; |
• | 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; |
• | whether and under what circumstances CAF will issue the debt securities as global debt securities; and |
• | any other specific terms of the debt securities. |
Certain debt securities will be treated for U.S. federal income tax purposes as having been issued with original issue discount (“Discount Securities”) 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 U.S. federal income tax
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purposes). See “Taxation — United States Taxation” for more information regarding the U.S. federal income tax consequences of the ownership and disposition of Discount Securities. If applicable, the prospectus supplement also may describe certain U.S. federal income tax considerations that may be relevant to a beneficial owner of Discount Securities and any other 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 USD 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, CAF will appoint a transfer agent in Luxembourg, which it anticipates being the same entity that serves as CAF’s Luxembourg paying agent. In such circumstances, transfers or exchanges of any definitive notes may be made at the office of CAF’s Luxembourg transfer agent (in addition to the corporate trust office of the fiscal agent).
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:
• | registered in the name of a depositary or its nominee identified in the prospectus supplement; |
• | deposited with the depositary or nominee or the depositary’s custodian; and |
• | 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, CAF will make payments of principal and interest on debt securities:
• | through the fiscal agent; |
• | 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 |
• | at the office of the paying agent or agents designated by us; unless |
• | at CAF’s option, payment is mailed to the registered holder, or |
• | at the request of a registered holder of more than USD 1,000,000 principal amount of the securities, payment is made by wire transfer. |
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Unless otherwise indicated in the prospectus supplement, CAF’s 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 CAF pays to its 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 CAF by such agent. Upon such repayment, all liability of CAF’s fiscal agent or any paying agent with respect to such monies shall thereupon cease, without, however, limiting in any way CAF’s 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, CAF will not cause or permit to be created on any of CAF’s 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 CAF for money borrowed (other than purchase money mortgages, pledges or liens on property purchased by it 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:
• | 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; |
• | 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; |
• | a failure to pay any amount in excess of USD 100,000,000 (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 |
• | the acceleration of any indebtedness incurred or assumed by CAF with an aggregate principal amount in excess of USD 100,000,000 (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.
Redemption for Tax Reasons
The debt securities may be redeemed at CAF’s option in whole, but not in part:
(i) at any time (if floating rate note provisions are not specified in the accompanying prospectus supplement as being applicable); or
(ii) on any interest payment date (if floating rate note provisions are specified in the accompanying prospectus supplement as being applicable),
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on giving not less than 30 nor more than 60 days’ notice to the holders of the debt securities (which notice shall be irrevocable), at the principal amount of such debt securities or such other amount as may be specified in, or determined in accordance with, the accompanying pricing supplement, together with interest accrued (if any) to the date fixed for redemption, if:
(A) | CAF has or will become obliged to pay additional amounts as provided or referred to in “— Additional Payments by CAF” as a result of any change in, or amendment to, the laws or regulations of any of the full member shareholder countries or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after the date of issue of the first tranche of the debt securities; and |
(B) | such obligation cannot be avoided by CAF taking reasonable measures available to us, |
provided, however, that no such notice of redemption shall be given earlier than:
(1) | where the debt securities may be redeemed at any time, 90 days prior to the earliest date on which CAF would be obliged to pay such additional amounts if a payment in respect of the debt securities were then due; or |
(2) | where the debt securities may be redeemed only on an interest payment date, 60 days prior to the interest payment date occurring immediately before the earliest date on which CAF would be obliged to pay such additional amounts if a payment in respect of the debt securities were then due. |
Prior to the publication of any notice of redemption pursuant to this section, CAF shall deliver to the fiscal agent (A) a certificate signed by two authorized officers of CAF stating that it is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of CAF so to redeem have occurred and (B) an opinion of independent legal advisers of recognized standing to the effect that CAF has or will become obliged to pay such additional amounts as a result of such change or amendment. Upon the expiration of any such notice as is referred to in this section, CAF shall be bound to redeem the debt securities in accordance with this section.
Additional Payments by CAF
All payments of principal and interest in respect of the debt securities by or on behalf of CAF 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, levied, collected, withheld or assessed by or on behalf of any of the full member shareholder countries or any political subdivision therein or any authority 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, CAF will pay such additional amounts as will result in receipt by the holder of debt securities after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable in respect of any debt securities presented for payment:
• | by or 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 having some connection with any of the full member shareholder countries other than the mere holding of the debt security; or |
• | if such withholding or deduction may be avoided by a holder of a debt security of any series complying with a request of CAF relating to any certification, identification or other reporting concerning its nationality, residence, identity or connection with any full member shareholder country if the holder is legally able to comply with the request and CAF has provided the notice in writing at least 60 days before such information is required to be provided by the holder; or |
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• | more than 30 days after the Relevant Date, except to the extent that the holder of such debt security of any series would have been entitled to such additional amounts on presenting such debt security for payment on the last day of such period of 30 days; or |
• | any estate, inheritance, gift, sale, transfer, personal property or similar taxes, duties, assessments, or governmental charges; or |
• | any taxes, duties, assessments, or governmental charges which are payable otherwise than by deduction or withholding from payments made under or with respect to the debt security; or |
• | any taxes, duties, assessments, or governmental charges that were imposed with respect to any payment on a note to any person who is a fiduciary or partnership or person other than the sole beneficial owner of such payment to the extent that no additional amounts would have been payable had the beneficial owner of the applicable note been the holder of such debt security; or |
• | if such withholding or deduction is imposed or required pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code. |
Any reference in this section to principal or interest shall be deemed to include any additional amounts in respect of principal or interest (as the case may be) which may be payable under this section.
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:
• | change the due date of the principal of or interest on any series of debt securities; or |
• | reduce the principal amount, interest rate, or amount payable upon acceleration of the due date of the debt securities of a series; or |
• | change the currency or place of payment of principal of or interest on the debt securities of a series; or |
• | 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 |
• | change CAF’s obligation to pay additional amounts. |
CAF may, however, with the written consent of the holders of 66 2/3% 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, CAF 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:
• | adding to CAF’s covenants for the benefit of the holders of the debt securities; or |
• | surrendering any right or power conferred on CAF; or |
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• | securing the debt securities of that series; or |
• | curing any ambiguity or correcting or supplementing any defective provision of the fiscal agency agreement or the debt securities; or |
• | for any purpose that CAF deems 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
CAF 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, provided that any new debt securities would be treated as fungible with the original debt securities for United States federal income tax purposes. If such additional notes are not fungible with the original debt securities for United States federal income tax purposes, the additional notes will be issued under a separate CUSIP number.
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. CAF 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. CAF will appoint CT Corporation in The City of New York as its authorized agent upon which process in any such action may be served. CAF will irrevocably waive any immunity to which it 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 CAF’s waiver of immunity will not extend to such actions.
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From time to time CAF 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 CAF. A holder of a primary security will also have the benefit of CAF’s 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.
CAF 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 CAF’s other unsecured general debt obligations, other than such obligations as may be preferred by provisions of law that are both mandatory and of general application, and will be governed by the laws of the State of New York.
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Full Member Shareholder Country Taxation
Under the terms of the Constitutive Agreement, CAF is exempt from all types of taxes levied by each of the full member shareholder countries on CAF’s income, property, and other assets, and on operations CAF carries out in accordance with that treaty, and it is 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, CAF has 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
The following is a summary of certain U.S. federal income tax consequences of the acquisition, ownership, and disposition by a U.S. Holder (as defined below) of the debt securities CAF is offering. This summary does not address the material U.S. federal income tax consequences of every type of debt security which may be issued, and the relevant prospectus supplement with the terms of the securities in that offering will contain additional or modified disclosure concerning the material U.S. federal income tax consequences relevant to such type of debt security as appropriate. This summary deals only with U.S. Holders that will hold debt securities as capital assets. The discussion does not cover all aspects of U.S. federal income taxation such as the Medicare contribution tax on net investment income that may be relevant to, or the actual tax effect that any of the matters described herein will have on, the acquisition, ownership or disposition of the debt securities by particular investors, and does not address state, local, non-U.S. or tax laws other than U.S. federal income tax law. In particular, this summary does not discuss all of the tax considerations that may be relevant to certain types of investors subject to special treatment under the U.S. federal income tax laws (such as partnerships or other pass-through entities, financial institutions, insurance companies, investors liable for any alternative minimum tax, investors subject to special tax accounting rules as a result of any item of gross income with respect to debt securities being taken into account in an applicable financial statement, individual retirement accounts and other tax-deferred accounts, tax-exempt organizations, dealers in securities or currencies, investors that will hold the debt securities as part of straddles, wash sales, hedging transactions or conversion transactions for U.S. federal income tax purposes, U.S. Holders whose functional currency is not the U.S. dollar or persons holding debt securities in connection with a trade or business conducted outside the United States).
Moreover, this summary deals only with debt securities with a term of 30 years or less. The U.S. federal income tax consequences of owning debt securities with a longer term will be discussed in an applicable prospectus supplement.
The following summary does not discuss debt securities characterized as contingent payment debt instruments for U.S. federal income tax purposes. In the event CAF issue any such debt securities, the applicable prospectus supplement will describe the material U.S. federal income tax consequences thereof.
As used herein, the term “U.S. Holder” means a beneficial owner of debt securities that is, for U.S. federal income tax purposes, (i) a citizen or individual resident of the United States, (ii) a corporation, or other entity treated as a corporation, created or organized under the laws of the United States, any State thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a U.S. court can exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or the trust has elected to be treated as a domestic trust for U.S. federal income tax purposes.
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If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds debt securities, the U.S. federal income tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. A U.S. investor that is an entity treated as a partnership for U.S. federal income tax purposes holding debt securities should consult its own tax advisors concerning the U.S. federal income tax consequences to it and its partners of the acquisition, ownership, and disposition of debt securities by the partnership.
This summary is based on the tax laws of the United States including the United States Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed Treasury Regulations thereunder, published rulings and court decisions, all as of the date hereof and all subject to change at any time, possibly with retroactive effect.
The discussion assumed that debt securities will be issued only in registered form.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET OUT BELOW IS FOR GENERAL INFORMATION ONLY. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING THE DEBT SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS AND POSSIBLE CHANGES IN TAX LAW.
Characterization of the Debt Securities
Whether a debt security is treated as debt (and not equity) for U.S. federal income tax purposes is an inherently factual question and no single factor is determinative. Unless otherwise set forth in an applicable prospectus supplement, CAF believes that the debt securities will be treated as indebtedness for U.S. federal income tax purposes, although no opinions have been sought, and no assurances can be given, with respect to such treatment. The following discussion assumes that such treatment will be respected.
Payments of Interest
Interest on a debt security, whether payable in U.S. dollars or a currency, composite currency or basket of currencies other than U.S. dollars (a “foreign currency”), other than interest on a “Discount Security” that is not “qualified stated interest” (each as defined below under “— Original Issue Discount — General”), will be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, depending on the U.S. Holder’s method of accounting for U.S. federal income tax purposes. Interest paid by CAF on the debt security and original issue discount, if any, accrued with respect to the debt securities (as described below under “Original Issue Discount”) and any additional amounts paid with respect to withholding tax on such debt securities, including withholding tax on payments of such additional amounts will constitute income from sources outside the United States for foreign tax credit purposes.
In the event any foreign withholding tax is imposed, subject to certain limitations, a U.S. Holder will generally be entitled to a credit against its U.S. federal income tax liability, or a deduction in computing its U.S. federal taxable income, for foreign withholding taxes withheld by CAF (paid at the rate applicable to a U.S. Holder). Interest and OID will constitute foreign source income. For purposes of the foreign tax credit limitation, foreign source income is classified as belonging to a specified “basket”, and the credit for foreign taxes on income in any basket is limited to U.S. federal income tax allocable to that basket. Interest on the debt securities will generally be passive category income. There are additional significant and complex limits on a U.S. Holder’s ability to claim foreign tax credits, and certain U.S. Treasury regulations that apply to foreign income taxes paid or accrued in taxable years beginning on or after December 28, 2021 further restrict the availability of any such credit based on the nature of the tax imposed by the foreign jurisdiction (although Notice 2023-55 (as extended by the recent Notice 2023-80) provides temporary relief from the application of certain aspects of these regulations for taxable years ending on or before date that a notice or other guidance withdrawing or modifying the temporary relief is issued). U.S. Holders should consult their tax advisors concerning foreign tax credits.
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Original Issue Discount
General. The following is a summary of certain U.S. federal income tax consequences of the ownership of debt securities issued with original issue discount (“OID”).
A debt security, other than a debt security with a term of one year or less (a “Short-Term Security”), will be treated as issued with OID (a “Discount Security”) if the amount by which the debt security’s “stated redemption price at maturity” exceeds its issue price is equal to or greater than a de minimis amount (0.25% of the debt security’s stated redemption price at maturity multiplied by the number of complete years to its maturity). A debt security that provides for the payment of amounts other than qualified stated interest before maturity (an “installment obligation”) will be treated as a Discount Security if the excess of the debt security’s stated redemption price at maturity over its issue price is equal to or greater than 0.25% of the debt security’s stated redemption price at maturity multiplied by the weighted average maturity of the debt security. A debt security’s weighted average maturity is the sum of the following amounts determined for each payment on a debt security (other than a payment of qualified stated interest): (i) the number of complete years from the issue date until the payment is made multiplied by (ii) a fraction, the numerator of which is the amount of the payment and the denominator of which is the debt security’s stated redemption price at maturity. Generally, the issue price of a debt security will be the first price at which a substantial amount of debt securities included in the issue of which the debt security is a part is sold to persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers. The stated redemption price at maturity of a debt security is the total of all payments provided by the debt security that are not payments of “qualified stated interest”. A qualified stated interest payment is generally any one of a series of stated interest payments on a debt security that are unconditionally payable in cash or in property (other than debt instruments of the issuer) at least annually at a single fixed rate (with certain exceptions for different rates that take into account different compounding periods), or a variable rate (in the circumstances described below under “— Variable Interest Rate Securities”), applied to the outstanding principal amount of the debt security. Solely for the purposes of determining whether a debt security has OID, CAF will be deemed to exercise any unconditional call option that has the effect of decreasing the yield on the debt security, and the U.S. Holder will be deemed to exercise any unconditional put option that has the effect of increasing the yield on the debt security.
U.S. Holders of Discount Securities (regardless of their method of accounting) must include OID in income as it accrues, using a constant-yield method generally before the receipt of cash attributable to the income, and generally will have to include in income increasingly greater amounts of OID over the life of the Discount Securities. The amount of OID includible in income by a U.S. Holder of a Discount Security is the sum of the daily portions of OID with respect to the Discount Security for each day during the taxable year or portion of the taxable year on which the U.S. Holder holds the Discount Security (“accrued OID”). The daily portion is determined by allocating to each day in any “accrual period” a pro rata portion of the OID allocable to that accrual period. Accrual periods with respect to a Discount Security may be of any length and may vary in length over the term of the Discount Security as long as (i) no accrual period is longer than one year and (ii) each scheduled payment of interest or principal on the Discount Security occurs on either the first or final day of an accrual period. The amount of OID allocable to an accrual period equals the excess of (a) the product of the Discount Security’s adjusted issue price at the beginning of the accrual period and the Discount Security’s yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of each accrual period) over (b) the sum of the payments of qualified stated interest on the Discount Security allocable to the accrual period. The “adjusted issue price” of a Discount Security at the beginning of any accrual period is the issue price of the Discount Security increased by (x) the amount of accrued OID for each prior accrual period and decreased by (y) the amount of any payments previously made on the Discount Security that were not qualified stated interest payments.
The amount of OID allocable to the final accrual period is equal to the difference between: (i) the amount payable at the maturity of a debt security, other than any payment of qualified stated interest, and (ii) the debt security’s adjusted issue price as of the beginning of the final accrual period.
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Acquisition Premium. A U.S. Holder that purchases a Discount Security for an amount less than or equal to the sum of all amounts, other than qualified stated interest, payable on the Discount Security after the purchase date, but in excess of its adjusted issue price (any such excess being “acquisition premium”) and that does not make the election described below under “— Election to Treat All Interest as Original Issue Discount”, is permitted to reduce the daily portions of OID by a fraction equal to the excess of the U.S. Holder’s adjusted basis in the Discount Security immediately after its purchase over the debt security’s adjusted issue price divided by the excess of the sum of all amounts payable on the Discount Security after the purchase date, other than payments of qualified stated interest, over the Discount Security’s adjusted issue price.
Election to Treat All Interest as Original Issue Discount. A U.S. Holder may elect to include in gross income all interest that accrues on a debt security using the constant-yield method described above under “— General”, with certain modifications. For purposes of this election, interest includes stated interest, acquisition discount OID, de minimis OID, market discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond premium (described below under “— Debt Securities Purchased at a Premium”) or acquisition premium. Generally, this election will apply only to the debt security with respect to which it is made and may not be revoked without the consent of the U.S. Internal Revenue Service (“IRS”). If this election is made with respect to a debt security that has amortizable bond premium, the electing U.S. Holder will be treated as having made the election discussed below under “— Debt Securities Purchased at a Premium” to apply amortizable bond premium against interest for all debt instruments with amortizable bond premium, other than debt instruments the interest on which is excludible from gross income, that the U.S. Holder held as of the beginning of the taxable year to which the election applies or acquired in any taxable year thereafter. If this election is made with respect to a Market Discount Security (as defined below), the electing U.S. Holder will be treated as having made the election discussed below under “— Market Discount” to include market discount in income currently over the life of all debt instruments having market discount that are acquired on or after the first day of the first taxable year to which the election applies. U.S. Holders should consult their tax advisors concerning the propriety and consequences of this election.
Variable Interest Rate Securities. It is expected that debt securities that provide for interest at variable rates (“Variable Interest Rate Securities”) generally will bear interest at a “qualified floating rate” (defined below) and thus will be treated as “variable rate debt instruments” under Treasury Regulations governing accrual of OID. A Variable Interest Rate Security will qualify as a “variable rate debt instrument” if (a) its issue price does not exceed the total non-contingent principal payments by more than an amount equal to the lesser of (x) .015 multiplied by the product of the total non-contingent principal payments and the number of complete years to maturity from the issue date, or (y) 15 percent of the total non-contingent principal payments, (b) it provides for stated interest, compounded or paid at least annually, only at (i) one or more qualified floating rates, (ii) a single fixed rate and one or more qualified floating rates, (iii) a single objective rate (defined below), or (iv) a single fixed rate and a single objective rate that is a qualified inverse floating rate, and (c) it does not provide for any principal payments that are contingent (other than as described in (a) above). A qualified floating rate or objective rate in effect at any time during the term of the instrument must be set at a “current value” of that rate. A “current value” of a rate is the value of the rate on any day that is no earlier than three months prior to the first day on which that value is in effect and no later than one year following that first day.
A “qualified floating rate” is any variable rate where variations in the value of the rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Variable Interest Rate Security is denominated. A fixed multiple of a qualified floating rate will constitute a qualified floating rate only if the multiple is greater than 0.65 but not more than 1.35. A variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than 0.65 but not more than 1.35, increased or decreased by a fixed rate, will also constitute a qualified floating rate. In addition, two or more qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the Variable Interest Rate Security (e.g., two or more qualified floating rates with values within 25 basis points of each other as determined on the Variable Interest Rate Security’s issue date) will be treated as a single qualified floating rate. The debt security would not have a qualified floating rate, however, if the rate is subject to certain
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restrictions (including caps, floors, governors, or other similar restrictions), unless such restrictions are fixed throughout the term of the debt security or are not reasonably expected to significantly affect the yield of the debt security.
An “objective rate” is a rate that is not itself a qualified floating rate, but which is determined using a single fixed formula and that is based on objective financial or economic information. A rate will not qualify as an objective rate if it is based on information that is within CAF’s control (or a related party) or that is unique to its circumstances (or a related party), such as dividends, profits or the value of its stock (although a rate does not fail to be an objective rate merely because it is based on its credit quality). Other variable interest rates may be treated as objective rates if so designated by the IRS in the future. Despite the foregoing, a variable rate of interest on a Variable Interest Rate Security will not constitute an objective rate if it is reasonably expected that the average value of the rate during the first half of the Variable Interest Rate Security’s term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Variable Interest Rate Security’s term.
A “qualified inverse floating rate” is any objective rate equal to a fixed rate minus a qualified floating rate, as long as variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the qualified floating rate. If a Variable Interest Rate Security provides for stated interest at a fixed rate for an initial period of one year or less followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent period and the value of the variable rate on the Variable Interest Rate Security’s issue date is intended to approximate the fixed rate (e.g., the value of the variable rate on the issue date does not differ from the value of the fixed rate by more than 25 basis points), then the fixed rate and the variable rate together will constitute either a single qualified floating rate or objective rate, as the case may be.
If a Variable Interest Rate Security that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof qualifies as a “variable rate debt instrument”, then any stated interest on the Variable Interest Rate Security which is unconditionally payable in cash or property (other than CAF’s debt instruments) at least annually will constitute qualified stated interest and will be taxed accordingly. Thus, a Variable Interest Rate Security that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof and that qualifies as a “variable rate debt instrument” will generally not be treated as having been issued with OID unless the Variable Interest Rate Security is issued at a price that is below the debt security’s stated principal amount by more than a specified de minimis amount. OID on a Variable Interest Rate Security arising from such discount is allocated to an accrual period using the constant yield method described above by assuming that the variable rate is a fixed rate equal to (i) in the case of a qualified floating rate or qualified inverse floating rate, the value, as of the issue date, of the qualified floating rate or qualified inverse floating rate, or (ii) in the case of an objective rate (other than a qualified inverse floating rate), a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Security.
In general, any other Variable Interest Rate Security that qualifies as a “variable rate debt instrument” will be converted into an “equivalent” fixed rate debt instrument for purposes of determining the amount and accrual of OID and qualified stated interest on the Variable Interest Rate Security. Such a Variable Interest Rate Security must be converted into an “equivalent” fixed rate debt instrument by substituting any qualified floating rate or qualified inverse floating rate provided for under the terms of the Variable Interest Rate Security with a fixed rate equal to the value of the qualified floating rate or qualified inverse floating rate, as the case may be, as of the Variable Interest Rate Security’s issue date. Any objective rate (other than a qualified inverse floating rate) provided for under the terms of the Variable Interest Rate Security is converted into a fixed rate that reflects the yield that is reasonably expected for the Variable Interest Rate Security. In the case of a Variable Interest Rate Security that qualifies as a “variable rate debt instrument” and provides for stated interest at a fixed rate in addition to either one or more qualified floating rates or a qualified inverse floating rate, the fixed rate is initially converted into a qualified floating rate (or a qualified inverse floating rate, if the Variable Interest Rate Security provides for a qualified inverse floating rate). Under these circumstances, the qualified floating rate or qualified inverse floating rate that replaces the fixed rate must be such that the fair market value of the Variable Interest
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Rate Security as of the Variable Interest Rate Security’s issue date is approximately the same as the fair market value of an otherwise identical debt instrument that provides for either the qualified floating rate or qualified inverse floating rate rather than the fixed rate. Subsequent to converting the fixed rate into either a qualified floating rate or a qualified inverse floating rate, the Variable Interest Rate Security is converted into an “equivalent” fixed rate debt instrument in the manner described above.
Once the Variable Interest Rate Security that qualifies as a “variable rate debt instrument” is converted into an “equivalent” fixed rate debt instrument pursuant to the foregoing rules, the amount of OID and qualified stated interest, if any, are determined for the “equivalent” fixed rate debt instrument by applying the general OID rules to the “equivalent” fixed rate debt instrument and a U.S. Holder of the Variable Interest Rate Security will account for the OID and qualified stated interest as if the U.S. Holder held the “equivalent” fixed rate debt instrument. In each accrual period, appropriate adjustments will be made to the amount of qualified stated interest or OID assumed to have been accrued or paid with respect to the “equivalent” fixed rate debt instrument in the event that these amounts differ from the actual amount of interest accrued or paid on the Variable Interest Rate Security during the accrual period.
If a Variable Interest Rate Security does not qualify as a “variable rate debt instrument”, then the debt security will be treated as a contingent payment debt obligation. The U.S. federal income tax treatment of debt securities that are treated as contingent payment debt obligations will be described in an applicable prospectus supplement.
Short-Term Securities. In general, an individual or other cash basis U.S. Holder of a Short-Term Security is not required to accrue OID (as specially defined below for the purposes of this paragraph) for U.S. federal income tax purposes unless it elects to do so (but may be required to include any stated interest in income as the interest is received). Accrual basis U.S. Holders and certain other U.S. Holders are required to accrue OID on Short-Term Securities on a straight-line basis or, if the U.S. Holder so elects, under the constant-yield method (based on daily compounding). In the case of a U.S. Holder not required and not electing to include OID in income currently, any gain recognized on the sale or retirement of the Short-Term Security will be ordinary income to the extent of the OID accrued on a straight-line basis (or, if an election was made, based on the constant-yield method) through the date of sale or retirement. However, U.S. Holders who are not required and do not elect to accrue OID on Short-Term Securities will be required to defer deductions for interest on borrowings allocable to Short-Term Securities in an amount not exceeding the deferred income until the deferred income is recognized.
For purposes of determining the amount of OID subject to these rules, all interest payments on a Short- Term Security are included in the Short-Term Security’s stated redemption price at maturity. A U.S. Holder not otherwise required to accrue OID may elect to do so on a Short-Term Security as if the Short-Term Security had been originally issued to the U.S. Holder at the U.S. Holder’s purchase price for the Short-Term Security. This election will apply to all obligations with a maturity of one year or less acquired by the U.S. Holder on or after the first day of the first taxable year to which the election applies, and may not be revoked without the consent of the IRS.
Market Discount
A debt security, other than a Short-Term Security, generally will be treated as purchased at a market discount (a “Market Discount Security”) if the debt security’s stated redemption price at maturity or, in the case of a Discount Security, the debt security’s “revised issue price”, exceeds the amount for which the U.S. Holder purchased the debt security by at least 0.25% of the debt security’s stated redemption price at maturity or revised issue price, respectively, multiplied by the number of complete years to the debt security’s maturity (or, in the case of a debt security that is an installment obligation, the debt security’s weighted average remaining maturity). For this purpose, the “revised issue price” of a debt security generally equals its issue price, increased by the amount of any OID that has accrued on the debt security and decreased by the amount of any payments
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previously made on the debt security that were not qualified stated interest payments. If this excess is not sufficient to cause the debt security to be a Market Discount Security, then the excess constitutes “de minimis market discount”, and the rules discussed below are not applicable.
Any gain recognized on the maturity or disposition of a Market Discount Security (including any payment on a debt security that is not qualified stated interest) will be treated as ordinary income to the extent of market discount that accrued on the debt security while held by such U.S. Holder. Alternatively, a U.S. Holder of a Market Discount Security may elect to include market discount in income currently over the life of the debt security. This election shall apply to all debt instruments with market discount acquired by the electing U.S. Holder on or after the first day of the first taxable year to which the election applies. This election may not be revoked without the consent of the IRS. A U.S. Holder of a Market Discount Security that does not elect to include market discount in income currently will generally be required to defer deductions for interest on borrowings incurred to purchase or carry a Market Discount Security that is in excess of the interest and OID on the debt security includible in the U.S. Holder’s income, to the extent that this excess interest expense does not exceed the portion of accrued market discount allocable to the days on which the Market Discount Security was held by the U.S. Holder, until maturity or disposition of the Market Discount Security.
Market discount will accrue on a straight-line basis unless the U.S. Holder elects to accrue the market discount on a constant-yield method. This election applies only to the Market Discount Security with respect to which it is made and is irrevocable without the consent of the IRS.
Debt Securities Purchased at a Premium
A U.S. Holder that purchases a debt security for an amount in excess of its principal amount, or for a Discount Security, its stated redemption price at maturity, will not be required to include any OID in its income and may elect to treat the excess as “amortizable bond premium”, in which case the amount required to be included in the U.S. Holder’s income each year with respect to interest on the debt security will be reduced by the amount of amortizable bond premium allocable (based on the debt security’s yield to maturity) to that year, as amount computed with reference to the amount payable on the earlier date of redemption. Any election to amortize bond premium shall apply to all bonds with amortizable bond premium (other than bonds the interest on which is excludable from gross income for U.S. federal income tax purposes) held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and is irrevocable without the consent of the IRS. See “— Original Issue Discount — Election to Treat All Interest as Original Issue Discount.”
Purchase, Sale, Retirement or Other Taxable Disposition of Debt Securities
A U.S. Holder’s adjusted tax basis in a debt security will generally be its cost, increased by the amount of any OID or market discount included in the U.S. Holder’s income with respect to the debt security and the amount, if any, of income attributable to de minimis OID and de minimis market discount included in the U.S. Holder’s income with respect to the debt security, and reduced by (i) the amount of any payments that are not qualified stated interest payments, and (ii) the amount of any amortizable bond premium previously applied to reduce interest on the debt security.
A U.S. Holder will generally recognize gain or loss on the sale, retirement, or other taxable disposition of a debt security equal to the difference between the amount realized on such disposition, other than amounts attributed to accrued but unpaid interest (which will be taxable as interest income to the extent not previously included in income), and the U.S. Holder’s adjusted tax basis of the debt security. Except to the extent described above under “Original Issue Discount — Market Discount” or “Original Issue Discount — Short Term Security” or attributable to changes in exchange rates (as discussed below), gain or loss recognized on the taxable disposition of a debt security will be capital gain or loss and will be long term capital gain or loss if the U.S. Holder’s holding period in the debt securities exceeds one year. The deductibility of capital losses is subject to
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limitations. Gain or loss realized by a U.S. Holder on the taxable disposition of a debt security generally will constitute income or loss from sources within the United States for U.S. foreign tax credit purposes. As a result, if there are any foreign taxes imposed on any gain, the U.S. Holder may not be able to utilize foreign tax credit with respect to such taxes. In addition, certain U.S. Treasury regulations that apply to foreign income taxes paid or accrued in taxable years beginning on or after December 28, 2021 further restrict the availability of any such credit based on the nature of the tax imposed by the foreign jurisdiction (although Notice 2023-55 (as extended by the recent Notice 2023-80) provides temporary relief from the application of certain aspects of these regulations for taxable years ending on or before date that a notice or other guidance withdrawing or modifying the temporary relief is issued). U.S. Holders should consult their tax advisors concerning foreign tax credits.
Foreign Currency Debt Securities
Interest. If an interest payment is denominated in, or determined by reference to, a foreign currency (for this purpose, meaning a non-U.S. dollar currency), the amount of income recognized by a cash basis U.S. Holder will be the U.S. dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars.
An accrual basis U.S. Holder may determine the amount of income recognized with respect to an interest payment denominated in, or determined by reference to, a foreign currency in accordance with either of two methods. Under the first method, the amount of income accrued will be based on the average exchange rate in effect during the interest accrual period (or, in the case of an accrual period that spans two taxable years, the part of the period within the taxable year).
Under the second method, the U.S. Holder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period (or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year). Additionally, if a payment of interest is actually received within five business days of the last day of the accrual period, an electing accrual basis U.S. Holder may instead translate the accrued interest into U.S. dollars at the exchange rate in effect on the day of actual receipt. Any such election will apply to all debt instruments held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and will be irrevocable without the consent of the IRS.
Upon receipt of payment of accrued interest (including a payment attributable to accrued but unpaid interest upon the sale or retirement of a debt security) denominated in, or determined by reference to, a foreign currency, an accrual basis U.S. Holder may recognize exchange gain or loss (taxable as ordinary income or loss) equal to the difference between the amount received (translated into U.S. dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. dollars.
OID. OID for each accrual period on a Discount Security that is denominated in, or determined by reference to, a foreign currency, will be determined in the foreign currency and then translated into U.S. dollars in the same manner as stated interest accrued by an accrual basis U.S. Holder, as described above. Upon receipt of an amount attributable to OID (whether in connection with a payment on the debt security or a sale of the debt security), a U.S. Holder may recognize exchange gain or loss (taxable as ordinary income or loss) equal to the difference between the amount received (translated into U.S. dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. dollars.
Market Discount. Market Discount on a debt security that is denominated in, or determined by reference to, a foreign currency, will be accrued in the foreign currency. If the U.S. Holder elects to include market discount in income currently, the accrued market discount will be translated into U.S. dollars at the average exchange rate for the accrual period (or portion thereof within the U.S. Holder’s taxable year). Upon the receipt of an amount attributable to accrued market discount, the U.S. Holder may recognize exchange gain or loss (which will be taxable as ordinary income or loss) determined in the same manner as for accrued interest or OID. A U.S. Holder
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that does not elect to include market discount in income currently will recognize, upon the disposition or maturity of the debt security, the U.S. dollar value of the amount accrued, calculated at the spot rate on that date, and no part of this accrued market discount will be treated as exchange gain or loss.
Bond Premium. Bond premium (including acquisition premium) on a debt security that is denominated in, or determined by reference to, a foreign currency, will be computed in units of the foreign currency, and any such bond premium that is taken into account currently will reduce interest income in units of the foreign currency. On the date bond premium offsets interest income, a U.S. Holder may recognize exchange gain or loss (taxable as ordinary income or loss) equal to the amount offset multiplied by the difference between the spot rate in effect on the date of the offset and the spot rate in effect on the date the debt securities were acquired by the U.S. Holder. A U.S. Holder that does not elect to take bond premium (other than acquisition premium) into account currently will recognize a capital loss when the debt security matures.
Sale, Retirement or Other Taxable Disposition. As discussed above under “Purchase, Sale, Retirement or Other Taxable Disposition of Debt Securities”, a U.S. Holder will generally recognize gain or loss on the sale, retirement, or other taxable disposition of a debt security equal to the difference between the amount realized on such sale, retirement or taxable disposition and its adjusted tax basis in the debt security. A U.S. Holder’s adjusted tax basis in a debt security that is denominated in a foreign currency will be determined by reference to the U.S. dollar cost of the debt security. The U.S. dollar cost of a debt security purchased with foreign currency will generally be the U.S. dollar value of the purchase price on the date of purchase or, in the case of debt securities traded on an established securities market, as defined in the applicable U.S. Treasury Regulations, that are purchased by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects), on the settlement date for the purchase.
The amount realized on a sale, retirement or other taxable disposition of a debt security for an amount in foreign currency will be the U.S. dollar value of this amount on the date of such taxable disposition or, in the case of debt securities traded on an established securities market that are sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects), on the settlement date for the sale. Such an election by an accrual basis U.S. Holder must be applied consistently from year to year and cannot be revoked without the consent of the IRS.
A U.S. Holder will recognize exchange rate gain or loss (taxable as ordinary income or loss) on the taxable disposition of a debt security equal to the difference, if any, between the U.S. dollar values of the U.S. Holder’s purchase price for the debt security on (i) the date of disposition and (ii) the date on which the U.S. Holder acquired the debt security. Any such exchange rate gain or loss will be realized only to the extent of total gain or loss realized on the sale or retirement.
Exchange gain or loss generally constitutes income or loss from sources within the United States for U.S. foreign tax credit purposes.
Backup Withholding and Information Reporting
In general, payments of interest and accruals of any OID on, and the proceeds of a sale, redemption, or other disposition of, debt securities payable to a U.S. Holder by a U.S. issuing and paying agent or other U.S.-related intermediary will be reported to the IRS and to the U.S. Holder as may be required under applicable regulations. Backup withholding will apply to these payments and payments of OID if the U.S. Holder fails to provide an accurate taxpayer identification number or certification of exempt status or if the U.S. Holder had been notified that it is subject to backup withholding because of a failure to report all interest and dividends required to be shown on its U.S. federal income tax returns. Certain U.S. Holders (including, among others, corporations) are not subject to backup withholding. U.S. Holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining an exemption. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against such U.S. Holder’s U.S. federal
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income tax liability and may entitle such U.S. Holder to a refund, provided that the required information is timely furnished to the IRS and certain other requirements are met.
Certain U.S. Holders who are individuals (or certain specified entities) may be required to report information to the IRS with respect to any interest in debt securities not held in an account maintained by a financial institution, or with respect to certain accounts maintained with non-U.S. financial institutions. U.S. Holders who fail to report required information could become subject to substantial penalties. U.S. Holders are urged to consult with their own tax advisors regarding the possible implications of this legislation for their ownership and disposition of the debt securities CAF is offering.
Reportable Transactions
Certain regulations meant to require the reporting of certain tax shelter transactions cover transactions generally not regarded as tax shelters, including certain foreign currency transactions giving rise to losses that equal or exceed a certain threshold. The scope and application of these rules is not entirely clear. A U.S. Holder may be required to treat a foreign currency exchange loss from debt securities as a reportable transaction if the loss exceeds a certain threshold in a single taxable year, if the U.S. Holder is an individual or trust, or higher amounts for other non-individual U.S. Holders. In the event the acquisition, holding or disposition of debt securities constitutes participation in a “reportable transaction” for purposes of those rules, a U.S. Holder will be required to disclose its investment by filing Form 8886 with the IRS. A certain penalty is generally imposed on any taxpayer that fails to timely file an information return with the IRS with respect to a transaction resulting in a loss that is treated as a reportable transaction. Prospective purchasers are urged to consult their tax advisors regarding the application of these rules to the acquisition, holding or disposition of debt securities.
Foreign Account Tax Compliance Act
Pursuant to Sections 1471 to 1474 of the Code (provisions commonly referred to as “FATCA”), and subject to the proposed regulations described below, CAF and other non-U.S. financial institutions through which payments on the debt securities it is offering are made, may be required to withhold tax on all, or a portion of, payments made on any debt securities issued or materially modified on or after the date that is six months after final U.S. Treasury Regulations defining the term “foreign pass-through payment” are filed with the United States Federal Register. Under proposed regulations, any withholding on “foreign pass-through payments” on debt securities that are not otherwise grandfathered would apply to such payments made on or after the date that is two years after the date of publication in the United States Federal Register of applicable final regulations defining “foreign pass-through payments.” Taxpayers generally may rely on these proposed regulations until final regulations are issued. No such final regulations defining “foreign pass-through payments” have been issued as of the date of this prospectus. The rules governing FATCA are subject to change, and the future application of FATCA to CAF and CAF’s debt securities is uncertain. However, such withholding by CAF and other non-U.S. financial institutions through which payments on the debt securities are made, may be required, among others, where (i) CAF or such other non-U.S. financial institution is a foreign financial institution (“FFI”) that agrees to provide certain information on its account holders to the IRS (making CAF and such other non-U.S. financial institution a “participating FFI”) and (ii)(a) the payee itself is an FFI but is not a participating FFI or does not provide information sufficient for the relevant participating FFI to determine whether the payee is subject to withholding under FATCA or (b) the payee is not a participating FFI and is not otherwise exempt from FATCA withholding. Notwithstanding anything herein to the contrary, if an amount of, or in respect of, withholding tax were to be deducted or withheld from interest, principal, or other payments on the debt securities as a result of FATCA, CAF would not be required to pay any additional amounts as a result of the deduction or withholding of such tax. THE RULES GOVERNING FATCA ARE COMPLICATED. INVESTORS SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE WHETHER THESE RULES MAY APPLY TO PAYMENTS THEY WILL RECEIVE UNDER THE DEBT SECURITIES.
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CAF 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.
CAF may sell its guarantees separately from debt securities to guarantee certain obligations associated with the securities of third-party issuers. In such cases, CAF may sell the guarantees in the same transaction as the sale of the underlying security, or it 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. CAF also may, from time to time, authorize underwriters, acting as CAF’s 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 CAF 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 its other securities 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 CAF pays 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.
Unless otherwise specified in the prospectus supplement, each series of securities will be a new issue with no established trading market. CAF may elect to list any series of securities on any exchange, but it is 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 CAF 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.
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VALIDITY OF THE DEBT SECURITIES
The validity of the debt securities will be passed upon for CAF by Latham & Watkins LLP, and for any underwriters or agents by counsel to be named in the applicable prospectus supplement. Latham & Watkins LLP and counsel to the underwriters or agents may rely as to certain matters on the opinion of CAF’s General Counsel.
The validity of the guarantees will be passed upon for CAF by Latham & Watkins LLP, and for any underwriters or agents by counsel to be named in the applicable prospectus supplement. Latham & Watkins LLP and counsel to the underwriters or agents may rely as to certain matters on the opinion of CAF’s General Counsel.
The financial statements of Corporación Andina de Fomento as of and for the years ended December 31, 2023, 2022, and 2021 included in this prospectus and the effectiveness of Corporación Andina de Fomento’s internal control over financial reporting, have been audited by Lara Marambio & Asociados, independent auditors, as stated in their reports. Such financial statements are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
CAF’s 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.
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/ Gabriel Felpeto | |
Name: Gabriel Felpeto | ||
Title: Vice President of Finance and Chief Financial Officer |
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Management’s Report on the Effectiveness of Internal Control over Financial Reporting
Corporación Andina de Fomento (“CAF”)’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.
Management of CAF is responsible for designing, implementing, and maintaining effective internal control over financial reporting. Management assessed the effectiveness of CAF’s internal control over financial reporting as of December 31, 2023, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that assessment, CAF’s Management concluded that CAF’s internal control over financial reporting is effective as of December 31, 2023.
There are inherent limitations in the effectiveness of any internal control system, including the possibility of human error and the circumvention 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, 2023 and for the year then ended, have been audited by an independent accounting firm, which has also issued an independent auditor’s report on CAF´s internal control over financial reporting. The Independent Auditor´s Report on Internal Control over Financial Reporting, which is included in this document, expresses an unmodified opinion on CAF’s internal control over financial reporting as of December 31, 2023.
/s/ Sergio Díaz-Granados |
Sergio Díaz-Granados |
Executive President |
/s/ Gabriel Felpeto | /s/ Corina Arroyo | |
Gabriel Felpeto | Corina Arroyo | |
Vice-President of Finance | Acting Executive Vice-President |
February 9, 2024
Torre CAF, Av. Luis Roche, Altamira, Caracas, Venezuela. Telf. +58 (212) 209 2111 www.caf.com
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To the Board of Directors and Shareholders of
Corporación Andina de Fomento (CAF)
Opinion on Internal Control Over Financial Reporting
We have audited the internal control over financial reporting of Corporación Andina de Fomento (CAF) as of December 31, 2023, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, CAF maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We also have audited, in accordance with auditing standards generally accepted in the United States of America (GAAS), the financial statements of CAF as of and for the years ended December 31, 2023, 2022 and 2021, and our report dated February 9, 2024 expressed an unmodified opinion on those financial statements.
Basis for Opinion
We conducted our audit in accordance with GAAS. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of Internal Control Over Financial Reporting section of our report. We are required to be independent of CAF and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for Internal Control over Financial Reporting
Management is responsible for designing, implementing, and maintaining effective internal control over financial reporting, and for its assessment about the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on the Effectiveness of Internal Control over Financial Reporting.
Auditor’s Responsibilities for the Audit of Internal Control Over Financial Reporting
Our objectives are to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects and to issue an auditor’s report that includes our opinion on internal control over financial reporting. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit of internal control over financial reporting conducted in accordance with GAAS will always detect a material weakness when it exists.
In performing an audit of internal control over financial reporting in accordance with GAAS, we:
• | Exercise professional judgment and maintain professional skepticism throughout the audit. |
• | Obtain an understanding of internal control over financial reporting, assess the risks that a material weakness exists, and test and evaluate the design and operating effectiveness of internal control over financial reporting based on the assessed risk. |
Definition and Inherent Limitations of Internal Control over Financial Reporting
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
F-3
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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 its inherent limitations, internal control over financial reporting may not prevent, or detect and correct, misstatements. Also, projections of any assessment 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.
/s/ Deloitte
February 9, 2024
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
To the Board of Directors and Shareholders of
Corporación Andina de Fomento (CAF)
Opinion
We have audited the financial statements of Corporación Andina de Fomento (CAF), which comprise the balance sheets as of December 31, 2023, 2022 and 2021, and the related statements of income, shareholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of CAF as of December 31, 2023, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with auditing standards generally accepted in the United States of America (GAAS), CAF’s internal control over financial reporting as of December 31, 2023, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 9, 2024 expressed an unmodified opinion on CAF’s internal control over financial reporting.
Basis for Opinion
We conducted our audits in accordance with GAAS. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of CAF and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about CAF ability to continue as a going concern for one year after date that the financial statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
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In performing an audit in accordance with GAAS, we:
• | Exercise professional judgment and maintain professional skepticism throughout the audit. |
• | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
• | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. |
• | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
• | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about CAF ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
/s/ Deloitte
February 9, 2024
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-6
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Balance Sheets
As of December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
NOTES | 2023 | 2022 | 2021 | |||||||||||||
ASSETS | ||||||||||||||||
Cash and due from banks | 70,592 | 107,592 | 112,047 | |||||||||||||
Deposits with banks | 4,963,938 | 6,535,869 | 3,210,216 | |||||||||||||
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| |||||||||||
Cash and due from banks and deposits with banks | 3 | 5,034,530 | 6,643,461 | 3,322,263 | ||||||||||||
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|
|
| |||||||||||
Marketable securities - trading | 4 and 18 | 9,988,218 | 8,483,605 | 12,503,067 | ||||||||||||
Other investments | 5 | 1,265,038 | 258,372 | 292,392 | ||||||||||||
Loans (US$ 2,549,568, US$ 2,499,856 and US$ 2,389,651 at fair value as of December 31, 2023, 2022 and 2022, respectively) | 6 and 18 | 33,479,085 | 30,622,324 | 29,595,386 | ||||||||||||
Less loan commissions, net of origination costs | 175,732 | 166,213 | 153,955 | |||||||||||||
Less allowance for loan losses | 6 | 56,913 | 63,192 | 76,650 | ||||||||||||
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|
|
| |||||||||||
Loans, net | 33,246,440 | 30,392,919 | 29,364,781 | |||||||||||||
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|
|
| |||||||||||
Accrued interest and commissions receivable: | 18 | |||||||||||||||
Loans | 508,058 | 362,486 | 133,523 | |||||||||||||
Others | 449,514 | 311,406 | 224,313 | |||||||||||||
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|
|
|
| |||||||||||
957,572 | 673,892 | 357,836 | ||||||||||||||
Derivative financial instruments | 17 and 18 | 911,749 | 459,809 | 512,383 | ||||||||||||
Equity investments | 7 | 392,184 | 381,779 | 433,350 | ||||||||||||
Property and equipment, net | 91,675 | 98,804 | 105,987 | |||||||||||||
Other assets | 8 | 1,926,857 | 2,984,101 | 700,291 | ||||||||||||
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|
|
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| |||||||||||
TOTAL | 53,814,263 | 50,376,742 | 47,592,350 | |||||||||||||
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| |||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
LIABILITIES: | ||||||||||||||||
Deposits (US$ 0, US$ 109,377 and US$ 106,119 at fair value as of December 31, 2023, 2022 and 2021, respectively) | 9 and 18 | 4,144,495 | 4,663,591 | 4,002,626 | ||||||||||||
Commercial papers | 10 | 4,653,512 | 4,618,797 | 2,813,646 | ||||||||||||
Borrowings from other financial institutions (US$ 593,086, US$ 665,849 and US$ 740,028 at fair value as of December 31, 2023, 2022 and 2021, respectively), net | 11 and 18 | 2,046,796 | 2,072,776 | 1,772,171 | ||||||||||||
Bonds (US$ 24,608,695, US$ 21,137,893 and US$ 24,074,774 at fair value as of December 31, 2023, 2022 and 2021, respectively), net | 12 and 18 | 24,759,450 | 21,252,213 | 24,260,537 | ||||||||||||
Accrued interest payable | 18 | 846,534 | 565,916 | 288,233 | ||||||||||||
Derivative financial instruments | 17 and 18 | 2,340,647 | 3,309,978 | 842,958 | ||||||||||||
Accrued expenses and other liabilities | 13 | 293,109 | 174,154 | 312,540 | ||||||||||||
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| |||||||||||
Total liabilities | 39,084,543 | 36,657,425 | 34,292,711 | |||||||||||||
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| |||||||||||
SHAREHOLDERS’ EQUITY: | 15 | |||||||||||||||
Subscribed capital | 9,988,015 | 8,563,350 | 7,716,975 | |||||||||||||
Less callable capital portion | 1,819,660 | 1,625,660 | 1,589,660 | |||||||||||||
Less capital subscriptions receivable | 2,570,045 | 1,412,260 | 690,940 | |||||||||||||
|
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|
|
|
| |||||||||||
Paid-in capital | 5,598,310 | 5,525,430 | 5,436,375 | |||||||||||||
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|
|
| |||||||||||
Additional paid-in capital | 4,380,427 | 4,252,952 | 4,091,298 | |||||||||||||
Reserves | 3,940,935 | 3,771,966 | 3,666,951 | |||||||||||||
Retained earnings | 810,048 | 168,969 | 105,015 | |||||||||||||
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|
| |||||||||||
Total shareholders’ equity | 14,729,720 | 13,719,317 | 13,299,639 | |||||||||||||
|
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|
|
|
| |||||||||||
TOTAL | 53,814,263 | 50,376,742 | 47,592,350 | |||||||||||||
|
|
|
|
|
|
See accompanying notes to the financial statements
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Statements of Income
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
NOTES | 2023 | 2022 | 2021 | |||||||||||||
Interest income: | ||||||||||||||||
Loans | 2 (g) | 2,330,525 | 1,093,099 | 603,903 | ||||||||||||
Investments and deposits with banks | 2 (g), 3 and 4 | 922,659 | 172,987 | 23,098 | ||||||||||||
Loan commissions | 2 (g) | 49,239 | 49,197 | 44,990 | ||||||||||||
|
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|
|
|
| |||||||||||
Total interest income | 3,302,423 | 1,315,283 | 671,991 | |||||||||||||
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|
|
| |||||||||||
Interest expense: | ||||||||||||||||
Bonds | 1,640,106 | 659,043 | 329,247 | |||||||||||||
Commercial papers | 236,761 | 62,532 | 5,077 | |||||||||||||
Deposits | 168,407 | 63,844 | 4,109 | |||||||||||||
Borrowings from other financial institutions | 143,978 | 58,941 | 22,427 | |||||||||||||
Commissions | 10,034 | 10,373 | 10,415 | |||||||||||||
|
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|
|
| |||||||||||
Total interest expense | 2,199,286 | 854,733 | 371,275 | |||||||||||||
|
|
|
|
|
| |||||||||||
Net interest income | 1,103,137 | 460,550 | 300,716 | |||||||||||||
Provision (credit) for loan losses | 6 | 439 | (3,287) | 29,869 | ||||||||||||
|
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|
|
|
| |||||||||||
Net interest income, after provision (credit) for loan losses | 1,102,698 | 463,837 | 270,847 | |||||||||||||
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|
|
|
| |||||||||||
Non-interest income: | ||||||||||||||||
Dividends and equity in earnings of investees | 7 | 15,939 | 8,668 | 5,108 | ||||||||||||
Other commissions | 2,651 | 2,967 | 2,055 | |||||||||||||
Other income | 6 and 7 | 39,696 | 7,306 | 31,794 | ||||||||||||
|
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|
|
| |||||||||||
Total non-interest income | 58,286 | 18,941 | 38,957 | |||||||||||||
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| |||||||||||
Non-interest expenses: | ||||||||||||||||
Administrative expenses | 205,161 | 177,803 | 157,353 | |||||||||||||
Other expenses | 7 | 5,636 | 25,811 | 14,048 | ||||||||||||
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|
| |||||||||||
Total non-interest expenses | 210,797 | 203,614 | 171,401 | |||||||||||||
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| |||||||||||
Income before unrealized changes in fair value related to other financial instruments and contributions to Shareholders’ Special Funds | 950,187 | 279,164 | 138,403 | |||||||||||||
Unrealized changes in fair value related to other financial instruments | 19 | (20,139) | (21,195) | (3,388) | ||||||||||||
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| |||||||||||
Income before contributions to Shareholders’ Special Funds, net | 930,048 | 257,969 | 135,015 | |||||||||||||
Contributions to Shareholders’ Special Funds | 21 | 120,000 | 89,000 | 30,000 | ||||||||||||
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|
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| |||||||||||
Net income | 810,048 | 168,969 | 105,015 | |||||||||||||
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|
|
|
|
See accompanying notes to the financial statements
F-8
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Statements of Shareholders’ Equity
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Reserves | ||||||||||||||||||||||||||||||||
NOTES | Paid-in capital | Additional paid-in capital | General reserve | Article N° 42 of the Constitutive Agreement | Total reserves | Retained earnings | Total shareholders’ equity | |||||||||||||||||||||||||
BALANCES AS OF DECEMBER 31, 2020 | 5,366,050 | 3,961,900 | 2,878,929 | 548,200 | 3,427,129 | 239,822 | 12,994,901 | |||||||||||||||||||||||||
Capital increase | 15 | 221,105 | 406,833 | — | — | — | — | 627,938 | ||||||||||||||||||||||||
Capital decrease due to shares’ repurchase | 6 | (150,780 | ) | (277,435 | ) | — | — | — | — | (428,215 | ) | |||||||||||||||||||||
Net income and total comprehensive income | 15 | — | — | — | — | — | 105,015 | 105,015 | ||||||||||||||||||||||||
Appropriated for general reserve | 15 | — | — | 215,839 | — | 215,839 | (215,839 | ) | — | |||||||||||||||||||||||
Appropriated for reserve pursuant to Article N° 42 of the Constitutive Agreement | 15 | — | — | — | 23,983 | 23,983 | (23,983 | ) | — | |||||||||||||||||||||||
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BALANCES AS OF DECEMBER 31, 2021 | 5,436,375 | 4,091,298 | 3,094,768 | 572,183 | 3,666,951 | 105,015 | 13,299,639 | |||||||||||||||||||||||||
Capital increase | 15 | 254,235 | 465,585 | — | — | — | — | 719,820 | ||||||||||||||||||||||||
Capital decrease due to shares’ repurchase | 6 | (165,180 | ) | (303,931 | ) | — | — | — | — | (469,111 | ) | |||||||||||||||||||||
Net income | 15 | — | — | — | — | — | 168,969 | 168,969 | ||||||||||||||||||||||||
Appropriated for general reserve | 15 | — | — | 94,505 | — | 94,505 | (94,505 | ) | — | |||||||||||||||||||||||
Appropriated for reserve pursuant to Article N° 42 of the Constitutive Agreement | 15 | — | — | — | 10,510 | 10,510 | (10,510 | ) | — | |||||||||||||||||||||||
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| |||||||||||||||||||
BALANCES AS OF DECEMBER 31, 2022 | 5,525,430 | 4,252,952 | 3,189,273 | 582,693 | 3,771,966 | 168,969 | 13,719,317 | |||||||||||||||||||||||||
Capital increase | 15 | 269,560 | 489,366 | — | — | — | — | 758,926 | ||||||||||||||||||||||||
Capital decrease due to shares’ repurchase | 6 | (196,680 | ) | (361,891 | ) | — | — | — | — | (558,571 | ) | |||||||||||||||||||||
Net income | 15 | — | — | — | — | — | 810,048 | 810,048 | ||||||||||||||||||||||||
Appropriated for general reserve | 15 | — | — | 152,069 | — | 152,069 | (152,069 | ) | — | |||||||||||||||||||||||
Appropriated for reserve pursuant to Article N° 42 of the Constitutive Agreement | 15 | — | — | — | 16,900 | 16,900 | (16,900 | ) | — | |||||||||||||||||||||||
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| |||||||||||||||||||
BALANCES AS OF DECEMBER 31, 2023 | 5,598,310 | 4,380,427 | 3,341,342 | 599,593 | 3,940,935 | 810,048 | 14,729,720 | |||||||||||||||||||||||||
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See accompanying notes to the financial statements
F-9
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Statements of Cash Flows
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
NOTES | 2023 | 2022 | 2021 | |||||||||||
OPERATING ACTIVITIES: | ||||||||||||||
Net income | 810,048 | 168,969 | 105,015 | |||||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||||||||
Unrealized (gain) loss on trading securities | (121,961 | ) | 50,336 | 72,788 | ||||||||||
Loan commissions, net of amortization of origination costs | (18,467 | ) | (20,172 | ) | (18,630 | ) | ||||||||
Provision (credit) for loan losses | 6 | 439 | (3,287 | ) | 29,869 | |||||||||
Impairment charge for equity investments | 7 | 1,336 | 962 | 117 | ||||||||||
Unrealized changes in fair value related to equity investment | 7 | (11,403 | ) | 17,854 | (26,748 | ) | ||||||||
Equity in earnings of investees | 7 | (11,005 | ) | (1,943 | ) | 871 | ||||||||
Amortization of deferred charges | 3,187 | 4,751 | 5,020 | |||||||||||
Depreciation of property and equipment | 8,650 | 8,831 | 8,895 | |||||||||||
Provision for employees’ severance benefits | 17,723 | 15,023 | 13,207 | |||||||||||
Provision for employees’ savings plan | 607 | 744 | 823 | |||||||||||
Unrealized changes in fair value related to other financial instruments | 19 | 20,139 | 21,195 | 3,388 | ||||||||||
Net changes in operating assets and liabilities: | ||||||||||||||
Trading securities, net | (1,490,393 | ) | 3,965,795 | (1,620,056 | ) | |||||||||
Accrued interest and commissions receivable | (283,683 | ) | (316,056 | ) | 28,789 | |||||||||
Other assets | (31,362 | ) | (22,004 | ) | (18,891 | ) | ||||||||
Accrued interest payable | 280,619 | 277,683 | (20,753 | ) | ||||||||||
Severance benefits paid or advanced | (15,862 | ) | (14,417 | ) | (10,345 | ) | ||||||||
Employees’ savings plan paid or advanced | (1,648 | ) | (2,101 | ) | (783 | ) | ||||||||
Accrued expenses and other liabilities | (47,366 | ) | 23,167 | (44,330 | ) | |||||||||
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| |||||||||
Total adjustments and net changes in operating assets and liabilities | (1,700,450 | ) | 4,006,361 | (1,596,769 | ) | |||||||||
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| |||||||||
Net cash (used in) provided by operating activities | (890,402 | ) | 4,175,330 | (1,491,754 | ) | |||||||||
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| |||||||||
INVESTING ACTIVITIES: | ||||||||||||||
Purchases of other investments | 5 | (2,694,830 | ) | (562,436 | ) | (2,010,262 | ) | |||||||
Maturities of other investments | 5 | 1,814,033 | 596,456 | 2,529,075 | ||||||||||
Loan origination and principal collections, net | 6 | (3,229,529 | ) | (1,805,360 | ) | (2,096,433 | ) | |||||||
Equity investments, net | 7 | 10,667 | 34,698 | 25,010 | ||||||||||
Property and equipment, net | (1,521 | ) | (1,648 | ) | (3,148 | ) | ||||||||
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| |||||||||
Net cash used in investing activities | (4,101,180 | ) | (1,738,290 | ) | (1,555,758 | ) | ||||||||
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| |||||||||
FINANCING ACTIVITIES: | ||||||||||||||
Net (decrease) increase in deposits | 9 | (514,720 | ) | 652,707 | 668,277 | |||||||||
Proceeds from commercial papers | 10 | 66,484,410 | 63,977,481 | 24,847,310 | ||||||||||
Repayment of commercial papers | 10 | (66,449,695 | ) | (62,172,330 | ) | (23,632,360 | ) | |||||||
Net decrease (increase) in derivative-related collateral | 1,239,557 | (2,414,170 | ) | (445,293 | ) | |||||||||
Proceeds from issuance of bonds | 12 | 6,505,253 | 3,653,612 | 4,478,803 | ||||||||||
Repayment of bonds | 12 | (4,574,471 | ) | (3,923,431 | ) | (3,320,266 | ) | |||||||
Proceeds from borrowings from other financial institutions | 186,023 | 797,723 | 374,681 | |||||||||||
Repayment of borrowings from other financial institutions | (252,632 | ) | (407,254 | ) | (177,605 | ) | ||||||||
Proceeds from issuance of shares | 15 | 758,926 | 719,820 | 627,938 | ||||||||||
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| |||||||||
Net cash provided by financing activities | 3,382,651 | 884,158 | 3,421,485 | |||||||||||
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| |||||||||
NET (DECREASE) INCREASE IN CASH AND DUE FROM BANKS AND DEPOSITS WITH BANKS | (1,608,931 | ) | 3,321,198 | 373,973 | ||||||||||
CASH AND DUE FROM BANKS AND DEPOSITS WITH BANKS AT BEGINNING OF THE YEAR | 6,643,461 | 3,322,263 | 2,948,290 | |||||||||||
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| |||||||||
CASH AND DUE FROM BANKS AND DEPOSITS WITH BANKS AT END OF THE YEAR | 5,034,530 | 6,643,461 | 3,322,263 | |||||||||||
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F-10
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Statements of Cash Flows
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
NOTES | 2023 | 2022 | 2021 | |||||||||||||
SUPPLEMENTAL DISCLOSURE: | ||||||||||||||||
Interest paid during the year | 1,925,433 | 612,024 | 374,796 | |||||||||||||
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NONCASH FINANCING ACTIVITIES: | ||||||||||||||||
Principal collections - Loans | 6 | 558,571 | 469,111 | 428,215 | ||||||||||||
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Capital decrease | 6 | (558,571 | ) | (469,111 | ) | (428,215 | ) | |||||||||
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Change in derivative instruments assets | (451,940 | ) | 52,574 | 1,254,549 | ||||||||||||
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Change in derivative instruments liabilities | (969,331 | ) | 2,467,020 | 438,116 | ||||||||||||
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See accompanying notes to the financial statements
F-11
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
1. | ORIGIN |
Business description – 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 Constitutive Agreement. Series “A” and “B” shareholder countries are: Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Honduras, Panama, Paraguay, Peru, Trinidad and Tobago, Uruguay and Venezuela. Series “C” shareholder countries are: Barbados, Costa Rica, Jamaica, Mexico, Portugal and Spain. In addition, there are 13 banks which are Series “B” shareholders.
CAF is headquartered in Caracas, Venezuela and has offices in Asuncion, Paraguay; Bogota, Colombia; Brasilia and Sao Paulo, Brazil; Buenos Aires, Argentina; Mexico City, Mexico; Panama City, Panama;La Paz, Bolivia; Lima, Peru; Madrid, Spain; Montevideo, Uruguay; Port of Spain, Trinidad and Tobago, Quito, Ecuador, San Salvador, El Salvador, Santiago de Chile, Chile and Santo Domingo, Dominican Republic.
CAF promotes a sustainable development model through credit, non-refundable resources, and supports in the technical and financial structuring of projects in the public and private sectors of Latin America and the Caribbean.
CAF offers financial and related services to the governments of its shareholder 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 undertakefeasibility studies for investment opportunities in shareholder countries. Furthermore, CAF manages and supervises third-party cooperation funds owned and sponsored by other countries and organizations, destined to finance programs agreed upon with donor countries and organizations which are in line with CAF’s policies and strategies.
CAF raises funds to finance its operations from sources both within and outside its shareholder countries.
2. | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
a. | Financial statement presentation – The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles with the U.S. dollar as the functional currency. |
b. | Use of estimates – The preparation of the accompanying financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheets, as well as the amounts reported as revenues and expenses during the corresponding reporting period. The most important estimates related to the preparation of the accompanyingfinancial statements refer to estimating the allowance for loan losses, and valuation and classification at fair values of financial instruments, among others. Management believes these estimates are adequate. Actual results could differ from those estimates. |
c. | Transactions denominated in other currencies – Transactions denominated in currencies other than U.S. dollars are converted into U.S. dollars at exchange rates prevailing in international markets on the dates of the transactions. Currency balances other than U.S. dollars are converted into U.S. dollarsat year-end exchange rates. Any foreign exchange gains or losses, including related hedge effects, are included in the statements of income. |
F-12
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
d. | Cash and deposits with banks – Cash and deposits with banks comprised of cash, due from banksand short-term deposits with banks with an original maturity of three months or less. |
e. | Marketable securities and other investments – These investments are classified as trading marketable securities, according to management’s intention and are recorded on the trade date. Trading marketable securities are securities that are mainly bought and held principally for the purpose of selling them in the near term and therefore held for only a short period of time. Trading marketable securities are recorded at fair value. Gains and losses from sales of trading marketable securities and changes in the fair value of trading marketable securities are included in interest income of investments and deposits with banks in the statements of income. Deposits with banks due more than 90 days (original maturity) and Special Drawing Rights are recorded as other investments. |
f. | Reverse repurchase agreements – CAF has entered into reverse repurchase agreements as part of liquidity management. Under a reverse repurchase agreement, CAF purchases securities with an agreement to resell them to the counterparty on a specific date for a specific price plus interests, with earlier resale permitted. Securities purchased under reverse repurchase agreements are included in the balance sheets under account “Securities purchased under resale agreement” and interests thereon are included in the statements of income under “Investments and deposits with banks”. |
All securities covered under reverse repurchase agreements are carried at face value, which approximate fair value due to their short-term in nature and minimal credit risk. There are no open positions as of December 31, 2023, 2022 and 2021.
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 shareholder countries. |
For credit risk purposes, CAF classifies its loans as follow:
(i) | Sovereign loans – Include loans granted to national, regional or local governments or decentralized institutions and other loans fully guaranteed by national governments. |
(ii) | Non-sovereign loans – Include loans granted to corporate and financial sectors (public and private sectors), among others, which are not guaranteed by national governments. |
Loans are carried at their unpaid 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 certaindirect origination costs, are deferred and recognized as an adjustment of the related loan yield using the effective interest method and are presented as interest income—loan commissions in the statements of income.
Private sector loans that are 90 days overdue or public sector loans that are 180 days overdue are placed on non-accrual status and, as result, the accrual for interest on non-accrual loans is discontinued unless the loans are well-secured and in process of collection.
Interest accrued but not collected for loans that are placed on non-accrual loans status is reversed against interest income. The interest on non-accrual loans is accounted for on a cash-basis, until the
F-13
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
loans qualify 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.
Factors considered by management in determining non-accrual loans are payment status and the probability of collecting scheduled principal and interest payments when due.
When a loan is overdue, CAF will immediately suspend any pending disbursement for said loan and for any other loans in which the client is the borrower, beneficiary or guarantor for CAF. CAF charges late payments fees on these overdue loans.
Loan losses, partial or total, are written off against the allowance for loan losses when management confirms the uncollectability of a loan balance. Subsequent recoveries on written off loans, if any,will be credited to the allowance for loan losses.
CAF maintains risk exposure policies to avoid concentrating its loans in any one country or economic group, which might be affected by market situations or other circumstances. For thispurpose, CAF uses certain measurement parameters, such as: CAF’s shareholders’ equity, total loan balance, exposure to economic groups from public and private sectors, among others. CAF reviews, on a semi-annual basis, the credit risk rating of its loans and classifies the risk into the following categories:
(i) | Satisfactory-excellent – Extremely strong capacity to meet financial commitments. |
(ii) | Satisfactory-very good – Strong capacity to meet financial commitments, not significantly vulnerable to adverse economic conditions. |
(iii) | Satisfactory-adequate – Adequate capacity to meet financial commitments, but morevulnerable to adverse economic conditions. |
(iv) | Watch – Acceptable payment capacity however some indicators and elements require special attention otherwise they could result in impairment. |
(v) | Special mention – More vulnerable to adverse economic conditions but currently has thecapacity to meet financial commitments. |
(vi) | Sub-standard – Currently vulnerable and dependent on favorable economic conditions to meet financial commitments. |
(vii) | Doubtful – Currently highly vulnerable. |
(viii) | Loss – Payment default on financial commitments. |
h. | Allowance for loan losses – The allowance for credit losses is maintained at a level CAF believes to be appropriate to absorb expected lifetime credit losses over the contractual life of the loan portfolio. |
The allowance for loan losses reflects CAF’s current estimate of all expected credit losses based on the information available at the date of the balance sheet, and these information are assessed and updated timely taking into account the market’s characteristics, policies and macroeconomic perspectives to adequately reflect the effect of those changes in borrower credit ratings and therefore in expected credit losses.
F-14
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
For purposes of determining the allowance for expected credit losses, CAF management classifies its loans for credit risk purposes into sovereign loans and non-sovereign loans. The allowance for loan losses is estimated considering the credit risk exposure (undiscounted), cumulative default probability for 1 to 5 years tranches and loss given default, based on external data provided by risk rating agencies, recognizing such lifetime expected effects in profit or loss for the reporting period.
Sovereign loans within each country exhibit similar risk characteristics, therefore, the allowance for loan losses on sovereign loans is collectively evaluated at country level and established by CAF based on the individual long-term foreign currency debt rating applicable to the borrower countries, which is determined using the average rating of three recognized international credit rating agenciesat the date of each of the balance sheet presented. The long-term foreign currency debt ratingconsiders a default probability. Given CAF’s status as a de facto preferred creditor and the immunities and privileges conferred by its shareholder countries, which are established in CAF’s Constitutive Agreement and other similar agreements, adjustments are made to reflect a lower default probability – usually equivalent to three levels to the average rating referred above. Historically, none of its sovereign loans has ever been placed in non-accrual status or has been written off. It is not the policy of CAF to restructure its sovereign loans and management does not have any expectation of writing off such loans.
For the non-sovereign loans, the allowance for loan losses is individually evaluated and calculated on a non-discounted cash flow method by considering CAF’s internal rating of each borrower, using the probability of default corresponding to the average rating of the equivalent categories of the international risk-rating agencies.
For those cases where the category equivalent to the rating of a particular borrower determined in accordance with any of the international risk-rating agencies is higher than the risk rating in local currency of the country corresponding to such borrower, or if for any reason there is no risk rating, the risk rating in local currency of such country determined by international credit rating agencies will be used.
CAF considers that external data provided by risk rating agencies used to determine the probability of default reflects its expectations about the future economic conditions and there are no other adjustments regarding historical loss information and future conditions that should be considered as significant factor to determining the expected collectability.
CAF assesses and determine the loss given default which considers the CAF´s status as a de facto preferred creditor, the immunities and privileges conferred by its shareholder countries, the collateral of each loan, the effect of interest on late payments to avoid the potential impairment derived by the time value of money and the evidence of historical loss data collected for each country through the years. In addition, given the nature of CAF´s lending activities as multilateral bank, in case of delay on payments of sovereign loans, the loss given default reflects the expectation to collect the total amount due, including accrued interests and commissions receivable for the period of delay.
A specific allowance for loan losses is individually evaluated and established by CAF for loans in non-accrual status as these loans do not have the same risk characteristics as other loans. A loan is considered in non-accrual status when, based on currently available information and events, it is
F-15
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
probable that CAF will not recover the total amount of principal and interest as agreed in the terms of the original loan contract. The allowance for loan losses 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.
i. | Equity investments – CAF invests in equity securities of companies and funds in strategic sectors,with the objective of promoting the development of such companies and funds and their participation in the securities markets and to serve as a catalyst in attracting resources to shareholder countries. |
If CAF has the ability to exercise significant influence over the operating and financial policies of the investee, which is generally presumed to exist when CAF holds an ownership interest in the voting stock of an investee between 20% and 50%, the equity investments are accounted for using the equity method. Under the equity method, the carrying amount of the equity investment is adjusted to reflect CAF’s proportionate share of earnings or losses, dividends received and certain transactions of the investee Company.
Other than those accounted for under the equity method, CAF recorded investments in equity securities without readily determinable fair value, as follows:
(i) | Direct investments in equity securities of companies – These investments, which do not qualify for the net asset value practical expedient to estimate fair value, are accounted for at cost minus impairment (if any), plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. |
(ii) | Equity investments in funds – These investments are carried at fair value using the net asset value practical expedient to estimate fair value. |
Dividend income from equity investments without readily determinable fair value is recognized when CAF’s right to receive payment has been established.
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 estimated useful life for assets is as follows:
Buildings | 30 years | |
Building 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 mainly include the following: |
(i) | Derivative-related collateral – CAF receives or provides cash collateral from or to individual swap and futures counterparties to mitigate its credit exposure to these counterparties. It is the policy of CAF to restrict and invest cash collateral received from swap and futures counterparties for fulfilling its obligations under the collateral agreement. CAF records cash collateral received |
F-16
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
in other assets with a corresponding obligation to return the cash collateral received recorded in accrued expenses and other liabilities. Cash collateral provided to swap and futures counterparties, under the collateral agreement, are recorded in other assets. |
(ii) | Intangible assets – Include software investments which are reported at cost less accumulated amortization. The amortization is calculated with the straight-line method over the useful lifeestimated by CAF. The estimated useful life of these assets is between 2 and 5 years. |
l. | Impairment of investment accounted for under the equity method – An investment accounted for under the equity method is considered impaired and an impairment loss is recognized only if there are circumstances that indicate impairment as a result of one or more events (“loss events”) that have occurred after recognition of such investment. |
An impairment charge is recorded whenever a decline in value of an investment below its carrying amount is determined to be other-than-temporary. In determining if a decline is other-than-temporary, factors such as the length of time and extent to which the fair value of the investment has been less than the carrying amount of the investment, the near-term and longer-term operating and financial prospects of the affiliate and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery are considered.
m. | Deposits – Deposits denominated in US$ are recorded at amortized cost. Deposits denominated in currencies other than the US$ are recognized at fair value. Gains or losses resulting from changes in the fair value of these deposits are recognized in the statements of income when they occur. |
n. | Commercial papers – Commercial papers are recorded at amortized cost. |
o. | Borrowings from other financial institutions – The borrowings from other financial institutions, both local or foreign financial institutions, are recorded at amortized cost, except for some borrowings that are designated a fair value hedge or as an economic hedge. The up-front costs and fees related to the issuance of borrowings recorded at amortized cost are deferred and reported in the balance sheets as a direct deduction from the face amount of borrowings and amortized during the term of the borrowings as interest expense. The up-front cost and fees related to borrowings that are designated a fair value hedge or as an economic hedge are recognized in the statements of income when they occur. |
p. | Bonds – Medium and long-term bond issuances, whose objective is to provide the financial resources required to finance CAF’s operations, are recorded as follows: |
(i) | Bonds denominated in currencies other than the US$ are recognized at fair value. Gains or losses resulting from changes in the fair value of these bonds, as well as the related bond’s up-frontcosts and fees, are recognized in the statements of income when they occur. CAF enters into cross-currency and interest rate swaps to economically hedge the interest rate and foreign exchange risks related with these bonds. |
(ii) | Bond denominated in US$ are recognized at fair value. The interest rate risk on US$denominated bonds is hedged using interest rate swaps, and such interest rate swaps aredesignated as part of fair value hedge accounting relationships assuming no hedgeineffectiveness (the “shortcut method”). The related bond’s up-front costs and fees are deferred and reported in the balance sheets as a direct deduction from the face amount of the bonds and amortized during the term of the bonds as interest expense. |
F-17
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Partial repurchases of bond issuances result in derecognition of the corresponding liabilities. The difference between the repurchase price and the bond’s carrying amount is recognized as income/loss for the year.
q. | Employees’ severance benefits – Accrual for severance benefits comprises all the liabilities related to the workers’ vested rights according to CAF’s employee policies and the applicable labor law of the member countries. The accrual for employee severance benefits is presented as part of “Employees’ severance benefits and savings plan” account under “Accrued expenses and other liabilities” caption. |
Under CAF’s employee policies, employees earn a severance benefit 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 days 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 as they are incurred and interest on the amounts owed to employees are paid annually as a result of employees’ rights to receive severance benefits accrued in the year in which earned.
In the case of unjustified dismissal or involuntary termination, employees have the right to anadditional severance benefit of one month of salary per year of service.
r. | Pension plan – CAF has established a defined benefit plan (the Plan), which is mandatory for all employees hired on or after the establishment of the Plan and voluntary for all other employees. The Plan’s benefits are calculated based on years of service and the average salary of the three consecutive years in which the employee received the highest salary. CAF periodically updates the benefit obligations considering actuarial assumptions. |
s. | Derivative financial instruments and hedging activities – CAF records all derivative financial instruments on the balance sheet at fair value, regardless of the purpose or intent for holding them. |
CAF’s policy is not to enter into derivative financial instruments for speculative purposes. CAF also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair values of the hedged items.
Derivative financial instruments that are considered to be hedges from an accounting perspective are recognized in the balance sheet at fair value with changes in fair value either: (1) offset by changes in fair value of the hedged assets, liabilities or firm commitments through earnings within “Derivative financial instruments assets” or “Derivative financial instruments liabilities” if the derivative is designated as a fair value hedge, or (2) recognized in other income until the hedged item is recognized in earnings if the derivative is designated as a cash flow hedge. The ineffective portion of the change in fair value for a hedged derivative is immediately recognized in earnings as a component of “Unrealized changes in fair value related to other financial instruments”, regardless of whether the hedged derivative is designated as a cash flow or fair value hedge. In all situations in which hedge accounting is discontinued, CAF, recognizes any changes in its fair value in the statements of income.
F-18
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
CAF discontinues hedge accounting prospectively upon determining that the derivative financial instrument is no longer effective in offsetting changes in the fair value of the hedged item; thederivative 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 financial instrument as a hedging instrument is no longer appropriate.
When hedge accounting is discontinued because it is determined that the derivative financialinstrument no longer qualifies as an effective fair value hedge, CAF continues to carry the derivative financial instrument on the balance sheets at its fair value, but no longer adjusts the hedged asset or liability for changes in fair value.
Certain derivative financial instruments, although considered to be an effective hedge froman economic perspective (economic hedge), have not been designated as a hedge for accounting purposes. The changes in the fair value of such derivative financial instruments are recognized in the statements of income, concurrently with the change in fair value of the underlying assets and liabilities.
t. | Fair value of financial instruments and fair value measurements – An entity is required tomaximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Accounting guidance establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Inputs used to measure fair value may fall into one of three levels: |
Level 1 – Applies to assets or liabilities for which there are quoted prices in active markets foridentical assets or liabilities.
Level 2 – Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 – Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
u. | Guarantee fee income – CAF provides guarantees on loans originated by third parties to support projects located within a shareholder 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 of sharing 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 period covered by the guarantee. |
v. | Provision for guarantees losses – Provision for guarantees is maintained at a level CAF believes adequate to absorb probable losses inherent to the guaranteed loans originated by third parties as of the date of the financial statements. Guaranteed loans are classified as either sovereign ornon-sovereign. |
F-19
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Provision for guarantees is estimated by CAF considering the credit risk exposure, default probability and loss given default. Provision for sovereign guarantees losses is based on the individual long-term foreign currency debt rating of the guarantor countries (“country risk rating”) considering the weighted average rating of three recognized international risk rating agencies at the date of the financial statements’ preparation. These country risk ratings have associated default probability. Given CAF’s status as a de facto preferred creditor, arising from its status as amultilateral financial institution and from the interest of its borrowers in maintaining their credit standing with CAF, and taking into account the immunities and privileges conferred by itsshareholder countries, which are established in CAF’s Constitutive Agreement and other similar agreements, a factor that reflects a lower default probability – usually equivalent to three levels up in this weighted average rating is used. For non-sovereign guarantees, the provision is determined by considering the CAF internal rating of each client and the weighted average rating of the aforementioned agencies. |
The provision for guarantees losses are reported as other liabilities.
w. | Recent accounting pronouncements – |
Recent accounting pronouncements applicable
ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures
In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-02, Troubled Debt Restructurings and Vintage Disclosures (Topic 326). The amendments in this Update eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments in this Update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. CAF adopted the amendments in this Update on January 1, 2023 and the adoption did not have material effects in the financial statements.
ASU 2020-04, Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The ASU provides optional expedients and exceptions, for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU do not apply to contract modifications made or other transactions entered after December 31, 2022. In January 2021, the FASB issued amendments in ASU 2021-01 to the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and tailor the existing guidance to derivative instruments affected by the discounting transition. In December 2022, the FASB issued an amendment in ASU 2022-06, to defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The impact of both ASUs have no material effects in the financial statements since the rates were offset between financial assets and liabilities.
F-20
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Libor Replacement
The replacement of the LIBOR rates with a new reference rate or rates is an industry risk due to the implications it has on the assets as well as the liabilities of financial institutions. In that regard, CAF has been closely following the recent developments and announcements from groups and organizations that are most closely involved with the phasing out of the LIBOR rate that affect the loan and derivatives markets, including the International Swaps and Derivatives Association (ISDA) andits publication of the ISDA 2020 IBOR Fallbacks Protocol, to which CAF has adhered inJanuary 2021. In addition, CAF has established an interdepartmental task force in charge of preparing the institution for the change in reference rates, including measures such as the incorporation of fallback provisions on loans to mitigate any possible impact LIBOR may have. This task force in coordination with management recommended and approved that starting January 1, 2022, all loans originated will be made in the reference rate Term SOFR. New financial liabilities will also be hedged to SOFR. Legacy loans that are referenced to LIBOR rate are being converted after June 2023 when LIBOR rate ceases to be representative. It is for this reason that we expected the LIBOR transition to occur smoothly. On April 3, 2023, the Financial Conduct Authority (FCA) announced that US$ LIBOR rates of 1, 3 and 6 months will be published using an unrepresentative ‘synthetic’ methodology starting July 1, 2023 up to September 30, 2024. These synthetic rates are intended for use in legacy contracts only, to help ensure the incorporation of fallback language in the remaining legacy contracts.
If SOFR or another rate does not achieve wide acceptance as the alternative to LIBOR, there likely will be disruption in financial markets. In the event that SOFR or another reference rate is widely accepted, risks will remain related to outstanding loans, borrowings, derivatives and other instruments using LIBOR related to transitioning those instruments to a new reference rate and the corresponding value transfer that may occur in connection with that transition, as the new reference rate will not exactly mimic LIBOR.
Accounting pronouncements pending adoption
ASU 2020-06, Simplifies Issuer’s Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity
On August 5, 2020, the FASB issued ASU 2020-06, which simplifies the accounting forcertain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for fiscal years beginning after December 15, 2023 with early adoption permitted. CAF will not early adopt this ASU and estimates it will not have material effects in the financial statements.
ASU 2023-06, Disclosure Improvements
On October 9, 2023, the FASB issued ASU 2023-06, which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the “Codification”). The ASU was issued in response to the Security Exchange Commission (SEC) Disclosure Update and Simplification Initiative that updated and simplified disclosure requirements that the SEC believed were “redundant, duplicative, overlapping, outdated, or superseded.” The new guidance is intended to align U.S. GAAP requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. CAF will not early adopt this ASU and estimates it will not have material effects in the financial statements.
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
ASU 2023-07, Improvements to Reportable Segment Disclosures
On November 27, 2023, the FASB issued ASU 2023-07, which amendments “improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.” In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable “investors to better understand an entity’s overall performance” and assess “potential future cash flows. This ASU is effective for fiscal years beginning after December 15, 2023 with early adoption permitted. CAF will not early adopt this ASU and estimates it will not have material effects in the financial statements.
3. | CASH AND DUE FROM BANKS AND DEPOSITS WITH BANKS |
Cash and deposits with banks with original maturity of three months or less include the following:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Cash and due from banks | 70,592 | 107,592 | 112,047 | |||||||||
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Deposits with banks: | ||||||||||||
U.S. dollars | 4,793,922 | 5,417,808 | 3,058,495 | |||||||||
Euro | 170,016 | 1,118,061 | 151,721 | |||||||||
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| |||||||
5,034,530 | 6,643,461 | 3,322,263 | ||||||||||
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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, 2023, 2022 and 2021
(In thousands of U.S. dollars)
4. | MARKETABLE SECURITIES |
Trading
A summary of trading securities follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
maturity | maturity | maturity | ||||||||||||||||||||||
Amount | (years) | Amount | (years) | Amount | (years) | |||||||||||||||||||
U.S. Securities | 2,542,017 | 1.45 | 1,775,459 | 1.70 | 2,219,711 | 1.60 | ||||||||||||||||||
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Non-U.S. governments and government entities bonds | 423,908 | 1.74 | 334,634 | 1.42 | 556,230 | 0.80 | ||||||||||||||||||
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| |||||||||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||||||||||
Commercial paper | 2,610,195 | 0.39 | 1,851,803 | 0.23 | 3,861,129 | 0.14 | ||||||||||||||||||
Certificates of deposits(1) | 2,103,754 | 0.39 | 2,769,645 | 0.36 | 3,284,428 | 0.24 | ||||||||||||||||||
Bonds | 1,818,551 | 2.54 | 1,325,284 | 1.69 | 1,941,602 | 1.93 | ||||||||||||||||||
Collateralized mortgage obligation | 377,665 | 4.56 | 266,250 | 5.11 | 290,805 | 5.95 | ||||||||||||||||||
Liquidity funds(2) | 112,128 | 1.00 | 160,530 | 1.00 | 349,162 | 1.00 | ||||||||||||||||||
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| |||||||||||||||||||
7,022,293 | 1.18 | 6,373,512 | 0.81 | 9,727,126 | 0.73 | |||||||||||||||||||
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| |||||||||||||||||||
Trading | 9,988,218 | 1.27 | 8,483,605 | 1.02 | 12,503,067 | 0.89 | ||||||||||||||||||
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|
|
(1) | Each certificate of deposit bears a maturity date and specified fixed interest rate. It also is held through The Depository Trust Company (DTC) and has a CUSIP number, which is a code that identifies a financial security and facilitates trading. |
(2) | The liquidity funds are comprised of short-term (less than one year) securities representing high-quality liquid debt and monetary instruments. |
The fair value of trading securities includes net unrealized gains of US$ 56,025 and losses US$ 65,936, US$ 15,600 as of December 31, 2023, 2022 and 2021, respectively.
For the years ended December 31, 2023, 2022 and 2021, Interest income – Investments and deposits with banks includes interest income for US$ 661,050, US$ 230,948 and 63,828, respectively, and gain and loss on the mark-to-market valuations for US$ 260,233, US$ 57,961 and 40,729, respectively. The fluctuation in Interest income - Investments and deposits with banks is mainly due to the increase of the benchmark interest rates since the start of 2022 due to high inflation expectations and the increase of the short-term interest rates by the U.S. Federal Reserve which affected the mark-to-market valuations of CAF´s trading securities during the years ended December 31, 2023 and 2022, respectively.
CAF places its short-term investments mainly in high grade financial institutions and corporate securities. CAF has conservative investment guidelines that limit the amount of credit risk exposure, considering among other factors, limits as to credit ratings, limits as to duration exposure, specific allocations by type of investment instruments and limits across sector and currency allocation. As of December 31, 2023,2022 and
F-23
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
2021, CAF does not have any significant concentrations of credit risk according to its investment guidelines. Non-US dollar-denominated securities included in marketable securities amounted to the equivalent of US$ 283,554, US$ 550,973 and US$ 307,437 as of December 31, 2023, 2022 and 2021, respectively.
Maturity of marketable securities are as follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Less than one year | 6,009,404 | 5,614,860 | 8,891,515 | |||||||||
Between one and two years | 2,377,609 | 1,941,949 | 2,351,677 | |||||||||
Between two and three years | 677,273 | 542,997 | 500,274 | |||||||||
Between three and four years | 309,478 | 189,879 | 407,059 | |||||||||
Between four and five years | 366,187 | 97,714 | 235,344 | |||||||||
Over five years | 248,267 | 96,206 | 117,198 | |||||||||
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9,988,218 | 8,483,605 | 12,503,067 | ||||||||||
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5. | OTHER INVESTMENTS |
Other investments are as follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Deposits with banks due more than 90 days | ||||||||||||
U.S. dollars | 1,095,009 | 111,193 | 292,392 | |||||||||
Euro | 44,160 | — | — | |||||||||
Colombian pesos | — | 147,179 | — | |||||||||
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1,139,169 | 258,372 | 292,392 | ||||||||||
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Special drawing rights | 125,869 | — | — | |||||||||
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1,265,038 | 258,372 | 292,392 | ||||||||||
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The interest rates on deposits with banks ranged from 2.52% to 6.60% as of December 31, 2023, from 0.39% to 6.60% as of December 31, 2022 and from 0.11% to 0.34% as of December 31, 2021.
Special Drawing Rights (SDR) are an international reserve asset issued by the International MonetaryFund (IMF) as a complementary official reserve for member countries, its value is based on a 5 currencies basket (the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling). Since February 2023, CAF was named authorized holder by the International Monetary Fund allowingit hold and exchange SDR only with authorized holders. SDR holdings earn interest which is determined on weekly basis. The interest rate as of December 31, 2023 is 4.151%.
F-24
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
6. | 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” shareholder countries, or to private institutions or companies domiciled in those countries. Loans by country are summarized as follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Shareholder country: | ||||||||||||
Argentina | 5,503,626 | 3,981,391 | 3,842,317 | |||||||||
Barbados | 175,013 | 181,098 | 172,683 | |||||||||
Bolivia | 2,948,465 | 3,100,722 | 2,752,463 | |||||||||
Brazil | 2,970,763 | 2,633,318 | 2,698,038 | |||||||||
Chile | 244,000 | 192,510 | 304,187 | |||||||||
Colombia | 3,842,359 | 3,726,267 | 3,403,385 | |||||||||
Costa Rica | 497,638 | 533,937 | 547,145 | |||||||||
Dominican Republic | 445,105 | 412,627 | 110,789 | |||||||||
Ecuador | 4,246,954 | 4,232,207 | 4,201,415 | |||||||||
El Salvador | 302,000 | 75,000 | — | |||||||||
Mexico | 980,000 | 955,000 | 825,000 | |||||||||
Panama | 2,582,659 | 2,691,924 | 2,562,057 | |||||||||
Paraguay | 2,373,889 | 2,059,119 | 1,511,665 | |||||||||
Peru | 1,836,850 | 1,473,683 | 1,743,908 | |||||||||
Trinidad & Tobago | 1,305,459 | 1,217,246 | 1,163,978 | |||||||||
Uruguay | 1,331,442 | 980,458 | 903,243 | |||||||||
Venezuela | 2,135,370 | 2,512,567 | 2,871,509 | |||||||||
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| |||||||
Total | 33,721,592 | 30,959,074 | 29,613,782 | |||||||||
Fair value adjustments | (242,507 | ) | (336,750 | ) | (18,396 | ) | ||||||
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| |||||||
Loans | 33,479,085 | 30,622,324 | 29,595,386 | |||||||||
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Fair value adjustments of loans represent mainly adjustments to the amount of loans for which the fair value option is elected.
As of December 31, 2023, 2022 and 2021, loans denominated in currencies other than U.S. dollar weregranted for an equivalent of US$ 696,136, US$ 468,750 and US$ 170,401, respectively, mainly in Colombian pesos, Uruguayan pesos, Brazilian reales, Swiss francs, Peruvian nuevo sol, Paraguayan guarani and Bolivian bolivianos. All these loans are hedged with Swaps, Borrowings from other financial institution and Bonds. As of December 31, 2023, 2022 and 2021, fixed interest rate loans amounted to US$ 2,226,339, US$ 2,209,011 and US$ 2,321,999, respectively.
F-25
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Loans classified by sector borrowers and the weighted average yield of the loan portfolio is shown below:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
average | average | average | ||||||||||||||||||||||
Amount | yield (%) | Amount | yield (%) | Amount | yield (%) | |||||||||||||||||||
Public sector | 32,327,694 | 7.30 | 29,791,001 | 6.17 | 27,723,931 | 2.25 | ||||||||||||||||||
Private sector | 1,393,898 | 7.45 | 1,168,073 | 6.29 | 1,889,851 | 1.98 | ||||||||||||||||||
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33,721,592 | 7.30 | 30,959,074 | 6.18 | 29,613,782 | 2.23 | |||||||||||||||||||
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Loans by industry segments are as follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||||||||
Infrastructure programs | 14,364,602 | 43 | 12,441,156 | 41 | 9,927,111 | 34 | ||||||||||||||||||
Transport, warehousing and communications | 9,003,229 | 27 | 8,487,104 | 27 | 8,326,436 | 28 | ||||||||||||||||||
Electricity, gas and water supply | 5,327,072 | 16 | 5,696,943 | 18 | 6,025,830 | 20 | ||||||||||||||||||
Health and social services | 2,665,148 | 8 | 2,317,517 | 7 | 2,569,709 | 9 | ||||||||||||||||||
Financial services – Commercial banks | 1,259,164 | 4 | 1,040,578 | 3 | 1,230,670 | 4 | ||||||||||||||||||
Financial services – Development banks | 985,000 | 2 | 841,398 | 3 | 1,367,969 | 4 | ||||||||||||||||||
Agriculture, hunting and forestry | 70,724 | — | 52,852 | — | 62,104 | — | ||||||||||||||||||
Manufacturing industry | — | — | 24,392 | — | 32,291 | — | ||||||||||||||||||
Others | 46,653 | — | 57,134 | 1 | 71,662 | 1 | ||||||||||||||||||
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33,721,592 | 100 | 30,959,074 | 100 | 29,613,782 | 100 | |||||||||||||||||||
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Loans mature as follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Less than one year | 5,715,772 | 4,060,523 | 5,176,788 | |||||||||
Between one and two years | 3,175,175 | 3,158,733 | 2,721,602 | |||||||||
Between two and three years | 3,079,662 | 2,979,214 | 2,818,766 | |||||||||
Between three and four years | 3,210,996 | 2,785,391 | 2,811,208 | |||||||||
Between four and five years | 2,936,228 | 2,932,946 | 2,575,262 | |||||||||
Between five and ten years | 10,231,497 | 9,749,684 | 9,007,204 | |||||||||
Between ten and fifteen years | 4,159,272 | 3,980,057 | 3,335,471 | |||||||||
Over fifteen years | 1,212,990 | 1,312,526 | 1,167,481 | |||||||||
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| |||||||
33,721,592 | 30,959,074 | 29,613,782 | ||||||||||
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CAF maintains an internal risk rating system to evaluate the quality of the non-sovereign loans, which identifies, through a standardized rating and review parameters, those risks related to credit transactions in order to determine an internal risk rating classification designed by CAF. For purpose of determining the allowance for loan losses of sovereign loans as of December 31, 2023, 2022 and 2021, rating assigned by external agencies are used.
F-26
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
The credit quality of the sovereign loans of estimating the allowance for credit losses is based on the individual long-term foreign currency debt rating applicable to the borrower countries, which is determined using the average rating of three recognized international credit rating agencies. The credit quality by year of origination and taking the Moody’s rating as a reference as of December 31, 2023, is as follows:
Credit Rating | Year of origination | |||||||||||||||||||||||||||||||
Country | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Total | |||||||||||||||||||||||||
Argentina | Ca | 1,540,214 | 489,970 | 773,755 | 697,856 | 8,969 | 1,924,493 | 5,435,257 | ||||||||||||||||||||||||
Barbados | B3 | — | — | 30,000 | 100,000 | 3,695 | 41,318 | 175,013 | ||||||||||||||||||||||||
Bolivia | Caa1 | 12,933 | 560,810 | 350,000 | 42,607 | 250,952 | 1,600,034 | 2,817,336 | ||||||||||||||||||||||||
Brazil | Ba2 | — | 458,903 | — | 463,823 | 448,443 | 1,230,668 | 2,601,837 | ||||||||||||||||||||||||
Colombia | Baa2 | 250,000 | 600,000 | 500,000 | 350,000 | 500,716 | 1,013,455 | 3,214,171 | ||||||||||||||||||||||||
Costa Rica | B1 | — | — | — | 467,742 | — | 19,155 | 486,897 | ||||||||||||||||||||||||
Dominican Republic | Ba3 | — | 300,000 | 59,598 | — | — | 75,507 | 435,105 | ||||||||||||||||||||||||
Ecuador | Caa3 | 251,290 | 454,307 | 604,415 | 650,211 | 527,957 | 1,658,775 | 4,146,955 | ||||||||||||||||||||||||
El Salvador | Caa3 | 227,000 | 75,000 | — | — | — | — | 302,000 | ||||||||||||||||||||||||
Mexico | Baa2 | 380,000 | 300,000 | — | 300,000 | — | — | 980,000 | ||||||||||||||||||||||||
Panama | Baa3 | 12,433 | 320,000 | 356,537 | 382,143 | 320,830 | 893,217 | 2,285,160 | ||||||||||||||||||||||||
Paraguay | Ba1 | 187,200 | 322,763 | 250,000 | 414,950 | 135,793 | 1,034,307 | 2,345,013 | ||||||||||||||||||||||||
Peru | Baa1 | 250,000 | 154,917 | 484,599 | — | 218,750 | 376,380 | 1,484,646 | ||||||||||||||||||||||||
Trinidad & Tobago | Ba2 | 75,000 | 120,000 | 175,000 | 319,903 | 200,000 | 415,556 | 1,305,459 | ||||||||||||||||||||||||
Uruguay | Baa2 | 520,315 | 170,674 | 240,000 | 40,476 | — | 192,462 | 1,163,927 | ||||||||||||||||||||||||
Venezuela | C | — | — | — | — | 441,176 | 1,694,191 | 2,135,367 | ||||||||||||||||||||||||
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3,706,385 | 4,327,344 | 3,823,904 | 4,229,711 | 3,057,281 | 12,169,518 | 31,314,143 | ||||||||||||||||||||||||||
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The credit quality of the non-sovereign loan portfolio by year of origination, as represented by the internal credit risk classification as of December 31, 2023, is as follows:
Year of origination | ||||||||||||||||||||||||||||
Credit Rating | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Total | |||||||||||||||||||||
Satisfactory - outstanding | 244,000 | — | — | — | — | 60,000 | 304,000 | |||||||||||||||||||||
Satisfactory - very good | 351,962 | 100,000 | — | — | — | 5,741 | 457,703 | |||||||||||||||||||||
Satisfactory - adequate | 543,980 | 190,059 | 50,221 | 45,380 | 41,882 | 222,189 | 1,093,711 | |||||||||||||||||||||
Watch | 69,500 | 1,900 | 8,193 | 66,667 | 88,299 | — | 234,559 | |||||||||||||||||||||
Special mention | 171,630 | — | — | — | — | 66,169 | 237,799 | |||||||||||||||||||||
Doubtful | — | — | — | — | — | 36,182 | 36,182 | |||||||||||||||||||||
Sub-standard | — | — | — | — | — | 29,335 | 29,335 | |||||||||||||||||||||
Loss | — | — | — | — | — | 14,160 | 14,160 | |||||||||||||||||||||
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1,381,072 | 291,959 | 58,414 | 112,047 | 130,181 | 433,776 | 2,407,449 | ||||||||||||||||||||||
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The internal and external ratings have been updated as of December 31, 2023.
F-27
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Loan portfolio quality
The loan portfolio quality indicators and the related amounts are presented below:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
During the year CAF recorded the following transactions: | ||||||||||||
Loans written-off | 34,452 | 11,125 | 48,234 | |||||||||
Purchases of loan portfolio | — | — | — | |||||||||
Sales of loan portfolio | 33,000 | 37,500 | — | |||||||||
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
CAF presented the following amounts and quality indicators as of the end of the year: | ||||||||||||
Non-accrual loans | 50,342 | 107,937 | 112,059 | |||||||||
Troubled debt restructured | — | 23,142 | 29,206 | |||||||||
Overdue accrual loans | — | — | — | |||||||||
Allowance for loan losses as a percentage of loan portfolio | 0.17 | % | 0.21 | % | 0.26 | % | ||||||
Non-accrual loans as a percentage of loan portfolio | 0.15 | % | 0.35 | % | 0.38 | % | ||||||
Overdue loan principal as a percentage of loan portfolio | 0.00 | % | 0.00 | % | 0.00 | % |
No loans were restructured during the years ended December 31, 2023, 2022 and 2021. As of December 31, 2023, the remaining amount of the restructured loan was collected, including principal and interest, as a result of this transaction CAF, recognized a net gain of US$ 16,354 in the statement of income as other income.
As of December 31, 2023, 2022 and 2021, the total principal amount of non-accrual loans are related to private sector borrowers (non-sovereign loans) which were 2,749 days, 2,384 and 2,019 days overdue, respectively. For the years ended December 31, 2023, 2022 and 2021, there were no interest income recognized for non-accrual loans. The allowance of loan losses for non-accrual loans amount to US$ 6,155, US$ 22,103 and US$ 18,603 as of December 31, 2023, 2022 and 2021, respectively.
On March 31, 2020, CAF implemented the Support Program for the Liquidity Management in Exceptional Situations (the “Program”) approved by CAF’s Shareholders Assembly on March 3, 2020. The Program allows CAF to repurchase the shares of a shareholder country that fulfills the requirements of the Program and apply the proceeds to that country’s outstanding loans and interest. Pursuant to the Program, CAF notified Venezuela that it fulfills the requirements. Since inception of the Program to December 31, 2022 and 2021, CAF repurchased a total of 108,693 and 75.657, respectively, shares totaling US$ 1,543,440and US$ 1,074,329, respectively, deducting the amount of paid-in capital and additional paid-in capital for US$ 543,465, US$ 999,975 and US$ 378,285, US$ 696,044, respectively. For the year ended December 31, 2023, CAF repurchased an additional 39,336 shares totaling US$ 558,571 and applied that amount to repay due and overdue amounts of principal and interest and deducting the amount of paid-in capital and
F-28
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
additional paid-in capital for US$ 196,680 and US$ 361,891, respectively. Thus, since the inception of the Program to December 31, 2023, CAF repurchased 148,029 shares totaling US$ 2,102,011 and applied that amount to repay due and overdue amounts of principal and interest and deducting the amount of paid-in capital and additional paid-in capital for US$ 740,145 and US$ 1,361,866, respectively. As a result of the repurchases, as of February 9, 2024, Venezuela is current with its loans with CAF. It is estimated the Support Program will last during the year 2024. Venezuela is one of the founding shareholders of CAF in 1970. Venezuela has reiterated its commitment and its intention to undertake payments. CAF´s Management monitors its credit exposure periodically.
A/B Loans
CAF only assumes the credit risk for the portion of its participations of the loan. As of December 31, 2023, 2022 and 2021, CAF had loans of this nature amounting to US$ 452,641, US$ 361,170 and US$ 103,675, respectively, whereas other financial institutions provided funds for US$ 364,663, US$ 290,279 and US$ 46,215, respectively.
Allowance for Loan Losses
The allowance for credit losses is maintained at a level CAF believes to be appropriate to absorb expected lifetime losses over the contractual life of the loan portfolio and consider available information relevant to assessing the collectability of cash flows including a combination of internal and external information relating to past events, current conditions, and reasonable and supportable forecasts.
Changes in the allowance and the balance for loan losses over the outstanding amounts, individually and collectively evaluated, are presented below:
For the years ended | ||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Credit risk | Credit risk | Credit risk | ||||||||||||||||||||||||||||||||||
Non- | Non- | Non- | ||||||||||||||||||||||||||||||||||
Sovereign | sovereign | Total | Sovereign | sovereign | Total | Sovereign | sovereign | Total | ||||||||||||||||||||||||||||
Balances at beginning of year | — | 63,192 | 63,192 | — | 76,650 | 76,650 | — | 95,015 | 95,015 | |||||||||||||||||||||||||||
Provision (credit) for loan losses | — | 439 | 439 | — | (3,287 | ) | (3,287 | ) | — | 29,869 | 29,869 | |||||||||||||||||||||||||
Loans written-off | — | (34,452 | ) | (34,452 | ) | — | (11,125 | ) | (11,125 | ) | — | (48,234 | ) | (48,234 | ) | |||||||||||||||||||||
Recoveries | — | 27,734 | 27,734 | — | 954 | 954 | — | — | — | |||||||||||||||||||||||||||
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Balances at end of year | — | 56,913 | 56,913 | — | 63,192 | 63,192 | — | 76,650 | 76,650 | |||||||||||||||||||||||||||
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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, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Changes in the provision for contingencies and the off-balance-sheet undisbursed loan commitments and financial guarantees, individually and collectively evaluated, are presented below:
For the years ended | ||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Credit risk | Credit risk | Credit risk | ||||||||||||||||||||||||||||||||||
Non- | Non- | Non- | ||||||||||||||||||||||||||||||||||
Sovereign | sovereign | Total | Sovereign | sovereign | Total | Sovereign | sovereign | Total | ||||||||||||||||||||||||||||
Balances at beginning of year | — | 15,462 | 15,462 | — | 15,202 | 15,202 | — | 14,833 | 14,833 | |||||||||||||||||||||||||||
(Credit) provision for contingencies | — | (8,613 | ) | (8,613 | ) | — | 260 | 260 | — | 369 | 369 | |||||||||||||||||||||||||
|
|
|
|
|
|
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|
|
|
|
|
|
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| |||||||||||||||||||
Balances at end of year | — | 6,849 | 6,849 | — | 15,462 | 15,462 | — | 15,202 | 15,202 | |||||||||||||||||||||||||||
|
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(Credit) provision for contingencies and the off-balance-sheet undisbursed loan commitments and financial guarantees are included in the statements of income as part of other income for the year ended December 31, 2023, and as part of the other expenses for the years ended December 31, 2022 and 2021.
7. | EQUITY INVESTMENTS |
Equity investments, which have no readily determinable fair value, are as follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Investments - Equity securities | 338,965 | 340,407 | 380,167 | |||||||||
Investments - Equity method | 53,219 | 41,372 | 53,183 | |||||||||
|
|
|
|
|
| |||||||
392,184 | 381,779 | 433,350 | ||||||||||
|
|
|
|
|
|
CAF recognized the following in the statements of income related to investment in equity securities:
For the years ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Dividends | 4,934 | 6,725 | 5,108 | |||||||||
Changes in fair value measurements | 11,403 | (17,854 | ) | 26,748 | ||||||||
Impairment in equity securities | (1,336 | ) | (962 | ) | (117 | ) |
For the years ended December 31, 2023, 2022 and 2021, CAF recognized gains of US$ 11,403, losses of US$ 17,854 and gains of US$ 26,748, respectively, corresponding to the net increase and net decrease in the fair value of investments in equity securities, which are included in the statements of income as part of other income and other expenses, respectively.
In addition, for the years ended December 31, 2023, 2022 and 2021, CAF recognized gains of its equity in earnings of the investees for US$ 11,005, US$ 1,943 and losses of US$ 871, respectively, for investments under the equity method, which are recorded in the statements of income as part of Dividends and equity in earnings of investees.
F-30
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
8. | OTHER ASSETS |
A summary of other assets follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Derivative related collateral | 1,823,920 | 2,913,970 | 645,632 | |||||||||
Intangible assets, net of accumulated amortization of US$ 10,194, US$ 10,212 and US$ 8,381, respectively | 63,142 | 38,463 | 25,386 | |||||||||
Receivable from investment securities sold | 6,867 | 2,237 | 4,017 | |||||||||
Other | 32,928 | 29,431 | 25,256 | |||||||||
|
|
|
|
|
| |||||||
1,926,857 | 2,984,101 | 700,291 | ||||||||||
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|
|
|
|
9. | DEPOSITS |
A summary of deposits follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Demand deposits | 212,768 | 219,557 | 83,157 | |||||||||
Time deposits: | ||||||||||||
Less than one year | 3,931,727 | 4,442,619 | 3,919,679 | |||||||||
|
|
|
|
|
| |||||||
4,144,495 | 4,662,176 | 4,002,836 | ||||||||||
Fair value adjustments | — | 1,415 | (210 | ) | ||||||||
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|
|
|
|
| |||||||
Carrying value of deposits | 4,144,495 | 4,663,591 | 4,002,626 | |||||||||
|
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|
|
As of December 31, 2023, 2022 and 2021, the weighted average interest rate was 4.98%, 1.74% and 0.11%, respectively. Deposits are issued for amounts equal to or more than US$ 100. Total deposits denominated in currencies other than the U.S. dollar amount to an equivalent of US$ 116,412, US$ 610,372 and US$ 259,991 as of December 31, 2023, 2022 and 2021, respectively.
10. | COMMERCIAL PAPERS |
A summary of commercial papers follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
U.S. dollars | 4,439,048 | 3,614,583 | 2,814,740 | |||||||||
Euros | 292,559 | 1,057,709 | — | |||||||||
|
|
|
|
|
| |||||||
4,731,607 | 4,672,292 | 2,814,740 | ||||||||||
Less commercial papers issuance discount | (78,095 | ) | (53,495 | ) | (1,094 | ) | ||||||
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|
|
|
|
| |||||||
Carrying value of commercial papers | 4,653,512 | 4,618,797 | 2,813,646 | |||||||||
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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, 2023, 2022 and 2021
(In thousands of U.S. dollars)
As of December 31, 2023, 2022 and 2021, the weighted average interest rate was 5.21%, 2.00% and 0.23%, respectively. As of December 31, 2023, 2022 and 2021, commercial papers balance matures in 2024, 2023 and 2022, respectively.
11. | BORROWINGS FROM OTHER FINANCIAL INSTITUTIONS |
A summary of borrowings from other financial institutions by currency follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
U.S. dollars | 1,507,218 | 1,509,711 | 1,179,623 | |||||||||
Euros | 584,098 | 651,991 | 590,809 | |||||||||
Colombian Pesos | 28,695 | 27,546 | 30,764 | |||||||||
Others | 4,964 | 3,010 | — | |||||||||
|
|
|
|
|
| |||||||
2,124,975 | 2,192,258 | 1,801,196 | ||||||||||
Fair value adjustments | (77,562 | ) | (118,191 | ) | (28,328 | ) | ||||||
Less debt issuance costs | 617 | 1,291 | 697 | |||||||||
|
|
|
|
|
| |||||||
Carrying value of borrowings from other financial institutions | 2,046,796 | 2,072,776 | 1,772,171 | |||||||||
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As of December 31, 2023, 2022 and 2021, the fixed interest-bearing borrowings amounted to US$ 330,443, US$ 419,693 and US$ 410,531, respectively. As of December 31, 2023, 2022 and 2021, the weighted average interest rate after considering the impact of interest rate swaps was 6.38%, 3.40% and 1.52%, respectively.
Borrowings from other financial institutions, by remaining maturities, are summarized below:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Less than one year | 432,236 | 192,930 | 178,039 | |||||||||
Between one and two years | 410,976 | 441,786 | 388,211 | |||||||||
Between two and three years | 209,985 | 390,697 | 248,616 | |||||||||
Between three and four years | 190,508 | 191,040 | 191,271 | |||||||||
Between four and five years | 153,462 | 180,539 | 169,039 | |||||||||
Over five years | 727,808 | 795,266 | 626,020 | |||||||||
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| |||||||
2,124,975 | 2,192,258 | 1,801,196 | ||||||||||
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As of December 31, 2023, 2022 and 2021, there were unused term credit facilities amounting to US$ 1,557,697, US$ 1,614,675 and US$ 1,899,056, respectively.
F-32
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
12. | BONDS |
A summary of outstanding bonds follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
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 | 8,115,053 | 8,115,053 | 8.42 | 7,249,762 | 7,249,762 | 3.02 | 8,428,409 | 8,428,409 | 1.35 | |||||||||||||||||||||||||||
Euro | 8,784,835 | 8,322,257 | 6.79 | 8,457,619 | 7,674,839 | 4.83 | 8,637,076 | 8,274,796 | 1.25 | |||||||||||||||||||||||||||
Swiss francs | 2,793,740 | 3,119,430 | 6.84 | 2,669,895 | 2,731,206 | 4.88 | 2,203,076 | 2,297,342 | 1.42 | |||||||||||||||||||||||||||
Japanese yen | 1,614,238 | 1,333,853 | 6.74 | 1,467,350 | 1,194,018 | 5.03 | 1,404,689 | 1,297,358 | 1.28 | |||||||||||||||||||||||||||
Australian dollars | 1,340,315 | 1,284,576 | 6.83 | 1,094,600 | 956,756 | 5.63 | 1,026,690 | 945,521 | 1.58 | |||||||||||||||||||||||||||
Mexican pesos | 1,189,923 | 1,408,433 | 6.71 | 1,078,834 | 1,124,402 | 4.98 | 574,643 | 569,250 | 1.41 | |||||||||||||||||||||||||||
Norwegian kroner | 694,695 | 471,898 | 6.89 | 694,695 | 490,813 | 5.26 | 694,695 | 544,687 | 1.24 | |||||||||||||||||||||||||||
Hong Kong dollars | 584,332 | 580,710 | 7.02 | 584,332 | 580,725 | 5.05 | 635,865 | 632,757 | 1.73 | |||||||||||||||||||||||||||
Colombian pesos | 405,968 | 348,568 | 6.55 | 334,455 | 207,944 | 5.96 | 334,464 | 248,243 | 1.53 | |||||||||||||||||||||||||||
Brazilian Real | 201,662 | 219,915 | 6.29 | 201,662 | 201,880 | 4.99 | 280,304 | 250,040 | 1.20 | |||||||||||||||||||||||||||
Uruguayan pesos | 143,845 | 137,889 | 6.02 | 287,852 | 287,198 | 4.20 | 201,662 | 191,590 | 0.70 | |||||||||||||||||||||||||||
Turkish lira | 108,020 | 68,872 | 6.29 | 45,748 | 45,430 | 5.11 | — | — | — | |||||||||||||||||||||||||||
Costa Rica Colon | 99,047 | 101,312 | 6.46 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Polish Zloty | 61,130 | 68,737 | 6.37 | — | — | — | — | — | — | |||||||||||||||||||||||||||
New Zealand Dollar | 59,898 | 58,894 | 6.50 | 28,758 | 27,403 | 5.91 | 13,651 | 14,554 | 1.66 | |||||||||||||||||||||||||||
Canadian dollars | 30,395 | 30,182 | 6.88 | 30,395 | 29,542 | 4.63 | 30,395 | 31,385 | 2.50 | |||||||||||||||||||||||||||
Czech Koruna | 11,211 | 11,179 | 6.28 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Paraguayan Guarani | 9,952 | 9,952 | 1.30 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Indonesian Rupee | — | — | — | 75,000 | 66,403 | 4.28 | 75,000 | 72,467 | 0.46 | |||||||||||||||||||||||||||
Kazakhstan Tenge | — | — | — | 15,082 | 13,420 | 6.25 | 15,082 | 14,295 | 1.21 | |||||||||||||||||||||||||||
Indian Rupee | — | — | — | — | — | — | 31,891 | 28,729 | 2.71 | |||||||||||||||||||||||||||
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| |||||||||||||||||||||||||
26,248,259 | 25,691,710 | 24,316,039 | 22,881,741 | 24,587,592 | 23,841,423 | |||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
Fair value adjustments | (926,251 | ) | (1,625,155 | ) | 425,217 | |||||||||||||||||||||||||||||||
Less debt issuance costs | 6,009 | 4,373 | 6,103 | |||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
Carrying value of bonds | 24,759,450 | 21,252,213 | 24,260,537 | |||||||||||||||||||||||||||||||||
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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, 2023, 2022 and 2021
(In thousands of U.S. dollars)
A summary of the bonds issued, by remaining maturities at original exchange rate, follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Less than one year | 3,331,884 | 4,781,762 | 3,944,492 | |||||||||
Between one and two years | 5,210,881 | 3,230,823 | 4,557,150 | |||||||||
Between two and three years | 5,494,526 | 4,943,054 | 3,245,067 | |||||||||
Between three and four years | 4,382,168 | 3,682,075 | 4,256,759 | |||||||||
Between four and five years | 3,193,913 | 2,574,048 | 3,787,884 | |||||||||
Over five years | 4,634,887 | 5,104,277 | 4,796,240 | |||||||||
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| |||||||
26,248,259 | 24,316,039 | 24,587,592 | ||||||||||
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As of December 31, 2023, 2022 and 2021, fixed interest rate bonds amounted to US$ 25,737,649,US$ 23,836,526 and US$ 24,108,665, respectively, of which US$ 18,134,326, US$ 17,079,031 and US$ 16,173,655, respectively, are denominated in currencies other than U.S. dollar.
There were no bonds repurchased during the years ended December 31, 2023, 2022 and 2021.
13. | ACCRUED EXPENSES AND OTHER LIABILITIES |
A summary of accrued expenses and other liabilities follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Derivative-related collateral | 152,447 | 2,940 | 104,083 | |||||||||
Employees’ severance benefits and savings plan | 95,298 | 99,495 | 12,467 | |||||||||
Payable for investment securities purchased | 18,461 | 2,467 | 15,202 | |||||||||
Contributions to Shareholders’ Special Funds (Note 21) | 13,450 | 44,244 | 148,773 | |||||||||
Provision for contingencies (Note 6) | 6,849 | 15,462 | 17,437 | |||||||||
Other | 6,604 | 9,546 | 14,578 | |||||||||
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|
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| |||||||
293,109 | 174,154 | 312,540 | ||||||||||
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14. | PENSION PLAN |
As of December 31, 2023, 2022 and 2021, the plan has 759, 714 and 687 participants and active employees, respectively. The date used to determine pension plan benefit obligation is December 31 of each year.
For the years ended December 31, 2023, 2022 and 2021, a reconciliation of beginning and ending balances of the benefit obligation follows:
2023 | 2022 | 2021 | ||||||||||
Benefit obligation at beginning of year | 42,766 | 36,520 | 32,079 | |||||||||
Service cost | 4,132 | 3,379 | 3,024 | |||||||||
Interest cost | 1,689 | 1,454 | 1,275 | |||||||||
Plan participants’ contributions | 3,031 | 2,499 | 2,225 | |||||||||
Actuarial (gain) loss | (992 | ) | 615 | (553 | ) | |||||||
Benefit paid | (1,979 | ) | (1,701 | ) | (1,530 | ) | ||||||
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| |||||||
Benefit obligation at the end of year | 48,647 | 42,766 | 36,520 | |||||||||
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F-34
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
For the years ended December 31, 2023, 2022 and 2021, a reconciliation of beginning and ending balances of the fair value of plan assets follows:
2023 | 2022 | 2021 | ||||||||||
Fair value of plan assets at beginning of year | 43,146 | 36,833 | 32,455 | |||||||||
Actual return on plan assets | 1,590 | 1,516 | 1,208 | |||||||||
Contributions | 6,208 | 6,498 | 4,700 | |||||||||
Benefit paid | (1,979 | ) | (1,701 | ) | (1,530 | ) | ||||||
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|
|
| |||||||
Fair value of plan assets at end of year | 48,965 | 43,146 | 36,833 | |||||||||
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|
|
Plan assets are as follows:
December, 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Marketable securities | 48,965 | 43,146 | 36,833 | |||||||||
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The table below summarizes the component of the amount of net benefit cost recognized for the years ended December 31, 2023, 2022 and 2021:
2023 | 2022 | 2021 | ||||||||||
Service cost | 4,132 | 3,379 | 3,024 | |||||||||
Interest cost | 1,689 | 1,454 | 1,275 | |||||||||
Expected return on plan assets | (1,704 | ) | (1,467 | ) | (1,290 | ) | ||||||
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| |||||||
4,117 | 3,366 | 3,009 | ||||||||||
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|
A summary of the net projected cost for the year ending December 31, 2024 follows:
Service cost | ||||
Contribution to the plan | 2,876 | |||
Guaranteed benefit | 1,177 | |||
|
| |||
4,053 | ||||
Interest cost | 1,931 | |||
Expected return on plan assets | (1,944 | ) | ||
|
| |||
4,040 | ||||
|
|
A summary of the benefits that are expected to be paid for the next years follows:
2024 | 746 | |||
2025 | 906 | |||
2026 | 1,515 | |||
2027 | 1,737 | |||
2028 | 1,851 | |||
2029-2033 | 14,076 |
F-35
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Weighted-average assumptions used to determine net benefit cost of the Plan to December 31, 2023,2022 and 2021 follows:
2023 | 2022 | 2021 | ||||||||||
Discount rate | 4.00 | % | 4.00 | % | 4.00 | % | ||||||
Expected long-term nominal rate return on Plan assets | 4.00 | % | 4.00 | % | 4.00 | % | ||||||
Salary increase rate | 3.00 | % | 3.00 | % | 3.00 | % |
15. | SHAREHOLDERS’ EQUITY |
Authorized capital
The authorized capital of CAF as of December 31, 2023 and, 2022 amounts to US$ 25,000,000, of which US$ 18,000,000 is ordinary capital shares and US$ 7,000,000 is callable capital shares, distributed among Series “A”, “B” and “C” shares. The authorized capital of CAF as of December 31, 2021 amounts to US$ 15,000,000, of which US$ 10,000,000 is ordinary capital shares and US$ 5,000,000 is callable capital shares, distributed among Series “A”, “B” and “C” shares.
Additional paid-in capital
The additional paid-in capital is the amount paid by Series “B” and Series “C” shareholders in excess of the par value. The additional paid-in capital of CAF as of December 31, 2023, 2022 and 2021 amounts to US$ 4,380,427, US$ 4,252,952 and US$ 4,091,298, respectively.
Subscribed callable capital.
In addition to our subscribed paid-in and un-paid capital, our shareholders have subscribed to callable capital totaling US$ 1,819,660, US$ 1,625,660 and US$ 1,589,660 as of December 31, 2023, 2022 and 2021, respectively. Our callable capital (comprised of Series “B” and Series “C” callable capital shares) 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 their respective governments.
Shares
CAF´s Shares are divided into Series “A” Shares, Series “B” Shares and Series “C” Shares.
(i) | Series “A” shares may be owned only by the Member Countries. The term “Member Country” is defined in Article 3 of CAF’s General Regulations as any shareholder country holding at least one Series “A” share that, is either: i) a signatory to the Constitutive Agreement; or ii) a Latin America or the Caribbean country that has adhered to it. As of the date hereof, the Member Countries are the Argentine Republic, the Plurinational State of Bolivia, the Republic of Chile, the Republic of Colombia, Dominican Republic, Ecuador, El Salvador, Honduras, Panama, Paraguay, Peru, Trinidad |
F-36
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
and Tobago, the Federative Republic of Brazil, the Oriental Republic of Uruguay, and the Bolivarian Republic of Venezuela. Each Member 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 Member Countries owning a Series “A” share is entitled to elect one (1) Director and one (1) Alternate Director to our Board of Directors. The par value of the Series “A” Shares is one thousand two hundred US Dollars (US$ 1,200). |
(ii) | Series “B” shares are currently owned by the Member Countries and are held by the governments either directly or through designated governmental entities, except for certain Series “B” shares currently constituting approximately 0.03% of our outstanding shares, which are owned by thirteen (13) private sector financial institutions in the Member Countries. As owners of Series “B” shares, the Member Countries collectively are entitled to elect five (5) additional Directors and five (5) additional Alternate Directors through cumulative voting, and the 13 private sector financial institutions collectively are entitled to elect one (1) Director and one (1) Alternate Director. The nominal value of the Series “B” Shares is five US Dollars (US$ 5). |
(iii) | Series “C” shares are available for subscription by countries that are not Member Countries to strengthen relationships between these countries and the Member Countries. Series “C” shares are currently owned by six (6) associated shareholder countries: Barbados, Costa Rica, Jamaica, Mexico, Portugal and Spain. Holders of Series “C” shares collectively are entitled to elect two (2) Directors and two (2) Alternate Directors, and up to two (2) additional Directors with their respective two (2) Alternate Directors if additional new Series “C” Shares are subscribed and paid beyond certain threshold. In order for an additional director to be elected by the Series “C” shareholders, the subscription and payment for new Series “C” shares must represent an increase of one point five percent (1.5%) of CAF’s subscribed and paid-in capital equity in comparison with the total subscribed and paid-in capital at the end of the most recently completed fiscal year. The par value of the Series “C” Shares is five US Dollars (US$ 5.) |
A summary of the changes in subscribed and paid-in capital for the years ended December 31, 2023,2022 and 2021 follows:
Number of Shares | Nominal Amounts | |||||||||||||||||||||||||||||||
Note | Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | |||||||||||||||||||||||||
As of December 31, 2020 | 11 | 972,353 | 98,217 | 13,200 | 4,861,765 | 491,085 | 5,366,050 | |||||||||||||||||||||||||
Issued for cash | — | 42,373 | 1,848 | — | 211,865 | 9,240 | 221,105 | |||||||||||||||||||||||||
Shares’ repurchase | — | (30,156 | ) | — | — | (150,780 | ) | — | (150,780 | ) | ||||||||||||||||||||||
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As of December 31, 2021 | 11 | 984,570 | 100,065 | 13,200 | 4,922,850 | 500,325 | 5,436,375 | |||||||||||||||||||||||||
Issued for cash | 1 | 47,367 | 3,240 | 1,200 | 236,835 | 16,200 | 254,235 | |||||||||||||||||||||||||
Shares’ repurchase | 6 | — | (33,036 | ) | — | — | (165,180 | ) | — | (165,180 | ) | |||||||||||||||||||||
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| |||||||||||||||||||
As of December 31, 2022 | 12 | 998,901 | 103,305 | 14,400 | 4,994,505 | 516,525 | 5,525,430 | |||||||||||||||||||||||||
Issued for cash | 3 | 47,698 | 5,494 | 3,600 | 238,490 | 27,470 | 269,560 | |||||||||||||||||||||||||
Shares’ repurchase | 6 | — | (39,336 | ) | — | — | (196,680 | ) | — | (196,680 | ) | |||||||||||||||||||||
Share transfer | — | 23,657 | (23,657 | ) | — | 118,285 | (118,285 | ) | — | |||||||||||||||||||||||
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| |||||||||||||||||||
As of December 31, 2023 | 15 | 1,030,920 | 85,142 | 18,000 | 5,154,600 | 425,710 | 5,598,310 | |||||||||||||||||||||||||
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F-37
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Subscribed and paid-in capital as of December 31, 2023 is as follows:
Number of Shares | Nominal Amounts | |||||||||||||||||||||||||||
Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | ||||||||||||||||||||||
Shareholder: | ||||||||||||||||||||||||||||
Argentina | 1 | 131,876 | — | 1,200 | 659,380 | — | 660,580 | |||||||||||||||||||||
Bolivia | 1 | 66,555 | — | 1,200 | 332,775 | — | 333,975 | |||||||||||||||||||||
Brazil | 1 | 115,607 | — | 1,200 | 578,035 | — | 579,235 | |||||||||||||||||||||
Chile | 1 | 14,836 | — | 1,200 | 74,180 | — | 75,380 | |||||||||||||||||||||
Colombia | 1 | 210,016 | — | 1,200 | 1,050,080 | — | 1,051,280 | |||||||||||||||||||||
Dominican Republic | 1 | 17,177 | — | 1,200 | 85,885 | — | 87,085 | |||||||||||||||||||||
Ecuador | 1 | 70,447 | — | 1,200 | 352,235 | — | 353,435 | |||||||||||||||||||||
El Salvador | 1 | 9,256 | — | 1,200 | 46,280 | — | 47,480 | |||||||||||||||||||||
Panama | 1 | 41,988 | — | 1,200 | 209,940 | — | 211,140 | |||||||||||||||||||||
Paraguay | 1 | 40,747 | — | 1,200 | 203,735 | — | 204,935 | |||||||||||||||||||||
Peru | 1 | 216,835 | — | 1,200 | 1,084,175 | — | 1,085,375 | |||||||||||||||||||||
Trinidad & Tobago | 1 | 30,237 | — | 1,200 | 151,185 | — | 152,385 | |||||||||||||||||||||
Uruguay | 1 | 41,460 | — | 1,200 | 207,300 | — | 208,500 | |||||||||||||||||||||
Venezuela | 1 | 20,649 | — | 1,200 | 103,245 | — | 104,445 | |||||||||||||||||||||
Honduras | 1 | 2,691 | — | 1,200 | 13,455 | — | 14,655 | |||||||||||||||||||||
Barbados | — | — | 4,696 | — | — | 23,480 | 23,480 | |||||||||||||||||||||
Costa Rica | — | — | 11,038 | — | — | 55,190 | 55,190 | |||||||||||||||||||||
Jamaica | — | — | 182 | — | — | 910 | 910 | |||||||||||||||||||||
Mexico | — | — | 15,367 | — | — | 76,835 | 76,835 | |||||||||||||||||||||
Portugal | — | — | 1,920 | — | — | 9,600 | 9,600 | |||||||||||||||||||||
Spain | — | — | 51,939 | — | — | 259,695 | 259,695 | |||||||||||||||||||||
Commercial banks | — | 543 | — | — | 2,715 | — | 2,715 | |||||||||||||||||||||
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15 | 1,030,920 | 85,142 | 18,000 | 5,154,600 | 425,710 | 5,598,310 | ||||||||||||||||||||||
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As of December 31, 2023, the detail of unpaid subscribed capital and subscribed callable capital is presented below:
Capital subscriptions receivable | Capital portion | |||||||||||||||||||||||||||||||
Series “B” | Series “C” | Series “B” | Series “C” | |||||||||||||||||||||||||||||
Number | Nominal | Number | Nominal | Number | Nominal | Number | Nominal | |||||||||||||||||||||||||
of shares | Amount | of shares | Amount | of shares | Amount | of shares | Amount | |||||||||||||||||||||||||
Shareholder: | ||||||||||||||||||||||||||||||||
Argentina | 56,528 | 282,640 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Bolivia | 17,213 | 86,065 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Brazil | 12,536 | 62,680 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Chile | 93,364 | 466,820 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Colombia | 63,265 | 316,325 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Dominican Republic | 15,220 | 76,100 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Ecuador | 13,639 | 68,195 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Honduras | 29,706 | 148,530 | — | — | 7,200 | 36,000 | — | — |
F-38
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Capital subscriptions receivable | Capital portion | |||||||||||||||||||||||||||||||
Series “B” | Series “C” | Series “B” | Series “C” | |||||||||||||||||||||||||||||
Number | Nominal | Number | Nominal | Number | Nominal | Number | Nominal | |||||||||||||||||||||||||
of shares | Amount | of shares | Amount | of shares | Amount | of shares | Amount | |||||||||||||||||||||||||
El Salvador | 23,141 | 115,705 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Panama | 17,200 | 86,000 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Paraguay | 17,961 | 89,805 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Peru | 56,880 | 284,400 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Trinidad y Tobago | 25,562 | 127,810 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Uruguay | — | — | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Venezuela | 48,178 | 240,890 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Barbados | — | — | 2,348 | 11,740 | — | — | — | — | ||||||||||||||||||||||||
Mexico | — | — | — | — | — | — | 1,600 | 8,000 | ||||||||||||||||||||||||
Portugal | — | — | — | — | — | — | 16,332 | 81,660 | ||||||||||||||||||||||||
Spain | — | — | 21,268 | 106,340 | — | — | 40,000 | 200,000 | ||||||||||||||||||||||||
Commercial banks | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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490,393 | 2,451,965 | 23,616 | 118,080 | 306,000 | 1,530,000 | 57,932 | 289,660 | |||||||||||||||||||||||||
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Subscribed and paid-in capital as of December 31, 2022 is as follows:
Number of Shares | Nominal Amounts | |||||||||||||||||||||||||||
Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | ||||||||||||||||||||||
Shareholder: | ||||||||||||||||||||||||||||
Argentina | 1 | 125,304 | — | 1,200 | 626,520 | — | 627,720 | |||||||||||||||||||||
Bolivia | 1 | 64,794 | — | 1,200 | 323,970 | — | 325,170 | |||||||||||||||||||||
Brazil | 1 | 103,071 | — | 1,200 | 515,355 | — | 516,555 | |||||||||||||||||||||
Colombia | 1 | 203,209 | — | 1,200 | 1,016,045 | — | 1,017,245 | |||||||||||||||||||||
Ecuador | 1 | 68,907 | — | 1,200 | 344,535 | — | 345,735 | |||||||||||||||||||||
El Salvador | 1 | 4,628 | — | 1,200 | 23,140 | — | 24,340 | |||||||||||||||||||||
Panama | 1 | 40,227 | — | 1,200 | 201,135 | — | 202,335 | |||||||||||||||||||||
Paraguay | 1 | 39,747 | — | 1,200 | 198,735 | — | 199,935 | |||||||||||||||||||||
Peru | 1 | 216,835 | — | 1,200 | 1,084,175 | — | 1,085,375 | |||||||||||||||||||||
Trinidad & Tobago | 1 | 30,237 | — | 1,200 | 151,185 | — | 152,385 | |||||||||||||||||||||
Uruguay | 1 | 41,460 | — | 1,200 | 207,300 | — | 208,500 | |||||||||||||||||||||
Venezuela | 1 | 59,985 | — | 1,200 | 299,925 | — | 301,125 | |||||||||||||||||||||
Barbados | — | — | 3,522 | — | — | 17,610 | 17,610 | |||||||||||||||||||||
Chile | — | — | 5,541 | — | — | 27,705 | 27,705 | |||||||||||||||||||||
Costa Rica | — | — | 11,038 | — | — | 55,190 | 55,190 | |||||||||||||||||||||
Dominican Republic | — | — | 13,796 | — | — | 68,980 | 68,980 | |||||||||||||||||||||
Jamaica | — | — | 182 | — | — | 910 | 910 | |||||||||||||||||||||
Mexico | — | — | 15,367 | — | — | 76,835 | 76,835 | |||||||||||||||||||||
Portugal | — | — | 1,920 | — | — | 9,600 | 9,600 | |||||||||||||||||||||
Spain | — | — | 51,939 | — | — | 259,695 | 259,695 | |||||||||||||||||||||
Commercial banks | — | 497 | — | — | 2,485 | — | 2,485 | |||||||||||||||||||||
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12 | 998,901 | 103,305 | 14,400 | 4,994,505 | 516,525 | 5,525,430 | ||||||||||||||||||||||
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F-39
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
As of December 31, 2022, the detail of unpaid subscribed capital and of subscribed callable capital is presented below:
Capital subscriptions receivable | Capital portion | |||||||||||||||||||||||||||||||
Series “B” | Series “C” | Series “B” | Series “C” | |||||||||||||||||||||||||||||
Number | Nominal | Number | Nominal | Number | Nominal | Number | Nominal | |||||||||||||||||||||||||
of shares | Amount | of shares | Amount | of shares | Amount | of shares | Amount | |||||||||||||||||||||||||
Shareholder: | ||||||||||||||||||||||||||||||||
Argentina | 6,220 | 31,100 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Bolivia | 18,961 | 94,805 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Brazil | 25,072 | 125,360 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Colombia | 13,192 | 65,960 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Ecuador | 15,169 | 75,845 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
El Salvador | 27,769 | 138,845 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Panama | — | — | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Paraguay | — | — | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Peru | — | — | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Trinidad y Tobago | 6,601 | 33,005 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Uruguay | — | — | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Venezuela | 48,156 | 240,780 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Chile | — | — | 102,659 | 513,295 | — | — | 800 | 4,000 | ||||||||||||||||||||||||
Dominican Republic | — | — | 18,601 | 93,005 | — | — | — | — | ||||||||||||||||||||||||
Mexico | — | — | — | — | — | — | 1,600 | 8,000 | ||||||||||||||||||||||||
Portugal | — | — | — | — | — | — | 16,332 | 81,660 | ||||||||||||||||||||||||
Spain | — | — | — | — | — | — | 40,000 | 200,000 | ||||||||||||||||||||||||
Commercial banks | 52 | 260 | — | — | — | — | — | — | ||||||||||||||||||||||||
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161,192 | 805,960 | 121,260 | 606,300 | 266,400 | 1,332,000 | 58,732 | 293,660 | |||||||||||||||||||||||||
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Subscribed and paid-in capital as of December 31, 2021, is as follows:
Number of Shares | Nominal Amounts | |||||||||||||||||||||||||||
Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | ||||||||||||||||||||||
Stockholder: | ||||||||||||||||||||||||||||
Argentina | 1 | 119,079 | — | 1,200 | 595,395 | — | 596,595 | |||||||||||||||||||||
Bolivia | 1 | 62,360 | — | 1,200 | 311,800 | — | 313,000 | |||||||||||||||||||||
Brazil | 1 | 94,284 | — | 1,200 | 471,420 | — | 472,620 | |||||||||||||||||||||
Colombia | 1 | 196,613 | — | 1,200 | 983,065 | — | 984,265 | |||||||||||||||||||||
Ecuador | 1 | 65,115 | — | 1,200 | 325,575 | — | 326,775 | |||||||||||||||||||||
Panama | 1 | 37,793 | — | 1,200 | 188,965 | — | 190,165 | |||||||||||||||||||||
Paraguay | 1 | 37,313 | — | 1,200 | 186,565 | — | 187,765 | |||||||||||||||||||||
Peru | 1 | 211,432 | — | 1,200 | 1,057,160 | — | 1,058,360 | |||||||||||||||||||||
Trinidad & Tobago | 1 | 28,037 | — | 1,200 | 140,185 | — | 141,385 | |||||||||||||||||||||
Uruguay | 1 | 39,026 | — | 1,200 | 195,130 | — | 196,330 | |||||||||||||||||||||
Venezuela | 1 | 93,021 | — | 1,200 | 465,105 | — | 466,305 | |||||||||||||||||||||
Barbados | — | — | 3,522 | — | — | 17,610 | 17,610 |
F-40
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Number of Shares | Nominal Amounts | |||||||||||||||||||||||||||
Series “A” | Series “B” | Series “C” | Series “A” | Series “B” | Series “C” | Total | ||||||||||||||||||||||
Chile | — | — | 5,541 | — | — | 27,705 | 27,705 | |||||||||||||||||||||
Costa Rica | — | — | 11,038 | — | — | 55,190 | 55,190 | |||||||||||||||||||||
Dominican Republic | — | — | 10,556 | — | — | 52,780 | 52,780 | |||||||||||||||||||||
Jamaica | — | — | 182 | — | — | 910 | 910 | |||||||||||||||||||||
Mexico | — | — | 15,367 | — | — | 76,835 | 76,835 | |||||||||||||||||||||
Portugal | — | — | 1,920 | — | — | 9,600 | 9,600 | |||||||||||||||||||||
Spain | — | — | 51,939 | — | — | 259,695 | 259,695 | |||||||||||||||||||||
Commercial banks | — | 497 | — | — | 2,485 | — | 2,485 | |||||||||||||||||||||
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11 | 984,570 | 100,065 | 13,200 | 4,922,850 | 500,325 | 5,436,375 | ||||||||||||||||||||||
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As of December 31, 2021, the detail of unpaid subscribed capital and of subscribed callable capital is presented below:
Capital subscriptions receivable | Capital portion | |||||||||||||||||||||||||||||||
Series “B” | Series “C” | Series “B” | Series “C” | |||||||||||||||||||||||||||||
Number | Nominal | Number | Nominal | Number | Nominal | Number | Nominal | |||||||||||||||||||||||||
of shares | Amount | of shares | Amount | of shares | Amount | of shares | Amount | |||||||||||||||||||||||||
Stockholder: | ||||||||||||||||||||||||||||||||
Argentina | 12,445 | 62,225 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Bolivia | 2,434 | 12,170 | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Brazil | 33,859 | 169,295 | — | — | 25,200 | 126,000 | — | — | ||||||||||||||||||||||||
Colombia | 19,788 | 98,940 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Ecuador | — | — | — | — | 14,400 | 72,000 | — | — | ||||||||||||||||||||||||
Panama | 2,434 | 12,170 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Paraguay | 2,434 | 12,170 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Peru | 5,403 | 27,015 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Trinidad y Tobago | 8,801 | 44,005 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Uruguay | 2,434 | 12,170 | — | — | 7,200 | 36,000 | — | — | ||||||||||||||||||||||||
Venezuela | 48,156 | 240,780 | — | — | 50,400 | 252,000 | — | — | ||||||||||||||||||||||||
Barbados | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Chile | — | — | — | — | — | — | 800 | 4,000 | ||||||||||||||||||||||||
Dominican Republic | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Mexico | — | — | — | — | — | — | 1,600 | 8,000 | ||||||||||||||||||||||||
Portugal | — | — | — | — | — | — | 16,332 | 81,660 | ||||||||||||||||||||||||
Spain | — | — | — | — | — | — | 40,000 | 200,000 | ||||||||||||||||||||||||
Commercial banks | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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138,188 | 690,940 | — | — | 259,200 | 1,296,000 | 58,732 | 293,660 | |||||||||||||||||||||||||
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General Reserve
CAF maintains a general reserve approved by the Shareholders’ Assembly, which is considered an equity reserve. Shareholders approved the increase in the general reserve by US$ 152,069, US$ 94,505 and US$ 215,839 during the years ended December 31, 2023, 2022 and 2021, through appropriations from net income for the years ended December 31, 2022, 2021 and 2020, respectively.
F-41
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Reserve Pursuant to Article N° 42 of the Constitutive Agreement
CAF’s Constitutive Agreement states that at least 10% of annual net income should be appropriated into a reserve fund until that reserve fund amounts to 50% of the subscribed capital. That reserve fund is considered an equity reserve. Additional appropriation may be approved by the shareholders. The Shareholders’ Assembly held in March 2023, 2022 and 2021, authorized an increase in the reserve fund forUS$ 16,900, US$ 10,510 and US$ 23,983, through an appropriation from net income for the years endedDecember 31, 2022, 2021 and 2020, respectively.
16. | TAX EXEMPTIONS |
Pursuant to its Constitutive Agreement, CAF is exempt, in all of its Member Countries, from all taxes and tariffs on income, properties or assets, and from any liability involving payment, withholding or collection of any taxes.
In addition, CAF has entered into agreements with each of the associated shareholder countries (defined in Article 3 of CAF’s General Regulations as any shareholder country holding directly or indirectly shares of CAF). Pursuant to these agreements, each country that is a shareholder but do not qualify as a Member Country has agreed to extend to CAF, with respect to its activities in and concerning that country, immunities and privileges similar to those than have been granted to CAF in the Member Countries.
17. | DERIVATIVE FINANCIAL 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.
The market risk associated with interest rate and foreign currency is managed by swapping marketable securities - trading, loans, borrowings from other financial institutions and bonds, subject to fixed interest rates and denominated in currency other than the U.S. dollar into floating interest rate instruments denominated in U.S. dollars. CAF enters into derivative financial instruments to offset the economic changes in value of specifically identified marketable securities – trading, loans, borrowings from other financial institutions and bonds.
Derivative financial instruments held by CAF consist of interest rate swaps designated as fair value hedges of specifically identified loans, bonds or borrowings from other financial institutions with fixed interest rates and denominated in U.S. dollars. Also, CAF enters into cross-currency and interest rate swaps as an economic hedge (derivative that is entered into to manage a risk but is not accounted as a hedge) for interest rate and foreign exchange risks related with deposits, bonds, borrowings or loans denominated in currencies other than the U.S. dollar where CAF’s management elected to measure those liabilities and assets at fair value under the fair value option guidance.
When the fair value of a derivative financial instrument is positive, the counterparty owes CAF, creating credit risk for CAF. When the fair value of a derivative financial instrument is negative, CAF owes the counterparty and, therefore, it does not have credit risk. CAF minimizes the credit risk in derivative financial instruments by entering into transactions with high-quality counterparties whose credit rating is “A” or higher.
F-42
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
In order to reduce the credit risk in derivative financial instruments, CAF enters into credit support agreements with its major swap counterparties. This provides risk mitigation, as the swap contracts are regularly marked-to-market, and the party being the net obligor is required to post collateral when net mark to-market exposure exceeds certain predetermined thresholds. This collateral is in the form of cash.
CAF does not offset for each counterparty, the fair value amount recognized for derivative financial instruments with the fair value amount recognized for the collateral, whether posted or received, under master netting arrangements executed with the same counterparty. CAF reports separately the cumulative gross amounts for the receivable from and payable to for derivative financial instruments.
CAF also utilizes futures derivatives instruments to reduce exposure to price risk. These are contracts for delayed delivery of securities or money market instruments in which the seller agrees to make delivery at a specified future date of a specified instrument at a specified price or yield. Initial margin requirements are met with cash or securities. CAF generally closes out open positions prior to maturity. Therefore, cash receipts or payments are limited to the change in fair value of the future contracts. Additionally, CAF utilizes forward contracts to reduce exposure to foreign currency risk.
The balance sheet details related to CAF’s derivative financial instruments are as follows:
Derivative assets | Derivative liabilities | |||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2021 | December 31, 2023 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||
Cross-currency swap | 567,599 | 97,854 | 350,991 | 2,059,602 | 2,923,934 | 779,146 | ||||||||||||||||||
Interest rate swap | 341,396 | 359,337 | 153,236 | 269,100 | 369,715 | 62,865 | ||||||||||||||||||
U.S Treasury futures | 2,600 | 2,583 | 1,763 | 9,996 | 9 | 628 | ||||||||||||||||||
Cross-currency forward contracts | 154 | 35 | 6,393 | 1,949 | 16,320 | 319 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
911,749 | 459,809 | 512,383 | 2,340,647 | 3,309,978 | 842,958 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the notional amount and fair values of interest rate swaps and cross-currency swaps and the underlying hedged items:
Notional amount | Fair value | |||||||||||||||
Interest rate | Cross- currency | Derivative | Derivative | |||||||||||||
swap | swap | assets | liabilities | |||||||||||||
As of December 31, 2023: | ||||||||||||||||
Loans | 2,185,292 | — | 286,406 | 2,773 | ||||||||||||
Loans | — | 555,412 | 33,917 | 70,142 | ||||||||||||
Borrowings from other financial institutions | — | 584,098 | 1,134 | 60,589 | ||||||||||||
Borrowings from other financial institutions | 86,551 | — | — | 3,236 | ||||||||||||
Bonds | — | 18,090,473 | 532,548 | 1,928,871 | ||||||||||||
Bonds | 8,003,323 | — | 54,990 | 263,091 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
10,275,166 | 19,229,983 | 908,995 | 2,328,702 | |||||||||||||
|
|
|
|
|
|
|
|
F-43
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Notional amount | Fair value | |||||||||||||||
Interest rate | Cross- currency | Derivative | Derivative | |||||||||||||
swap | swap | assets | Liabilities | |||||||||||||
As of December 31, 2022: | ||||||||||||||||
Loans | 2,435,671 | — | 359,337 | 2,124 | ||||||||||||
Loans | — | 418,772 | 29,879 | 14,151 | ||||||||||||
Deposits | — | 105,000 | 3,253 | — | ||||||||||||
Borrowings from other financial institutions | — | 651,991 | 86 | 98,067 | ||||||||||||
Borrowings from other financial institutions | 132,049 | — | — | 5,983 | ||||||||||||
Bonds | — | 17,040,870 | 64,636 | 2,811,716 | ||||||||||||
Bonds | 7,157,495 | — | — | 361,608 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
9,725,215 | 18,216,633 | 457,191 | 3,293,649 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Notional amount | Fair value | |||||||||||||||
Interest rate | Cross- currency | Derivative | Derivative | |||||||||||||
swap | swap | assets | Liabilities | |||||||||||||
As of December 31, 2021: | ||||||||||||||||
Loans | 2,296,334 | — | 38,643 | 18,377 | ||||||||||||
Loans | — | 112,936 | 2,083 | 1,692 | ||||||||||||
Deposits | — | 110,000 | 1,498 | 5,639 | ||||||||||||
Borrowings from other financial institutions | — | 590,809 | — | 26,298 | ||||||||||||
Borrowings from other financial institutions | 177,547 | — | 5,191 | — | ||||||||||||
Bonds | — | 16,143,345 | 347,410 | 745,517 | ||||||||||||
Bonds | 8,250,000 | — | 109,402 | 44,488 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
10,723,881 | 16,957,090 | 504,227 | 842,011 | |||||||||||||
|
|
|
|
|
|
|
|
The following table presents the notional amount and fair values of U.S. treasury futures andcross-currency forward contracts:
As of December 31, 2023 | ||||||||||||||
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative assets | ||||||||||
Futures long | Various | Until March 2024 | US$ | 291,300 | 2,600 | |||||||||
|
|
|
| |||||||||||
Forward contracts | Various | Various | Various | 14,599 | 154 | |||||||||
|
|
|
| |||||||||||
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative liabilities | ||||||||||
Futures short | Various | Until March 2024 | US$ | 851,442 | (9,996 | ) | ||||||||
|
|
|
| |||||||||||
Forward contracts | Various | Various | Various | 131,513 | (1,949 | ) | ||||||||
|
|
|
|
F-44
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
As of December 31, 2022 | ||||||||||||||
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative assets | ||||||||||
Futures short | Various | Until March 2023 | Various | 1,103,112 | 2,504 | |||||||||
|
|
|
| |||||||||||
Futures long | Various | Until March 2023 | US$ | 97,000 | 79 | |||||||||
|
|
|
| |||||||||||
Forward contracts | December 2022 | Until January 2023 | Various | 6,888 | 35 | |||||||||
|
|
|
| |||||||||||
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative liabilities | ||||||||||
Futures short | November 2022 | Until March 2023 | US$ | 5,600 | — | |||||||||
|
|
|
| |||||||||||
Futures long | Various | Until March 2023 | US$ | 25,800 | (9 | ) | ||||||||
|
|
|
| |||||||||||
Forward contracts | Various | Various | Various | 279,064 | (16,320 | ) | ||||||||
|
|
|
| |||||||||||
As of December 31, 2021 | ||||||||||||||
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative assets | ||||||||||
Futures short | Various | Until March 2022 | Various | 292,582 | 1,763 | |||||||||
|
|
|
| |||||||||||
Forward contracts | December 2022 | Until January 2022 | Various | 1,301,223 | 6,393 | |||||||||
|
|
|
| |||||||||||
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative liabilities | ||||||||||
Futures short | Various | Until March 2022 | US$ | 47,000 | (402 | ) | ||||||||
|
|
|
| |||||||||||
Futures long | Various | Until March 2022 | Various | 144,264 | (226 | ) | ||||||||
|
|
|
| |||||||||||
Forward contracts | Various | Until March 2022 | Various | 33,684 | (319 | ) | ||||||||
|
|
|
|
The amounts of collateral posted related to U.S. treasury futures as of December 31, 2023, 2022 and 2021, was US$ 15,844, US$ 9,693 and US$ 8,977, respectively. As of December 31, 2023, 2022 and 2021, the amount of collateral received related to U.S. treasury futures was US$ 356, US$ 60 and US$ 17, respectively.
F-45
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
CAF enters into International Swaps and Derivatives Association, Inc. (ISDA) master netting arrangements with all of its derivative counterparties. These legally enforceable master netting arrangements give CAF the right to take cash or liquidate securities held as collateral and to offset receivables and payables with the same counterparty, in the event of default by the counterparty. The following tables present information about the effect of offsetting of derivative financial instruments, although CAF has elected not to offset any derivative financial instruments by counterparty in the balance sheet:
As of December 31, 2023 | ||||||||||||||||
Derivative assets | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized assets | Financial instruments | Cash and securities collateral received | Net amount | ||||||||||||
Swaps | 908,995 | (704,676 | ) | (152,091 | ) | 52,228 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative liabilities | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized liabilities | Financial instruments | Cash and securities collateral pledged | Net amount | ||||||||||||
Swaps | (2,328,702 | ) | 704,676 | 1,805,746 | 181,720 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
As of December 31, 2022 | ||||||||||||||||
Derivative assets | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized assets | Financial instruments | Cash and securities collateral received | Net amount | ||||||||||||
Swaps | 457,191 | (421,915 | ) | (2,880 | ) | 32,396 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative liabilities | Gross amounts not offset in the balance sheet | |||||||||||||||
Gross amounts of | Financial | Cash and securities | Net | |||||||||||||
Description | liabilities | instruments | collateral pledged | amount | ||||||||||||
Swaps | (3,293,649 | ) | 421,915 | 2,904,277 | 32,543 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
As of December 31, 2021 | ||||||||||||||||
Derivative assets | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized assets | Financial instruments | Cash and securities collateral received | Net amount | ||||||||||||
Swaps | 504,227 | (329,443 | ) | (148,756 | ) | 26,028 | ||||||||||
|
|
|
|
|
|
|
|
F-46
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Derivative liabilities | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized liabilities | Financial instruments | Cash and securities collateral pledged | Net amount | ||||||||||||
Swaps | (842,011 | ) | 329,443 | 636,655 | 124,087 | |||||||||||
|
|
|
|
|
|
|
|
18. | FAIR VALUE MEASUREMENTS |
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 financial instrument is classified. Where appropriate, the description includes details of the valuation methodologies and the key inputs to those methodologies.
When available, CAF generally uses quoted prices in active markets to determine fair value.
If quoted market prices in active markets are not available, fair value is based upon internally developed valuation methodologies that use, where possible, current market-based or independently sourced market inputs, such as interest rates, currency rates, etc.
Where available, CAF may also make use of quoted prices in active markets for recent trading activity in positions with the same or similar characteristics to the financial instrument being valued. The frequency and size of trading activity and the amount of the bid-ask spread are among the factors considered in determining the liquidity of markets and the relevance of observed quoted prices from those markets.
The following valuation methodologies are used to estimate the fair value and determine the classification in the fair value hierarchy of CAF’s financial instruments:
- | Marketable securities: CAF uses quoted prices in active markets to determine the fair value of trading securities. These securities are classified in Level 1 of the fair value hierarchy. |
- | Loans: The fair value of fixed rate loans, is determined using a discounted cash flow technique 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: The fair value is calculated using market prices provided by an independent financial information services company, which are determined using discounted cash flow valuation technique using observable inputs. Derivative assets and liabilities are classified in Level 2 of the fair value hierarchy. |
- | Bonds, borrowings from other financial institutions and deposits: For CAF’s bonds issued and medium and long term borrowings from other financial institutions and deposits, fair value is determined by using a discounted cash flow technique, taking into consideration benchmark interest yield curves at the end of the reporting period to discount the expected cash flows for the applicable maturity, thus reflecting market fluctuations of key variables such as interest and exchange rates. These yield curves are adjusted to incorporate CAF credit risk spread. Bonds, borrowings from other financial institutions and deposits are generally classified in Level 2 of the fair value hierarchy based on the observability of significant inputs to the discounted cash flow technique. |
F-47
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(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 financial assets and liabilities that are measured at fair value on a recurring basis:
As of December 31, 2023 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. Securities | 2,542,017 | — | — | 2,542,017 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-U.S. governments and government entities bonds | 209,372 | 214,536 | — | 423,908 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | — | 2,610,195 | — | 2,610,195 | ||||||||||||
Certificate of deposits | 2,103,754 | — | — | 2,103,754 | ||||||||||||
Bonds | 1,818,551 | — | — | 1,818,551 | ||||||||||||
Collateralized mortgage obligation | 377,029 | 636 | — | 377,665 | ||||||||||||
Liquidity funds | 112,128 | — | — | 112,128 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
4,411,462 | 2,610,831 | — | 7,022,293 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Sub-total financial assets at fair value | 7,162,851 | 2,825,367 | — | 9,988,218 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Loans | — | 2,549,568 | — | 2,549,568 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 567,599 | — | 567,599 | ||||||||||||
Interest rate swap | — | 341,396 | — | 341,396 | ||||||||||||
U.S Treasury futures | — | 2,600 | — | 2,600 | ||||||||||||
Cross-currency forward contracts | — | 154 | — | 154 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
— | 911,749 | — | 911,749 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total financial assets at fair value | 7,162,851 | 6,286,684 | — | 13,449,535 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Borrowings from other financial institutions | — | 593,086 | — | 593,086 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Bonds | — | 24,608,695 | — | 24,608,695 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 2,059,602 | — | 2,059,602 | ||||||||||||
Interest rate swap | — | 269,100 | — | 269,100 | ||||||||||||
U.S Treasury futures | — | 9,996 | — | 9,996 | ||||||||||||
Cross-currency forward contracts | — | 1,949 | — | 1,949 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
— | 2,340,647 | — | 2,340,647 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total financial liabilities at fair value | — | 27,542,428 | — | 27,542,428 | ||||||||||||
|
|
|
|
|
|
|
|
F-48
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
As of December 31, 2022 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. Securities | 1,775,459 | — | — | 1,775,459 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-U.S. governments and government entities bonds | 148,493 | 186,141 | — | 334,634 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | — | 1,851,803 | — | 1,851,803 | ||||||||||||
Certificate of deposits | 2,769,645 | — | — | 2,769,645 | ||||||||||||
Bonds | 1,325,284 | — | — | 1,325,284 | ||||||||||||
Collateralized mortgage obligation | 266,250 | — | — | 266,250 | ||||||||||||
Liquidity funds | 160,530 | — | — | 160,530 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
4,521,709 | 1,851,803 | — | 6,373,512 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Sub-total financial assets at fair value | 6,445,661 | 2,037,944 | — | 8,483,605 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Loans | — | 2,499,856 | — | 2,499,856 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 97,854 | — | 97,854 | ||||||||||||
Interest rate swap | — | 359,337 | — | 359,337 | ||||||||||||
U.S Treasury futures | — | 2,583 | — | 2,583 | ||||||||||||
Cross-currency forward contracts | — | 35 | — | 35 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
— | 459,809 | — | 459,809 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total financial assets at fair value | 6,445,661 | 4,997,609 | — | 11,443,270 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Deposits | — | 109,377 | — | 109,377 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Borrowings from other financial institutions | — | 665,849 | — | 665,849 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Bonds | — | 21,137,893 | — | 21,137,893 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 2,923,934 | — | 2,923,934 | ||||||||||||
Interest rate swap | — | 369,715 | — | 369,715 | ||||||||||||
U.S Treasury futures | — | 9 | — | 9 | ||||||||||||
Cross-currency forward contracts | — | 16,320 | — | 16,320 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
— | 3,309,978 | — | 3,309,978 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total financial liabilities at fair value | — | 25,223,097 | — | 25,223,097 | ||||||||||||
|
|
|
|
|
|
|
|
F-49
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
As of December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. Securities | 2,219,711 | — | — | 2,219,711 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-U.S. governments and government entities bonds | 418,413 | 137,817 | — | 556,230 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | — | 3,861,129 | — | 3,861,129 | ||||||||||||
Certificate of deposits | 3,284,428 | — | — | 3,284,428 | ||||||||||||
Bonds | 1,941,602 | — | — | 1,941,602 | ||||||||||||
Collateralized mortgage obligation | 288,583 | 2,222 | — | 290,805 | ||||||||||||
Liquidity funds | 349,162 | — | — | 349,162 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
5,863,775 | 3,863,351 | — | 9,727,126 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Sub-total financial assets at fair value | 8,501,899 | 4,001,168 | — | 12,503,067 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Loans | — | 2,389,651 | — | 2,389,651 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 350,991 | — | 350,991 | ||||||||||||
Interest rate swap | — | 153,236 | — | 153,236 | ||||||||||||
U.S Treasury futures | — | 1,763 | — | 1,763 | ||||||||||||
Cross-currency forward contracts | — | 6,393 | — | 6,393 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
— | 512,383 | — | 512,383 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total financial assets at fair value | 8,501,899 | 6,903,202 | — | 15,405,101 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Deposits | — | 106,119 | — | 106,119 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Borrowings from other financial institutions | — | 740,028 | — | 740,028 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Bonds | — | 24,074,774 | — | 24,074,774 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 779,146 | — | 779,146 | ||||||||||||
Interest rate swap | — | 62,865 | — | 62,865 | ||||||||||||
U.S Treasury futures | — | 628 | — | 628 | ||||||||||||
Cross-currency forward contracts | — | 319 | — | 319 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
— | 842,958 | — | 842,958 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total financial liabilities at fair value | — | 25,763,879 | — | 25,763,879 | ||||||||||||
|
|
|
|
|
|
|
|
F-50
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Items that are not measured at fair value.
The carrying amount and estimated fair values of CAF’s financial instruments that are not recognized in the balance sheets at fair value are as follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||
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 | 70,592 | 70,592 | 107,592 | 107,592 | 112,047 | 112,047 | |||||||||||||||||||||
Deposits with banks | 1 | 4,963,938 | 4,963,938 | 6,535,869 | 6,535,869 | 3,210,216 | 3,210,216 | |||||||||||||||||||||
Other investments: | ||||||||||||||||||||||||||||
Bank deposits | 1 | 1,139,169 | 1,139,169 | 258,372 | 258,372 | 292,392 | 292,392 | |||||||||||||||||||||
Special Drawing Rights | 2 | 125,869 | 125,869 | — | — | — | — | |||||||||||||||||||||
Loans, net | 2 | 30,696,872 | 30,684,248 | 27,893,063 | 27,880,109 | 26,976,260 | 26,949,431 | |||||||||||||||||||||
Accrued interest and commissions receivable | 2 | 957,572 | 957,572 | 673,892 | 673,892 | 357,836 | 357,836 | |||||||||||||||||||||
Derivate related collateral | 1 | 1,823,920 | 1,823,920 | 2,913,970 | 2,913,970 | 645,362 | 645,632 | |||||||||||||||||||||
Receivable from investment securities sold | 1 | 6,867 | 6,867 | 2,237 | 2,237 | 4,017 | 4,017 | |||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||
Deposits | 2 | 4,144,495 | 4,144,495 | 4,554,214 | 4,554,214 | 3,896,507 | 3,896,507 | |||||||||||||||||||||
Commercial papers | 2 | 4,653,512 | 4,653,512 | 4,618,797 | 4,618,797 | 2,813,646 | 2,813,646 | |||||||||||||||||||||
Borrowings from other financial institutions, net | 2 | 1,453,710 | 1,444,501 | 1,406,927 | 1,399,446 | 1,032,143 | 1,014,964 | |||||||||||||||||||||
Bonds, net | 2 | 150,755 | 155,230 | 114,320 | 117,070 | 185,763 | 16,035 | |||||||||||||||||||||
Accrued interest payable | 2 | 846,534 | 846,534 | 565,916 | 565,916 | 288,233 | 288,233 | |||||||||||||||||||||
Derivate related collateral | 1 | 152,447 | 152,447 | 2,940 | 2,940 | 148,773 | 1,443,467 | |||||||||||||||||||||
Payable for investment securities purchased | 1 | 18,461 | 18,461 | 2,467 | 2,467 | 17,437 | 14,960 |
The following methods and assumptions were used to estimate the fair value of those financial instruments not accounted for at fair value on recurring basis:
- | Cash and due from banks, deposits with banks, other investments – Deposits with banks due more than 90 days, accrued interest and commissions receivable, deposits, commercial papers, accrued interest payable, derivative-related collateral, receivable from investment securities sold and payable for investment securities purchased: The carrying amounts approximate fair value because of the short maturity of these instruments. |
- | Other investments – Special drawing rights: The carrying amount approximates fair value because this asset is based on a basket of 5 international currencies (euro, Japanese yen, renminbi Chinese, pounds sterling and US dollar) reviewed and published by the IMF. |
- | Loans: CAF is one of the few institutions that grant loans for development projects in the shareholder countries. A secondary market does not exist for the type of loans granted by CAF. As rates on variable rate loans are reset on a semiannual basis, the carrying value, adjusted for credit risk, was determined |
F-51
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
to be the best estimate of fair value. The fair value of fixed rate loans is determined by using the current variable interest rate for similar loans. The fair value of non-accrual status loans is estimated using the discounted cash flow technique. |
- | Equity investments: The direct investments in equity securities of companies without a readily determinable fair value are measured at cost, less impairment plus or minus observable price changes of an identical or similar instrument of the same issuer. As of December 2023, 2022 and 2021, the carrying amount of those investments amounted to US$ 117,358, US$ 118,186 and US$ 113,036, respectively. In addition, as of December 31, 2023, 2022 and 2021, investments in funds without a readily determinable fair value, with carrying amount of US$ 221,909, US$ 222,222 and 267,1311, respectively, and the net effects of impairment and the changes in observable prices for the years ended December 31, 2023, 2022 and 2021 amounted to US$ 10,067, US$ (18,816) and US$ 26,631, respectively, are accounted for at fair value applying the practical expedient, using the net asset value per share. These financial instruments are generally classified in level 3 of the fair value hierarchy based on the observability of significant inputs to the valuation methodology (these instruments are not disclosed in the table above). |
- | Bonds and borrowings from other financial institutions: For CAF’s bonds issued and medium and long term borrowings, fair value is determined using a discounted cash flow 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 financial instrument are generally classified in Level 2 of the fair value hierarchy based on the observability of significant inputs to the valuation methodology. |
19. | NET LOSS ON CHANGES IN FAIR VALUE RELATED TO FINANCIAL INSTRUMENTS |
The loss on changes in fair value of cross-currency swaps and financial liabilities carried at fair value under the fair value option are as follows:
Year ended December 31, 2023 | ||||||||||||
Gain (loss) on derivatives | Gain (loss) on hedged item | Net Gain (loss) | ||||||||||
Cross-currency swaps: | ||||||||||||
Deposits | (3,253 | ) | 4,377 | 1,124 | ||||||||
Bonds | 1,350,756 | (1,421,864 | ) | (71,108 | ) | |||||||
Loans | (51,954 | ) | 89,871 | 37,917 | ||||||||
Borrowings from other financial institutions | 38,526 | (37,882 | ) | 644 | ||||||||
|
|
|
|
|
| |||||||
1,334,075 | (1,365,498 | ) | (31,423 | ) | ||||||||
|
|
|
|
|
| |||||||
Year ended December 31, 2022 | ||||||||||||
Gain (loss) on derivatives | Gain (loss) on hedged item | Net Gain (loss) | ||||||||||
Cross-currency swaps: | ||||||||||||
Deposits | 7,393 | (8,258 | ) | (865 | ) | |||||||
Bonds | (2,348,973 | ) | 2,315,379 | (33,594 | ) | |||||||
Loans | 15,337 | 1,980 | 17,317 | |||||||||
Borrowings from other financial institutions | (71,682 | ) | 78,689 | 7,007 | ||||||||
|
|
|
|
|
| |||||||
(2,397,925 | ) | 2,387,790 | (10,135 | ) | ||||||||
|
|
|
|
|
|
F-52
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Year ended December 31, 2021 | ||||||||||||
Gain (loss) on derivatives | Gain (loss) on hedged item | Net Gain (loss) | ||||||||||
Cross-currency swaps: | ||||||||||||
Bonds | (1,602,158 | ) | 1,575,875 | (26,283 | ) | |||||||
Deposits | (3,438 | ) | 3,224 | (214 | ) | |||||||
Loans | (482 | ) | (7,970 | ) | (8,452 | ) | ||||||
Borrowings from other financial institutions | (54,335 | ) | 87,737 | 33,402 | ||||||||
|
|
|
|
|
| |||||||
(1,660,413 | ) | 1,658,866 | (1,547 | ) | ||||||||
|
|
|
|
|
|
In addition, for the years ended December 31, 2023, 2022 and 2021, CAF recorded net gains of US$ 11,284 and losses of US$ 11,060, US$ 1,841 respectively, related to changes in fair value of U.S. treasury futures and U.S. treasury forwards and changes in fair value of the U.S. Treasury Notes.
20. | COMMITMENTS AND CONTINGENCIES |
Commitments and contingencies include the following:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Loan commitments subscribed – eligible | 6,278,476 | 7,160,613 | 5,659,681 | |||||||||
Lines of credit | 5,120,740 | 4,427,207 | 3,328,384 | |||||||||
Loan commitments subscribed – non eligible | 1,812,229 | 1,681,977 | 1,091,726 | |||||||||
Equity investments agreements subscribed | 108,629 | 74,410 | 79,769 | |||||||||
Guarantees | 83,917 | 136,993 | 129,804 |
These commitments and contingencies arose from the normal course of CAF’s business and are related principally to loans that have been approved or committed for disbursement.
In the ordinary course of business, CAF has entered into commitments to extend loans; such loan commitments are reported in the above table upon signing the corresponding loan agreement and are reported as loans in the balance sheets when disbursements are made. Loan commitments that have fulfilled the necessary requirements for disbursement are classified as eligible.
The commitments to extend loans have fixed expiration dates and in some cases expire without a loan being disbursed. Therefore, the amounts of total commitment to extend loans do not necessarily represent future cash requirements. Also, based on experience, portions of the loan commitments are disbursed on average two years after the signing of the loan agreement.
The lines of credit are extended to financial and corporate institutions as a facility to grant short term loans basically to finance working capital and international trade activities.
F-53
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
Guarantees mature as follows:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
Less than one year | 6,471 | 41,053 | 6,338 | |||||||||
Between one and five years | 15,265 | 37,712 | 62,649 | |||||||||
Over five years | 62,181 | 58,228 | 60,817 | |||||||||
|
|
|
|
|
| |||||||
83,917 | 136,993 | 129,804 | ||||||||||
|
|
|
|
|
|
To the best knowledge of CAF’s management, CAF is not involved 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.
21. | SPECIAL FUNDS AND OTHER FUNDS UNDER MANAGEMENT |
CAF, as a multilateral financial institution, acts as administrator of several funds owned by third parties and CAF’s shareholders’ special funds, created to promote technical and financial cooperation, sustainable human development, and management of poverty relief funds in shareholder countries.
The shareholders’ special funds contribute to regional integration and sustainable development through capacity building, increased domestic and international exchanges, generation and use of knowledge, as well as training human resources and fortifying institutions. The shareholders’ special funds are governed by the provisions of the Constitutive Agreement and any other provisions that may be established by the Board of Directors.
The Shareholders’ Assembly of CAF approves a maximum amount to be contributed to shareholders’ special funds during the fiscal year and to recognize these contributions as expenses.
The net assets of the shareholders’ special funds, that come from contributions by CAF, are completely independent from the net assets of CAF and are thus so maintained, accounted for, presented, utilized, invested, committed and otherwise disposed of. With regard to the use of the shareholders’ special funds, the financial responsibility of CAF, as administrator, is limited to the net assets of each of the constituted shareholders’ special funds. CAF has no residual interest in the net assets of the shareholders’ special funds.
In March 2023, the Shareholders’ Assembly of CAF approved the contribution up to a maximum amountof US$ 120,000 to some shareholders’ special funds for 2023. Subsequently, for the year ended December 31, 2023, based on the analysis of the new commitments contracted or the resources required bythe shareholders’ special funds, CAF recognized contributions of US$ 85,000, US$ 31,500, and US$ 3,500 to Compensatory Financial Fund (FFC), Technical Cooperation Fund (FCT) and Fund for the Development of Small and Medium Enterprises (FIDE), respectively. For the year ended December 31, 2023, CAF recognized US$ 120,000 as an expense and, as of December 31, 2023 recognized an unconditional obligation (accounts payable) for US$ 13,450 which was paid in January 2024.
In March 2022, the Shareholders’ Assembly of CAF approved the contribution up to a maximum amountof US$ 89,000 to some shareholders’ special funds for 2022. Subsequently, for the year ended December 31, 2022, based on the analysis of the new commitments contracted or the resources required by the shareholders’
F-54
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
special funds, CAF recognized contributions of US$ 70,000, US$ 15,000 and US$ 4,000 to FFC, FCT and Human Development Fund (FONDESHU), respectively. For the year ended December 31, 2022, CAF recognized US$ 89,000 as an expense and, as of December 31, 2022 recognized an unconditional obligation (accounts payable) for US$ 44,244 which was paid in January 2023.
In March 2021, the Stockholders’ Assembly of CAF approved the contribution up to a maximum amount of US$ 30,000 to FCT for 2021. Subsequently, for the year ended December 31, 2021, based on the analysis of the new commitments contracted or the resources required by the stockholders’ special funds, CAF recognized US$ 30,000 as an expense and, as of December 31, 2021 recognized an unconditional obligation (accounts payable) for US$ 12,467 which was paid in January 2022.
Managed funds assets are:
December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
FFC(1) | 214,182 | 191,710 | 192,250 | |||||||||
FCT | 96,433 | 88,130 | 93,862 | |||||||||
FIDE | 66,438 | 61,411 | 63,130 | |||||||||
FONDESHU | 3,148 | 6,837 | 4,439 | |||||||||
Others non related with shareholders’ special funds | 121,147 | 116,029 | 88,634 | |||||||||
|
|
|
|
|
| |||||||
501,348 | 464,117 | 442,315 | ||||||||||
|
|
|
|
|
|
(1) | FFC was created by CAF’s shareholders for the purpose of compensating a portion of the interest costs of certain loans granted by CAF to finance economic and social infrastructure projects. For the years ended December 31, 2023, 2022 and 2021, FFC compensated interest amounting to US$ 59,290,US$ 63,089 and US$ 67,077, respectively, which amounts are included in interest income – loans in the statements of income. |
22. | SEGMENT REPORTING |
Management has determined that CAF has only one operating and 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 on the basis of the nature of the products or services provided, the preparation process, or the method for providing services among individual countries.
For years ended December 31, 2023, 2022 and 2021, loans made to or guaranteed by three countries individually generated in excess, of 10% of interest income on loans, as follows:
2023 | 2022 | 2021 | ||||||||||
Ecuador | 308,457 | 153,978 | 86,239 | |||||||||
Argentina | 317,795 | 148,997 | 85,082 | |||||||||
Brazil | 238,967 | 105,214 | 51,316 | |||||||||
|
|
|
|
|
| |||||||
865,219 | 408,189 | 222,637 | ||||||||||
|
|
|
|
|
|
F-55
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Financial Statements
For the years ended December 31, 2023, 2022 and 2021
(In thousands of U.S. dollars)
23. | SUBSEQUENT EVENTS |
Management has evaluated subsequent events through February 9, 2024, the date these financial statements were available to be issued. As a result of this evaluation, management has determined that there are no subsequent events that require a disclosure in these financial statements except for:
- | During January 2024, Spain paid US$ 31.7 million related to 6,330 shares Serie “C”. |
- | During January 2024, CAF repurchased a total of 3,269 shares from Venezuela, totaling US$ 46.4 million. |
- | On January 17, 2024, CAF issued bonds for UYU 53.5 million, equivalent to US$ 1.4 million, 3.61% due 2039, under its EMTN Programme. |
- | On January 23, 2024, CAF issued bonds for US$ 25 million, SOFR plus 0.68% due 2026, under its EMTN Programme. |
- | On January 24, 2024, CAF issued bonds for US$ 1,750 million, 5.00% due 2029, under its US Shelf Programme. |
- | On January 29, 2024, Trinidad and Tobago paid US$ 36.2 million related to 2,552 shares Series “B”. |
- | On January 30, 2024, CAF issued bonds for PYG 222 billion, equivalent to US$ 30.4 million, 7.80% due 2029, under its Medium-Term Note Programme. |
- | In February 2024, CAF received the full-payment of the short-term bridge loan for US$ 960.0 million granted to the Republic of Argentina dated December 19, 2023, to support this country to cover the payment of the debt service to the International Monetary Fund. |
F-56
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Balance Sheets
As of March 31, 2024 and December 31, 2023
(In thousands of U.S. dollars)
NOTES | 2024 | 2023 | ||||||||
ASSETS | ||||||||||
Cash and due from banks | 101,951 | 70,592 | ||||||||
Deposits with banks | 3,535,261 | 4,963,938 | ||||||||
|
|
|
| |||||||
Cash and due from banks and deposits with banks | 3,637,212 | 5,034,530 | ||||||||
|
|
|
| |||||||
Marketable securities - trading | 3 and 15 | 11,983,970 | 9,988,218 | |||||||
Other investments | 4 | 2,305,313 | 1,265,038 | |||||||
Loans (US$ 2,393,242 and US$ 2,549,568 at fair value as of March 31, 2024 and as of December 31, 2023, respectively) | 5 and 15 | 33,027,390 | 33,479,085 | |||||||
Less loan commissions, net of origination costs | 174,034 | 175,732 | ||||||||
Less allowance for loan losses | 5 | 50,683 | 56,913 | |||||||
|
|
|
| |||||||
Loans, net | 32,802,673 | 33,246,440 | ||||||||
|
|
|
| |||||||
Accrued interest and commissions receivable: | ||||||||||
Loans | 627,529 | 508,058 | ||||||||
Others | 466,326 | 449,514 | ||||||||
|
|
|
| |||||||
1,093,855 | 957,572 | |||||||||
Derivative financial instruments | 14 and 15 | 684,760 | 911,749 | |||||||
Equity investments | 390,867 | 392,184 | ||||||||
Property and equipment, net | 89,924 | 91,675 | ||||||||
Other assets | 6 | 2,220,040 | 1,926,857 | |||||||
|
|
|
| |||||||
TOTAL | 55,208,614 | 53,814,263 | ||||||||
|
|
|
| |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
LIABILITIES: | ||||||||||
Deposits | 7 and 15 | 2,889,944 | 4,144,495 | |||||||
Commercial papers | 8 | 4,694,971 | 4,653,512 | |||||||
Borrowings from other financial institutions (US$ 567,574 and US$ 593,086 at fair value as of March 31, 2024 and December 31, 2023, respectively), net | 9 and 15 | 2,115,380 | 2,046,796 | |||||||
Bonds (US$ 26,570,073 and US$ 24,608,695 at fair value as of March 31, 2024 and December 31, 2023, respectively), net | 10 and 15 | 26,736,483 | 24,759,450 | |||||||
Accrued interest payable | 809,571 | 846,534 | ||||||||
Derivative financial instruments | 14 and 15 | 2,575,654 | 2,340,647 | |||||||
Accrued expenses and other liabilities | 11 | 276,420 | 293,109 | |||||||
|
|
|
| |||||||
Total liabilities | 40,098,423 | 39,084,543 | ||||||||
|
|
|
| |||||||
SHAREHOLDERS’ EQUITY: | ||||||||||
Subscribed capital | 9,956,090 | 9,988,015 | ||||||||
Less callable capital portion | 1,819,660 | 1,819,660 | ||||||||
Less capital subscriptions receivable | 2,465,810 | 2,570,045 | ||||||||
|
|
|
| |||||||
Paid-in capital | 5,670,620 | 5,598,310 | ||||||||
|
|
|
| |||||||
Additional paid-in capital | 4,513,477 | 4,380,427 | ||||||||
Reserves | 4,750,983 | 3,940,935 | ||||||||
Retained earnings | 175,111 | 810,048 | ||||||||
|
|
|
| |||||||
Total shareholders’ equity | 15,110,191 | 14,729,720 | ||||||||
|
|
|
| |||||||
TOTAL | 55,208,614 | 53,814,263 | ||||||||
|
|
|
|
See accompanying notes to Unaudited Condensed Interim Financial Information
F-57
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Statements of Income
For the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
NOTES | 2024 | 2023 | ||||||||
Interest income: | ||||||||||
Loans | 635,823 | 520,974 | ||||||||
Investments and deposits with banks | 3 and 4 | 234,077 | 225,240 | |||||||
Loan commissions | 15,481 | 11,430 | ||||||||
|
|
|
| |||||||
Total interest income | 885,381 | 757,644 | ||||||||
|
|
|
| |||||||
Interest expense: | ||||||||||
Bonds | 472,079 | 355,704 | ||||||||
Commercial paper | 63,042 | 48,823 | ||||||||
Deposits | 48,858 | 39,556 | ||||||||
Borrowings from other financial institutions | 36,131 | 32,364 | ||||||||
Commissions | 6,354 | 4,710 | ||||||||
|
|
|
| |||||||
Total interest expense | 626,464 | 481,157 | ||||||||
|
|
|
| |||||||
Net interest income | 258,917 | 276,487 | ||||||||
(Credit) provision for loan losses | 5 | 6,304 | 3,754 | |||||||
|
|
|
| |||||||
Net interest income, after (credit) provision for loan losses | 265,221 | 272,733 | ||||||||
|
|
|
| |||||||
Non-interest income: | ||||||||||
Dividends and equity in earnings of investees | 5,345 | 1,192 | ||||||||
Other commissions | 647 | 1,115 | ||||||||
Other income | 1,173 | 3,332 | ||||||||
|
|
|
| |||||||
Total non-interest income | 7,165 | 5,639 | ||||||||
|
|
|
| |||||||
Non-interest expenses: | ||||||||||
Administrative expenses | 59,371 | 54,858 | ||||||||
Other expenses | 5 | 5,059 | 666 | |||||||
|
|
|
| |||||||
Total non-interest expenses | 64,430 | 55,524 | ||||||||
|
|
|
| |||||||
Income before unrealized changes in fair value related to other financial instruments and contributions to Shareholders’ Special Funds | 207,956 | 222,848 | ||||||||
Unrealized changes in fair value related to other financial instruments | 16 | 2,828 | 10,654 | |||||||
|
|
|
| |||||||
Income before contributions to Shareholders’ Special Funds, net | 210,784 | 233,502 | ||||||||
Contributions to Shareholders’ Special Funds | 12 | 35,673 | 30,000 | |||||||
|
|
|
| |||||||
Net income | 175,111 | 203,502 | ||||||||
|
|
|
|
See accompanying notes to Unaudited Condensed Interim Financial Information
F-58
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Statements of Shareholders’ Equity
For the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Reserves | ||||||||||||||||||||||||||||||||
NOTES | Paid-in capital | Additional paid-in capital | General reserve | Article N° 42 of the Constitutive Agreement | Total reserves | Retained earnings | Total shareholders’ equity | |||||||||||||||||||||||||
BALANCES AS OF DECEMBER 31, 2022 | 5,525,430 | 4,252,952 | 3,189,273 | 582,693 | 3,771,966 | 168,969 | 13,719,317 | |||||||||||||||||||||||||
Capital increase | 43,105 | 77,106 | — | — | — | — | 120,211 | |||||||||||||||||||||||||
Capital decrease due to shares’ repurchase | 5 | 29,165 | 53,665 | — | — | — | — | 82,830 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 203,502 | 203,502 | |||||||||||||||||||||||||
Appropriated for general reserve | — | — | 152,069 | — | 152,069 | 152,069 | — | |||||||||||||||||||||||||
Appropriated for reserve pursuant to Article N° 42 of the Constitutive Agreement | — | — | — | 16,900 | 16,900 | 16,900 | — | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
BALANCES AS OF MARCH 31, 2023 | 5,539,370 | 4,276,393 | 3,341,342 | 599,593 | 3,940,935 | 203,502 | 13,960,200 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
BALANCES AS OF DECEMBER 31, 2023 | 5,598,310 | 4,380,427 | 3,341,342 | 599,593 | 3,940,935 | 810,048 | 14,729,720 | |||||||||||||||||||||||||
Capital increase | 104,235 | 191,792 | — | — | — | — | 296,027 | |||||||||||||||||||||||||
Capital decrease due to shares’ repurchase | 5 | 31,925 | 58,742 | — | — | — | — | 90,667 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 175,111 | 175,111 | |||||||||||||||||||||||||
Appropriated for general reserve | — | — | 728,548 | — | 728,548 | 728,548 | — | |||||||||||||||||||||||||
Appropriated for reserve pursuant to Article N° 42 of the Constitutive Agreement | — | — | — | 81,500 | 81,500 | 81,500 | — | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
BALANCES AS OF MARCH 31, 2024 | 5,670,620 | 4,513,477 | 4,069,890 | 681,093 | 4,750,983 | 175,111 | 15,110,191 | |||||||||||||||||||||||||
|
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|
|
|
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|
|
|
|
|
|
|
See accompanying notes to Unaudited Condensed Interim Financial Information
F-59
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Unaudited Condensed Interim Statements of Cash Flows
For the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
NOTES | 2024 | 2023 | ||||||||
OPERATING ACTIVITIES: | ||||||||||
Net income | 175,111 | 203,502 | ||||||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||
Unrealized gain on trading securities | 16,307 | (46,328 | ) | |||||||
Loan commissions, net of amortization of origination costs | 4,370 | 4,756 | ||||||||
(Credit) provision for loan losses | 5 | 6,304 | 3,754 | |||||||
Impairment charge for equity investments | 36 | 163 | ||||||||
Unrealized changes in fair value related to equity investment | 5,227 | 176 | ||||||||
Equity in earnings of investees | 5 | (658 | ) | |||||||
Amortization of deferred charges | 1,692 | 825 | ||||||||
Depreciation of property and equipment | 1,887 | 2,209 | ||||||||
Provision for employees’ severance benefits | 5,176 | 4,675 | ||||||||
Provision for employees’ savings plan | 143 | 149 | ||||||||
Unrealized changes in fair value related to other financial instruments | 16 | 2,828 | (10,654 | ) | ||||||
Net changes in operating assets and liabilities: | ||||||||||
Marketable securities - trading, net | 1,976,928 | 1,963,246 | ||||||||
Accrued interest and commissions receivable | 136,283 | 210,539 | ||||||||
Other assets | 2,645 | 4,993 | ||||||||
Accrued interest payable | 36,963 | 46,808 | ||||||||
Severance benefits paid or advanced | 1,871 | 3,548 | ||||||||
Employees’ savings plan paid or advanced | 323 | 683 | ||||||||
Accrued expenses and other liabilities | 21,117 | 19,042 | ||||||||
|
|
|
| |||||||
Total adjustments and net changes in operating assets and liabilities | 2,159,357 | 2,205,688 | ||||||||
|
|
|
| |||||||
Net cash used in operating activities | 1,984,246 | 2,002,186 | ||||||||
|
|
|
| |||||||
INVESTING ACTIVITIES: | ||||||||||
Purchases of other investments | 4 | 2,958,234 | 1,445,536 | |||||||
Maturities of other investments | 4 | 1,917,959 | 35,304 | |||||||
Loan origination and principal collections, net | 5 | 287,057 | 293,270 | |||||||
Equity investments, net | 6,513 | 3,493 | ||||||||
Property and equipment, net | 136 | 199 | ||||||||
|
|
|
| |||||||
Net cash used in investing activities | 746,841 | 1,700,208 | ||||||||
|
|
|
| |||||||
FINANCING ACTIVITIES: | ||||||||||
Net decrease in deposits | 7 | 1,254,551 | 1,980,400 | |||||||
Proceeds from commercial paper | 8 | 7,499,469 | 15,027,207 | |||||||
Repayment of commercial paper | 8 | 7,458,010 | 15,529,093 | |||||||
Net (decrease) increase in derivative-related collateral | 345,975 | 460,899 | ||||||||
Proceeds from issuance of bonds | 10 | 4,116,112 | 3,514,894 | |||||||
Repayment of bonds | 10 | 1,571,567 | 1,079,287 | |||||||
Proceeds from borrowings from other financial institutions | 9 | 122,277 | 79,381 | |||||||
Repayment of borrowings from other financial institutions | 9 | 70,013 | 37,393 | |||||||
Proceeds from issuance of shares | 296,027 | 120,211 | ||||||||
|
|
|
| |||||||
Net cash provided by financing activities | 1,333,769 | 576,419 | ||||||||
|
|
|
| |||||||
NET DECREASE IN CASH AND DUE FROM BANKS AND DEPOSITS WITH BANKS | 1,397,318 | 3,125,975 | ||||||||
CASH AND DUE FROM BANKS AND DEPOSITS WITH BANKS AT BEGINNING OF THE PERIOD | 5,034,530 | 6,643,461 | ||||||||
|
|
|
| |||||||
CASH AND DUE FROM BANKS AND DEPOSITS WITH BANKS AT END OF THE PERIOD | 3,637,212 | 3,517,486 | ||||||||
|
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| |||||||
SUPPLEMENTAL DISCLOSURE: | ||||||||||
Interest paid during the period | 650,079 | 464,485 | ||||||||
|
|
|
| |||||||
NONCASH FINANCING ACTIVITIES: | ||||||||||
Principal collections - Loans | 5 | 90,667 | 82,830 | |||||||
|
|
|
| |||||||
Capital decrease | 5 | 90,667 | 82,830 | |||||||
|
|
|
| |||||||
Change in derivative instruments assets | 226,989 | 71,529 | ||||||||
|
|
|
| |||||||
Change in derivative instruments liabilities | 235,007 | 303,409 | ||||||||
|
|
|
|
See accompanying notes to Unaudited Condensed Interim Financial Information
F-60
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
1. | ORIGIN |
Business description – 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 Constitutive Agreement. Series “A” and “B” shareholder countries are: Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Honduras, Panama, Paraguay, Peru, Trinidad and Tobago, Uruguay and Venezuela. Series “C” shareholder countries are: Barbados, Costa Rica, Jamaica, Mexico, Portugal and Spain. In addition, there are 13 banks which are Series “B” shareholders.
CAF is headquartered in Caracas, Venezuela and has offices in Asuncion, Paraguay; Bogota, Colombia; Brasilia and Sao Paulo, Brazil; Buenos Aires, Argentina; Mexico City, Mexico; Panama City, Panama; La Paz, Bolivia; Lima, Peru; Madrid, Spain; Montevideo, Uruguay; Port of Spain, Trinidad and Tobago; Quito, Ecuador; San Salvador, El Salvador; Santiago de Chile, Chile and Santo Domingo, Dominican Republic.
CAF promotes a sustainable development model through credit, non-refundable resources, and supports in the technical and financial structuring of projects in the public and private sectors of Latin America and the Caribbean.
CAF offers financial and related services to the governments of its shareholder 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 shareholder countries. Furthermore, CAF manages and supervises third-party cooperation funds owned and sponsored by other countries and organizations, destined to finance programs agreed upon with donor countries and organizations which are in line with CAF’s policies and strategies.
CAF raises funds to finance its operations from sources both within and outside its shareholder countries.
2. | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
Financial statement presentation –The condensed interim financial information as of March 31, 2024, and December 31, 2023, and for the three-month periods ended March 31, 2024 and 2023 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 condensed 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, 2024 are not necessarily an indication of the results to be expected for the full year 2024.
This condensed interim financial information should be read in conjunction with CAF’s audited financial statements as of and for the years ended December 31, 2023 and 2022 and the notes thereto (“audited financial statements”).
For a detailed discussion about CAF´s significant accounting policies to Note 2 of the audited financial statements.
F-61
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Recent accounting pronouncements –
Recent accounting pronouncements applicable
ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures
In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-02, Troubled Debt Restructurings and Vintage Disclosures (Topic 326). The amendments in this Update eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments in this Update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. CAF adopted the amendments in this Update on January 1, 2023 and the adoption did not have material effects in the financial statements.
ASU 2020-04, Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The ASU provides optional expedients and exceptions, for contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU do not apply to contract modifications made or other transactions entered after December 31, 2022. In January 2021, the FASB issued amendments in ASU 2021-01 to the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and tailor the existing guidance to derivative instruments affected by the discounting transition. In December 2022, the FASB issued an amendment in ASU 2022-06, to defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. Both ASUs have no material effects in the financial statements since the rates were offset between financial assets and liabilities.
Libor Replacement
The replacement of the LIBOR rates with a new reference rate or rates is an industry risk due to the implications it has on the assets as well as the liabilities of financial institutions. In that regard, CAF has been closely following the recent developments and announcements from groups and organizations that are most closely involved with the phasing out of the LIBOR rate that affect the loan and derivatives markets, including the International Swaps and Derivatives Association (ISDA) and its publication of the ISDA 2020 IBOR Fallbacks Protocol, to which CAF has adhered in January 2021. In addition, CAF has established an interdepartmental task force in charge of preparing the institution for the change in reference rates, including measures such as the incorporation of fallback provisions on loans to mitigate any possible impact LIBOR may have. This task force in coordination with management recommended and approved that starting January 1, 2022, all loans originated will be made in the reference rate Term SOFR. New financial liabilities will also be hedged to SOFR. Legacy loans that are referenced to LIBOR rate are being converted after June 2023 when LIBOR rate ceases to be representative. It is for this reason that we expected the LIBOR transition to occur smoothly. On April 3, 2023, the Financial Conduct Authority (FCA) announced that US$ LIBOR rates of 1, 3 and 6 months will be published using an unrepresentative ‘synthetic’ methodology
F-62
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
starting July 1, 2023 up to September 30, 2024. These synthetic rates are intended for use in legacy contracts only, to help ensure the incorporation of fallback language in the remaining legacy contracts.
If SOFR or another rate does not achieve wide acceptance as the alternative to LIBOR, there likely will be disruption in financial markets. In the event that SOFR or another reference rate is widely accepted, risks will remain related to outstanding loans, borrowings, derivatives and other instruments using LIBOR related to transitioning those instruments to a new reference rate and the corresponding value transfer that may occur in connection with that transition, as the new reference rate will not exactly mimic LIBOR.
ASU 2020-06, Simplifies Issuer’s Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity
On August 5, 2020, the FASB issued ASU 2020-06, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for fiscal years beginning after December 15, 2023 with early adoption permitted. The adoption of this ASU has not material effects in the financial statements of CAF.
Accounting pronouncements pending adoption
ASU 2023-06, Disclosure Improvements
On October 9, 2023, the FASB issued ASU 2023-06, which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the “Codification”). The ASU was issued in response to the Security Exchange Commission (SEC) Disclosure Update and Simplification Initiative that updated and simplified disclosure requirements that the SEC believed were “redundant, duplicative, overlapping, outdated, or superseded.” The new guidance is intended to align U.S. GAAP requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. CAF will not early adopt this ASU and estimates it will not have material effects in the financial statements. For all entities within the scope of the affected Codification subtopics, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the associated amendment will be removed from the Codification and will not become effective for any entities.
ASU 2023-07, Improvements to Reportable Segment Disclosures
On November 27, 2023, the FASB issued ASU 2023-07, which amendments “improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.” In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable “investors to better understand an entity’s overall performance” and assess “potential future cash flows. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. CAF will not early adopt this ASU and estimates it will not have material effects in the financial statements.
F-63
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
3. | MARKETABLE SECURITIES - TRADING |
A summary of trading securities follows:
March 31, 2024 | December 31, 2023 | |||||||||||||||
Amount | Average maturity (years) | Amount | Average maturity (years) | |||||||||||||
U.S. securities | 2,882,787 | 1.31 | 2,542,017 | 1.45 | ||||||||||||
|
|
|
| |||||||||||||
Non-U.S. governments and government entities bonds | 328,219 | 1.48 | 423,908 | 1.74 | ||||||||||||
|
|
|
| |||||||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial paper | 3,714,175 | 0.35 | 2,610,195 | 0.39 | ||||||||||||
Certificates of deposits(1) | 2,847,111 | 0.29 | 2,103,754 | 0.39 | ||||||||||||
Bonds | 1,716,302 | 2.20 | 1,818,551 | 2.54 | ||||||||||||
Collateralized mortgage obligation | 370,613 | 4.54 | 377,665 | 4.56 | ||||||||||||
Liquidity funds(2) | 124,763 | 1.00 | 112,128 | 1.00 | ||||||||||||
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|
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| |||||||||||||
8,772,964 | 0.88 | 7,022,293 | 1.18 | |||||||||||||
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|
|
| |||||||||||||
Trading | 11,983,970 | 1.00 | 9,988,218 | 1.27 | ||||||||||||
|
|
|
|
(1) | Each certificate of deposit bears a maturity date and specified fixed interest rate. It also is held through The Depository Trust Company (DTC) and has a CUSIP number, which is a code that identifies a financial security and facilitates trading. |
(2) | The liquidity funds are comprised of short-term (less than one year) securities representing high-quality liquid debt and monetary instruments. |
The fair value of trading securities includes net unrealized gains of US$ 72,332 and US$ 56,025 as of March 31, 2024 and December 31, 2023, respectively.
For the three-month periods ended March 31, 2024 and 2023, Interest income - Investments and deposits with banks includes interest income for US$ 173,103 and US$ 145,802, respectively, and gain on the mark-to-market valuations for US$ 63,765 and US$ 79,438, respectively. The fluctuation in Interest income - Investments and deposits with banks is mainly due to the increase of the benchmark interest rates since the start of 2022 due to high inflation expectations and the increase of the short-term interest rates by the U.S. Federal Reserve which affected the mark-to-market valuations of CAF´s trading securities during the three-month period ended March 31, 2024 and 2023.
CAF places its short-term investments mainly in high grade financial institutions and corporate securities. CAF has conservative investment guidelines that limit the amount of credit risk exposure, considering among other factors, limits as to credit ratings, limits as to duration exposure, specific allocations by type of investment instruments and limits across sector and currency allocation. As of March 31, 2024 and December 31, 2023, CAF does not have any significant concentrations of credit risk according to its investment guidelines. Non-US dollar-denominated securities included in marketable securities amounted to the equivalent of US$ 283,073 and US$ 283,554 as of March 31, 2024 and December 31, 2023, respectively.
F-64
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Maturity of marketable securities are as follows:
March 31, 2024 | December 31, 2023 | |||||||
Less than one year | 8,318,341 | 6,009,404 | ||||||
Between one and two years | 2,282,625 | 2,377,609 | ||||||
Between two and three years | 690,302 | 677,273 | ||||||
Between three and four years | 336,184 | 309,478 | ||||||
Between four and five years | 194,883 | 366,187 | ||||||
Over five years | 161,635 | 248,267 | ||||||
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| |||||
11,983,970 | 9,988,218 | |||||||
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|
4. | OTHER INVESTMENTS |
Other investments are as follows:
March 31, 2024 | December 31, 2023 | |||||||
Deposits with banks due more than 90 days | ||||||||
U.S. dollars | 2,147,000 | 1,095,009 | ||||||
Euro | — | 44,160 | ||||||
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| |||||
2,147,000 | 1,139,169 | |||||||
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| |||||
Special drawing rights | 158,313 | 125,869 | ||||||
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| |||||
2,305,313 | 1,265,038 | |||||||
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|
The interest rates on deposits with banks ranged from 5.39% to 6.10% as of March 31, 2024 and from 2.52% to 6.60% as of December 31, 2023.
Special Drawing Rights (SDR) are an international reserve asset issued by the International Monetary Fund (IMF) as a complementary official reserve for member countries, its value is based on a five currencies basket (the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling). Since February 2023, CAF was named authorized holder by the IMF allowing it hold and exchange SDR only with authorized holders. SDR holdings earn interest which is determined on weekly basis. The interest rate as of March 31, 2024 is 4.11%. For the three-month period ended March 31, 2024, Interest income - Investments and deposits with banks includes interest income for US$ 2,235 and loss in currency exposure for US$ 5,026 related to SDR investments.
There were no SDR investments as of March 31, 2023, or effects on the statement of income.
F-65
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
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” shareholder countries, or to private institutions or companies domiciled in those countries. Loans by country are summarized as follows:
March 31, 2024 | December 31, 2023 | |||||||
Shareholder country: | ||||||||
Argentina | 4,399,714 | 5,503,626 | ||||||
Barbados | 172,632 | 175,013 | ||||||
Bolivia | 2,966,798 | 2,948,465 | ||||||
Brazil | 3,028,856 | 2,970,763 | ||||||
Chile | 250,000 | 244,000 | ||||||
Colombia | 3,792,037 | 3,842,359 | ||||||
Costa Rica | 479,071 | 497,638 | ||||||
Dominican Republic | 438,208 | 445,105 | ||||||
Ecuador | 4,273,555 | 4,246,954 | ||||||
El Salvador | 302,000 | 302,000 | ||||||
Mexico | 1,300,000 | 980,000 | ||||||
Panama | 2,550,215 | 2,582,659 | ||||||
Paraguay | 2,372,161 | 2,373,889 | ||||||
Peru | 1,954,069 | 1,836,850 | ||||||
Trinidad & Tobago | 1,289,905 | 1,305,459 | ||||||
Uruguay | 1,689,704 | 1,331,442 | ||||||
Venezuela | 2,076,790 | 2,135,370 | ||||||
|
|
|
| |||||
Total | 33,335,715 | 33,721,592 | ||||||
Fair value adjustments | (308,325 | ) | (242,507 | ) | ||||
|
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| |||||
Loans | 33,027,390 | 33,479,085 | ||||||
|
|
|
|
Fair value adjustments of loans represent mainly adjustments to the amount of loans for which the fair value option is elected.
As of March 31, 2024 and December 31, 2023, loans denominated in currencies other than U.S. dollar were granted for an equivalent of US$ 625,612 and US$ 696,136, respectively, mainly in Colombian pesos, Uruguayan pesos, Brazilian reales, Swiss francs, Peruvian nuevo sol, Paraguayan guarani and Bolivian bolivianos. All these loans are hedged with swaps, Borrowings from other financial institution and Bonds. As of March 31, 2024 and December 31, 2023, fixed interest rate loans amounted to US$ 2,480,858 and US$ 2,226,339, respectively.
F-66
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Loans classified by sector borrowers and the weighted average yield of the loan portfolio is shown below:
March 31, 2024 | December 31, 2023 | |||||||||||||||
Amount | Weighted average yield (%) | Amount | Weighted average yield (%) | |||||||||||||
Public sector | 32,025,833 | 7.24 | 32,327,694 | 7.30 | ||||||||||||
Private sector | 1,309,882 | 7.43 | 1,393,898 | 7.45 | ||||||||||||
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| |||||||||
33,335,715 | 7.24 | 33,721,592 | 7.30 | |||||||||||||
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|
The public sector corresponds to entities dependent on the national government, subnational entities, public companies owned by the latter, or mixed companies controlled by the national government or subnational entities.
The private sector corresponds to entities controlled by private investors.
Loans by industry segments are as follows:
March 31, 2024 | December 31, 2023 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
Infrastructure programs | 13,866,947 | 42 | 14,364,602 | 43 | ||||||||||||
Transport, warehousing and communications | 8,920,512 | 27 | 9,003,229 | 27 | ||||||||||||
Electricity, gas and water supply | 5,448,267 | 16 | 5,327,072 | 16 | ||||||||||||
Health and social services | 2,634,582 | 8 | 2,665,148 | 8 | ||||||||||||
Financial services - Commercial banks | 1,374,853 | 4 | 1,259,164 | 4 | ||||||||||||
Financial services - Development banks | 977,325 | 3 | 985,000 | 2 | ||||||||||||
Agriculture, hunting and forestry | 66,576 | — | 70,724 | — | ||||||||||||
Others | 46,653 | — | 46,653 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
33,335,715 | 100 | 33,721,592 | 100 | |||||||||||||
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Loans mature as follows:
March 31, 2024 | December 31, 2023 | |||||||
Less than one year | 5,076,090 | 5,715,772 | ||||||
Between one and two years | 3,147,236 | 3,175,175 | ||||||
Between two and three years | 3,207,786 | 3,079,662 | ||||||
Between three and four years | 3,175,758 | 3,210,996 | ||||||
Between four and five years | 2,954,205 | 2,936,228 | ||||||
Between five and ten years | 10,290,703 | 10,231,497 | ||||||
Between ten and fifteen years | 4,207,730 | 4,159,272 | ||||||
Over fifteen years | 1,276,207 | 1,212,990 | ||||||
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33,335,715 | 33,721,592 | |||||||
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CAF maintains an internal risk rating system to evaluate the quality of the non-sovereign loans, which identifies, through a standardized rating and review parameters, those risks related to credit transactions in
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Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
order to determine an internal risk rating classification designed by CAF. For purpose of determining the allowance for loan losses of sovereign loans as of March 31, 2024 and December 31, 2023, rating assigned by external agencies are used.
The credit quality of the sovereign loans of estimating the allowance for credit losses is based on the individual long-term foreign currency debt rating applicable to the borrower countries, which is determined using the average rating of three recognized international credit rating agencies. The credit quality by year of origination and taking the Moody’s rating as a reference as of March 31, 2024, is as follows:
Country | Credit Rating | Year of origination | ||||||||||||||||||||||||||||||
2024 | 2023 | 2022 | 2021 | 2020 | Prior | Total | ||||||||||||||||||||||||||
Argentina | Ca | — | 579,202 | 500,470 | 773,755 | 707,798 | 1,775,121 | 4,336,346 | ||||||||||||||||||||||||
Barbados | B3 | — | — | — | 30,000 | 100,000 | 42,632 | 172,632 | ||||||||||||||||||||||||
Bolivia | Caa1 | — | 29,217 | 567,140 | 350,000 | 42,607 | 1,777,027 | 2,765,991 | ||||||||||||||||||||||||
Brazil | Ba2 | — | — | 522,302 | — | 485,723 | 1,667,538 | 2,675,563 | ||||||||||||||||||||||||
Colombia | Baa2 | — | 250,000 | 600,000 | 500,000 | 350,000 | 1,481,510 | 3,181,510 | ||||||||||||||||||||||||
Costa Rica | B1 | — | — | — | — | 451,613 | 17,240 | 468,853 | ||||||||||||||||||||||||
Dominican Republic | Ba3 | — | — | 300,000 | 59,598 | — | 68,610 | 428,208 | ||||||||||||||||||||||||
Ecuador | Caa3 | 50,000 | 251,290 | 454,307 | 596,722 | 644,656 | 2,136,580 | 4,133,555 | ||||||||||||||||||||||||
El Salvador | Caa3 | — | 227,000 | 75,000 | — | — | — | 302,000 | ||||||||||||||||||||||||
Mexico | Baa2 | 200,000 | 300,000 | 300,000 | — | 300,000 | — | 1,100,000 | ||||||||||||||||||||||||
Panama | Baa3 | — | 11,868 | 320,000 | 343,574 | 380,357 | 1,210,666 | 2,266,465 | ||||||||||||||||||||||||
Paraguay | Ba1 | — | 187,200 | 327,168 | 250,000 | 421,730 | 1,137,813 | 2,323,911 | ||||||||||||||||||||||||
Peru | Baa1 | — | 500,000 | 154,917 | 507,599 | — | 540,609 | 1,703,125 | ||||||||||||||||||||||||
Trinidad & Tobago | Ba2 | — | 75,000 | 120,000 | 175,000 | 319,903 | 600,000 | 1,289,903 | ||||||||||||||||||||||||
Uruguay | Baa1 | 375,000 | 511,241 | 165,948 | 240,000 | 40,476 | 185,962 | 1,518,627 | ||||||||||||||||||||||||
Venezuela | C | — | — | — | — | — | 2,076,790 | 2,076,790 | ||||||||||||||||||||||||
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625,000 | 2,922,018 | 4,407,252 | 3,826,248 | 4,244,863 | 14,718,098 | 30,743,479 | ||||||||||||||||||||||||||
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The credit quality of the non-sovereign loan portfolio by year of origination, as represented by the internal credit risk classification as of March 31, 2024, is as follows:
Year of origination | ||||||||||||||||||||||||||||
Credit Rating | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Total | |||||||||||||||||||||
Satisfactory - outstanding | 200,000 | 50,000 | — | — | — | 60,000 | 310,000 | |||||||||||||||||||||
Satisfactory - very good | 75,000 | 252,392 | 100,000 | — | — | 5,219 | 432,611 | |||||||||||||||||||||
Satisfactory - adequate | 353,177 | 402,693 | 161,635 | 44,712 | 38,184 | 263,861 | 1,264,262 | |||||||||||||||||||||
Watch | 13,245 | 69,500 | 1,969 | 8,487 | 66,666 | 87,046 | 246,913 | |||||||||||||||||||||
Special mention | 90,000 | 105,807 | — | — | — | 64,169 | 259,976 | |||||||||||||||||||||
Doubtful | — | — | — | — | — | 36,182 | 36,182 | |||||||||||||||||||||
Sub-standard | — | — | — | — | — | 28,132 | 28,132 | |||||||||||||||||||||
Loss | — | — | — | — | — | 14,160 | 14,160 | |||||||||||||||||||||
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731,422 | 880,392 | 263,604 | 53,199 | 104,850 | 558,769 | 2,592,236 | ||||||||||||||||||||||
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F-68
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
The internal and external ratings have been updated as of March 31, 2024.
Loan portfolio quality
The loan portfolio quality indicators and the related amounts are presented below:
March 31, 2024 | March 31, 2023 | |||||||
During the period CAF recorded the following transactions: | ||||||||
Loans written-off | — | — | ||||||
Purchases of loan portfolio | — | — | ||||||
Sales of loan portfolio | 22,500 | — |
March 31, 2024 | December 31, 2023 | |||||||
CAF presented the following amounts and quality indicators as of the end of the period/year: | ||||||||
Non-accrual loans | 50,342 | 50,342 | ||||||
Troubled debt restructured | — | — | ||||||
Overdue accrual loans | — | — | ||||||
Allowance for loan losses as a percentage of loan portfolio | 0.15 | % | 0.17 | % | ||||
Non-accrual loans as a percentage of loan portfolio | 0.15 | % | 0.15 | % | ||||
Overdue loan principal as a percentage of loan portfolio | 0.00 | % | 0.00 | % |
For the three-month period ended March 31, 2024 and for the years ended December 31, 2023, there were no new restructured loans. As of December 31, 2023, the remaining amount of the restructured loan was collected, including principal and interest, as a result of this transaction CAF, recognized a net gain of US$ 16,354 in the statement of income as other income.
As of March 31, 2024 and December 31, 2023, the total principal amount of non-accrual loans are related to private sector borrowers (non-sovereign loans) which were 2,840 days and 2,749 days overdue, respectively. For the three-month periods ended March 31, 2024 and 2023, there were no interest income recognized for non-accrual loans. The allowance of loan losses for non-accrual loans amount to US$ 6,155 as of March 31, 2024 and December 31, 2023.
On March 31, 2020, CAF implemented the Support Program for the Liquidity Management in Exceptional Situations (the “Program”) approved by CAF’s Shareholders Assembly on March 3, 2020. The Program allows CAF to repurchase the shares of a shareholder country that fulfills the requirements of the Program and apply the proceeds to that country’s outstanding loans and interest. Pursuant to the Program, CAF notified Venezuela that it fulfills the requirements. Since inception of the Program to December 31, 2023, CAF repurchased a total of 148,029 shares totaling US$ 2,102,011 deducting the amount of paid-in capital and additional paid-in capital for US$ 740,145 and US$ 1,361,866, respectively. For the three-month period ended March 31, 2024, CAF repurchased an additional 6,385 shares totaling US$ 90,667 and applied that
F-69
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
amount to repay due and overdue amounts of principal and interest and deducting the amount of paid-in capital and additional paid-in capital for US$ 31,925 and US$ 58,742, respectively. Thus, since the inception of the Program to March 31, 2024, CAF repurchased 154,414 shares totaling US$ 2,192,678 and applied that amount to repay due and overdue amounts of principal and interest and deducting the amount of paid-in capital and additional paid-in capital for US$ 772,070 and US$ 1,420,608, respectively. As a result of the repurchases, as of May 17, 2024, Venezuela is current with its loans with CAF. It is estimated the Support Program will last until year 2024. Venezuela is one of the founding shareholders of CAF in 1970. Venezuela has reiterated its commitment and its intention to undertake payments. CAF´s Management monitors its credit exposure periodically.
A/B Loans
CAF only assumes the credit risk for the portion of its participations of the loan. As of March 31, 2024 and December 31, 2023, CAF had loans of this nature amounting to US$ 543,716 and US$ 452,641, respectively, whereas other financial institutions provided funds for US$ 451,333 and US$ 364,663, respectively.
Allowance for Loan Losses
The allowance for credit losses is maintained at a level CAF believes to be appropriate to absorb expected lifetime losses over the contractual life of the loan portfolio and consider available information relevant to assessing the collectability of cash flows including a combination of internal and external information relating to past events, current conditions, and reasonable and supportable forecasts.
Changes in the allowance and the balance for loan losses over the outstanding amounts, individually and collectively evaluated, are presented below:
For the three-months period ended March 31, | ||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||
Credit risk | Credit risk | |||||||||||||||||||||||
Sovereign | Non- sovereign | Total | Sovereign | Non- sovereign | Total | |||||||||||||||||||
Balances at beginning of year | — | 56,913 | 56,913 | — | 63,192 | 63,192 | ||||||||||||||||||
(Credit) provision for loan losses | — | (6,304 | ) | (6,304 | ) | — | 3,754 | 3,754 | ||||||||||||||||
Recoveries | — | 74 | 74 | — | — | — | ||||||||||||||||||
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Balances at end of year | — | 50,683 | 50,683 | — | 66,946 | 66,946 | ||||||||||||||||||
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F-70
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Changes in the provision for contingencies and the off-balance-sheet undisbursed loan commitments and financial guarantees, individually and collectively evaluated, are presented below:
For the three-months period ended March 31, | ||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||
Credit risk | Credit risk | |||||||||||||||||||||||
Sovereign | Non- sovereign | Total | Sovereign | Non- sovereign | Total | |||||||||||||||||||
Balances at beginning of year | — | 6,849 | 6,849 | — | 15,462 | 15,462 | ||||||||||||||||||
Provision (credit) for contingencies | — | 498 | 498 | — | (609 | ) | (609 | ) | ||||||||||||||||
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Balances at end of year | — | 7,347 | 7,347 | — | 14,853 | 14,853 | ||||||||||||||||||
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Provision (credit) for contingencies and the off-balance-sheet undisbursed loan commitments and financial guarantees are included in the unaudited condensed interim statements of income as part of other expenses as of March 31, 2024, and as part of the other income as of March 31, 2023, respectively.
6. | OTHER ASSETS |
A summary of other assets follows:
March 31, 2024 | December 31, 2023 | |||||||
Derivative-related collateral | 2,111,254 | 1,823,920 | ||||||
Intangible assets, net of accumulated amortization of US$ 10,351 and US$ 10,194, respectively | 65,188 | 63,142 | ||||||
Receivable from investment securities sold | 11,762 | 6,867 | ||||||
Other | 31,836 | 32,928 | ||||||
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2,220,040 | 1,926,857 | |||||||
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7. | DEPOSITS |
A summary of deposits follows:
March 31, 2024 | December 31, 2023 | |||||||
Demand deposits | 116,672 | 212,768 | ||||||
Time deposits: | ||||||||
Less than one year | 2,773,272 | 3,931,727 | ||||||
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Carrying value of deposits | 2,889,944 | 4,144,495 | ||||||
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As of March 31, 2024 and December 31, 2023, the weighted average interest rate was 5.38% and 4.98%, respectively. Deposits are issued for amounts equal to or more than US$ 100. Total deposits denominated in currencies other than the U.S. dollar amount to an equivalent of US$ 113,667 and US$ 116,412 as of March 31, 2024 and December 31, 2023, respectively.
F-71
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
8. | COMMERCIAL PAPERS |
A summary of commercial papers follows:
March 31, 2024 | December 31, 2023 | |||||||
U.S. dollars | 4,687,133 | 4,439,048 | ||||||
Euros | 80,915 | 292,559 | ||||||
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4,768,048 | 4,731,607 | |||||||
Less commercial papers issuance discount | (73,077 | ) | (78,095 | ) | ||||
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Carrying value of commercial papers | 4,694,971 | 4,653,512 | ||||||
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As of March 31, 2024 and December 31, 2023, the weighted average interest rate was the weighted average interest rate was 5.64% and 5.21%, respectively. As of March 31, 2024 and December 31, 2023, commercial papers balances matures in 2024.
9. | BORROWINGS FROM OTHER FINANCIAL INSTITUTIONS |
A summary of borrowings from other financial institutions by currency follows:
March 31, 2024 | December 31, 2023 | |||||||
U.S. dollars | 1,601,055 | 1,507,218 | ||||||
Euros | 542,265 | 584,098 | ||||||
Colombian pesos | 28,814 | 28,695 | ||||||
Others | 4,974 | 4,964 | ||||||
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2,177,108 | 2,124,975 | |||||||
Fair value adjustments | (61,242 | ) | (77,562 | ) | ||||
Less debt issuance costs | 486 | 617 | ||||||
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Carrying value of borrowings from other financial institutions | 2,115,380 | 2,046,796 | ||||||
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As of March 31, 2024 and December 31, 2023, the fixed interest-bearing borrowings amounted to US$ 320,236 and US$ 330,443, respectively. As of March 31, 2024 and December 31, 2023, the weighted average interest rate after considering the impact of interest rate swaps was 7.39% and 6.38%, respectively.
Borrowings from other financial institutions, by remaining maturities, are summarized below:
March 31, 2024 | December 31, 2023 | |||||||
Less than one year | 623,923 | 432,236 | ||||||
Between one and two years | 213,062 | 410,976 | ||||||
Between two and three years | 207,610 | 209,985 | ||||||
Between three and four years | 190,191 | 190,508 | ||||||
Between four and five years | 144,713 | 153,462 | ||||||
Over five years | 797,609 | 727,808 | ||||||
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2,177,108 | 2,124,975 | |||||||
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F-72
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
As of March 31, 2024 and December 31, 2023, there were unused term credit facilities amounting to US$ 1,507,165 and US$ 1,557,697, respectively.
10. | BONDS |
A summary of outstanding bonds follows:
March 31, 2024 | December 31, 2023 | |||||||||||||||||||||||
At original exchange rate | At spot exchange rate | Weighted average cost, after swaps (%) (period end) | At original exchange rate | At spot exchange rate | Weighted average cost, after swaps (%) (year end) | |||||||||||||||||||
U.S. dollars | 9,705,999 | 9,705,999 | 8.16 | 8,115,053 | 8,115,053 | 8.42 | ||||||||||||||||||
Euro | 9,748,536 | 9,157,730 | 6.72 | 8,784,835 | 8,322,257 | 6.79 | ||||||||||||||||||
Swiss francs | 2,463,131 | 2,578,177 | 6.76 | 2,793,740 | 3,119,430 | 6.84 | ||||||||||||||||||
Australian dollars | 1,729,769 | 1,619,200 | 6.73 | 1,340,315 | 1,284,576 | 6.83 | ||||||||||||||||||
Japanese yen | 1,568,189 | 1,209,379 | 6.60 | 1,614,238 | 1,333,853 | 6.74 | ||||||||||||||||||
Mexican pesos | 1,189,994 | 1,438,736 | 6.60 | 1,189,923 | 1,408,433 | 6.71 | ||||||||||||||||||
Hong Kong dollars | 584,332 | 579,456 | 6.81 | 584,332 | 580,710 | 7.02 | ||||||||||||||||||
Norwegian kroner | 549,486 | 359,139 | 6.74 | 694,695 | 471,898 | 6.89 | ||||||||||||||||||
Colombian pesos | 405,966 | 350,005 | 6.55 | 405,968 | 348,568 | 6.55 | ||||||||||||||||||
Brazilian Real | 201,662 | 212,798 | 6.25 | 201,662 | 219,915 | 6.29 | ||||||||||||||||||
Uruguayan pesos | 146,822 | 145,799 | 6.17 | 143,845 | 137,889 | 6.02 | ||||||||||||||||||
Turkish lira | 108,020 | 62,620 | 6.15 | 108,020 | 68,872 | 6.29 | ||||||||||||||||||
Costa Rica Colon | 99,047 | 105,739 | 6.22 | 99,047 | 101,312 | 6.46 | ||||||||||||||||||
Indonesian Rupee | 90,433 | 89,923 | 6.34 | — | — | — | ||||||||||||||||||
Polish Zloty | 61,130 | 67,732 | 6.17 | 61,130 | 68,737 | 6.37 | ||||||||||||||||||
New Zealand Dollar | 59,898 | 55,654 | 6.39 | 59,898 | 58,894 | 6.50 | ||||||||||||||||||
Paraguayan Guarani | 40,226 | 39,862 | 6.18 | 9,952 | 9,952 | 1.30 | ||||||||||||||||||
Canadian dollars | 30,395 | 29,529 | 6.70 | 30,395 | 30,182 | 6.88 | ||||||||||||||||||
Czech Koruna | 11,211 | 10,660 | 6.11 | 11,211 | 11,179 | 6.28 | ||||||||||||||||||
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28,794,246 | 27,818,137 | 26,248,259 | 25,691,710 | |||||||||||||||||||||
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Fair value adjustments | (1,074,173 | ) | (926,251 | ) | ||||||||||||||||||||
Less debt issuance costs |
| 7,481 | 6,009 | |||||||||||||||||||||
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Carrying value of bonds |
| 26,736,483 | 24,759,450 | |||||||||||||||||||||
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F-73
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
A summary of the bonds issued, by remaining maturities at original exchange rate, follows:
March 31, 2024 | December 31, 2023 | |||||||
Less than one year | 3,243,656 | 3,331,884 | ||||||
Between one and two years | 6,386,822 | 5,210,881 | ||||||
Between two and three years | 4,369,775 | 5,494,526 | ||||||
Between three and four years | 4,462,310 | 4,382,168 | ||||||
Between four and five years | 4,131,402 | 3,193,913 | ||||||
Over five years | 6,200,281 | 4,634,887 | ||||||
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28,794,246 | 26,248,259 | |||||||
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As of March 31, 2024 and December 2023, fixed interest rate bonds amounted to US$ 28,271,124 and US$ 25,737,649, respectively, of which US$ 19,097,801 and US$ 18,134,326, respectively, are denominated in currencies other than U.S. dollar.
For the three-month period ended March 31, 2024 and the year ended December 31, 2023, there were no bonds repurchase.
11. | ACCRUED EXPENSES AND OTHER LIABILITIES |
A summary of accrued expenses and other liabilities follows:
March 31, 2024 | December 31, 2023 | |||||||
Employees’ severance benefits and savings plan | 100,067 | 95,298 | ||||||
Derivative-related collateral | 92,846 | 152,447 | ||||||
Contributions to Shareholders’ Special Funds (Note 12) | 35,673 | 13,450 | ||||||
Payable for investment securities purchased | 35,529 | 18,461 | ||||||
Provision for contingencies (Note 5) | 7,347 | 6,849 | ||||||
Other | 4,958 | 6,604 | ||||||
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276,420 | 293,109 | |||||||
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12. | CONTRIBUTIONS TO SHAREHOLDERS’ SPECIAL FUNDS |
In March 2024, the Shareholders’ Assembly of CAF approved the contribution up to a maximum amount of US$ 138,000 to some shareholders’ special funds for 2024. Subsequently, during the three-month period ended March, 31, 2024, based on the analysis of the new commitments contracted or the resources required by the shareholders’ special funds, authorized the contributions of US$ 97,000, US$ 34,000, US$ 4,500 and US$ 2,500 to Compensatory Financial Found (FFC), Technical Cooperation Fund (FCT), Human Development Fund (FONDESHU), and Fund for the Development of Small and Medium Enterprises (FIDE), respectively. For the three-month period ended March 31, 2024, CAF has recognized US$ 35,673 as an expense and, as of March 31, 2024, recognized an unconditional obligation (accounts payable) for US$ 35,673 which was paid in April 2024.
F-74
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
In March 2023, the Shareholders’ Assembly of CAF approved the contribution up to a maximum amount of US$ 120,000 to some shareholders’ special funds for 2023. Subsequently, during the three-month period ended March, 31, 2023, based on the analysis of the new commitments contracted or the resources required by the shareholders’ special funds, authorized the contributions of US$ 85,000, US$ 31,500, and US$ 3,500 to FFC, FCT, and FIDE, respectively. For the three-month period ended March 31, 2023, CAF has recognized US$ 30,000 as an expense and, as of March 31, 2023, recognized an unconditional obligation (accounts payable) for US$ 30,000 which was paid in April 2023.
13. | TAX EXEMPTIONS |
Pursuant to its Constitutive Agreement, CAF is exempt, in all of its Member Countries, from all taxes and tariffs on income, properties or assets, and from any liability involving payment, withholding or collection of any taxes.
In addition, CAF has entered into agreements with each of the associated shareholder countries (defined in Article 3 of CAF’s General Regulations as any shareholder country holding directly or indirectly shares of CAF). Pursuant to these agreements, each country that is a shareholder but do not qualify as a Member Country has agreed to extend to CAF, with respect to its activities in and concerning that country, immunities and privileges similar to those than have been granted to CAF in the Member Countries.
14. | DERIVATIVE FINANCIAL 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.
The market risk associated with interest rate and foreign currency is managed by swapping marketable securities - trading, loans, borrowings from other financial institutions and bonds, subject to fixed interest rates and denominated in currency other than the U.S. dollar into floating interest rate instruments denominated in U.S. dollars. CAF enters into derivative financial instruments to offset the economic changes in value of specifically identified marketable securities – trading, loans, borrowings from other financial institutions and bonds.
Derivative financial instruments held by CAF consist of interest rate swaps designated as fair value hedges of specifically identified loans, bonds or borrowings from other financial institutions with fixed interest rates and denominated in U.S. dollars. Also, CAF enters into cross-currency and interest rate swaps as an economic hedge (derivative that is entered into to manage a risk but is not accounted as a hedge) for interest rate and foreign exchange risks related with deposits, bonds, borrowings or loans denominated in currencies other than the U.S. dollar where CAF’s management elected to measure those liabilities and assets at fair value under the fair value option guidance in order to mitigate volatility in CAF’s financial statements, considering that both the financial instruments and the associated hedging instruments are held until maturity.
When the fair value of a derivative financial instrument is positive, the counterparty owes CAF, creating credit risk for CAF. When the fair value of a derivative financial instrument is negative, CAF owes the counterparty and, therefore, it does not have credit risk. CAF minimizes the credit risk in derivative financial instruments by entering into transactions with high-quality counterparties whose credit rating is “A” or higher.
F-75
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
In order to reduce the credit risk in derivative financial instruments, CAF enters into credit support agreements with its major swap counterparties. This provides risk mitigation, as the swap contracts are regularly marked-to-market, and the party being the net obligor is required to post collateral when net mark to-market exposure exceeds certain predetermined thresholds. This collateral is in the form of cash.
CAF does not offset for each counterparty, the fair value amount recognized for derivative financial instruments with the fair value amount recognized for the collateral, whether posted or received, under master netting arrangements executed with the same counterparty. CAF reports separately the cumulative gross amounts for the receivable from and payable to for derivative financial instruments.
CAF also utilizes futures derivatives instruments to reduce exposure to price risk. These are contracts for delayed delivery of securities or money market instruments in which the seller agrees to make delivery at a specified future date of a specified instrument at a specified price or yield. Initial margin requirements are met with cash or securities. CAF generally closes out open positions prior to maturity. Therefore, cash receipts or payments are limited to the change in fair value of the future contracts. Additionally, CAF utilizes forward contracts to reduce exposure to foreign currency risk.
The balance sheet details related to CAF’s derivative financial instruments are as follows:
Derivative assets | Derivative liabilities | |||||||||||||||
March 31, 2024 | December 31, 2023 | March 31, 2024 | December 31, 2023 | |||||||||||||
Cross-currency swap | 327,569 | 567,599 | 2,261,745 | 2,059,602 | ||||||||||||
Interest rate swap | 351,929 | 341,396 | 313,150 | 269,100 | ||||||||||||
U.S treasury futures | 4,135 | 2,600 | 759 | 9,996 | ||||||||||||
Cross-currency forward contracts | 1,127 | 154 | — | 1,949 | ||||||||||||
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| |||||||||
684,760 | 911,749 | 2,575,654 | 2,340,647 | |||||||||||||
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|
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The following table presents the notional amount and fair values of interest rate swaps and cross-currency swaps and the underlying hedged items:
Notional amount | Fair value | |||||||||||||||
Interest rate swap | Cross- currency swap | Derivative assets | Derivative liabilities | |||||||||||||
As of March 31, 2024: | ||||||||||||||||
Loans | 2,170,292 | — | 331,070 | — | ||||||||||||
Loans | — | 492,412 | 22,862 | 50,426 | ||||||||||||
Borrowings from other financial institutions | — | 542,265 | — | 64,138 | ||||||||||||
Borrowings from other financial institutions | 86,551 | — | — | 3,871 | ||||||||||||
Bonds | — | 19,050,972 | 304,707 | 2,147,181 | ||||||||||||
Bonds | 9,573,323 | — | 20,859 | 309,279 | ||||||||||||
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| |||||||||
11,830,166 | 20,085,649 | 679,498 | 2,574,895 | |||||||||||||
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F-76
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Notional amount | Fair value | |||||||||||||||
Interest rate swap | Cross- currency swap | Derivative assets | Derivative Liabilities | |||||||||||||
As of December 31, 2023: | ||||||||||||||||
Loans | 2,185,292 | — | 286,406 | 2,773 | ||||||||||||
Loans | — | 555,412 | 33,917 | 70,142 | ||||||||||||
Borrowings from other financial institutions | — | 584,098 | 1,134 | 60,589 | ||||||||||||
Borrowings from other financial institutions | 86,551 | — | — | 3,236 | ||||||||||||
Bonds | — | 18,090,473 | 532,548 | 1,928,871 | ||||||||||||
Bonds | 8,003,323 | — | 54,990 | 263,091 | ||||||||||||
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| |||||||||
10,275,166 | 19,229,983 | 908,995 | 2,328,702 | |||||||||||||
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The following table presents the notional amount and fair values of U.S. treasury futures and cross-currency forward contracts:
As of March 31, 2024
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative assets | ||||||||||
Futures short | Various | Until June 2024 | US$ | 1,119,200 | 3,953 | |||||||||
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| |||||||||||
Futures long | Various | Until June 2024 | US$ | 63,900 | 182 | |||||||||
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| |||||||||||
Forward contracts | Various | Various | Various | 132,945 | 1,127 | |||||||||
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|
|
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative liabilities | ||||||||||
Futures short | Various | Until June 2024 | US$ | 118,516 | (470 | ) | ||||||||
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| |||||||||||
Futures long | Various | Until June 2024 | US$ | 262,199 | (289 | ) | ||||||||
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As of December 31, 2023
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative assets | ||||||||||
Futures long | Various | Until March 2024 | US$ | 291,300 | 2,600 | |||||||||
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| |||||||||||
Forward contracts | Various | Various | Various | 14,599 | 154 | |||||||||
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F-77
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Fair value | ||||||||||||||
Start date | Termination date | Contract Currency | Notional amount | Derivative liabilities | ||||||||||
Futures short | Various | Until March 2024 | US$ | 851,442 | (9,996 | ) | ||||||||
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| |||||||||||
Forward contracts | Various | Various | Various | 131,513 | (1,949 | ) | ||||||||
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The amounts of collateral posted related to U.S. treasury futures as of March 31, 2024 and December 31, 2023 were US$ 9,229 and US$ 15,844, respectively. As of December 2023, the amount of collateral received related to U.S. treasury futures was US$ 356. As of March 31, 2024, no related to U.S. treasury collateral received.
CAF enters into International Swaps and Derivatives Association, Inc. (ISDA) master netting arrangements with all of its derivative counterparties. These legally enforceable master netting arrangements give CAF the right to take cash or liquidate securities held as collateral and to offset receivables and payables with the same counterparty, in the event of default by the counterparty. The following tables present information about the effect of offsetting of derivative financial instruments, although CAF has elected not to offset any derivative financial instruments by counterparty in the balance sheets:
As of March 31, 2024
Derivative assets | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized assets | Financial instruments | Cash and securities collateral received | Net amount | ||||||||||||
Swaps | 679,498 | (559,353 | ) | (92,846 | ) | 27,299 | ||||||||||
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| |||||||||
Derivative liabilities | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized liabilities | Financial instruments | Cash and securities collateral pledged | Net amount | ||||||||||||
Swaps | (2,574,895 | ) | 559,353 | 2,102,025 | 86,483 | |||||||||||
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As of December 31, 2023
Derivative assets | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized assets | Financial instruments | Cash and securities collateral received | Net amount | ||||||||||||
Swaps | 908,995 | (704,676 | ) | (152,091 | ) | 52,228 | ||||||||||
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Derivative liabilities | Gross amounts not offset in the balance sheet | |||||||||||||||
Description | Gross amounts of recognized liabilities | Financial instruments | Cash and securities collateral pledged | Net amount | ||||||||||||
Swaps | (2,328,702 | ) | 704,676 | 1,805,746 | 181,720 | |||||||||||
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F-78
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
15. | FAIR VALUE MEASUREMENTS |
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 financial instrument is classified. Where appropriate, the description includes details of the valuation methodologies and the key inputs to those methodologies.
When available, CAF generally uses quoted prices in active markets to determine fair value.
If quoted market prices in active markets are not available, fair value is based upon internally developed valuation methodologies that use, where possible, current market-based or independently sourced market inputs, such as interest rates, currency rates, etc.
Where available, CAF may also make use of quoted prices in active markets for recent trading activity in positions with the same or similar characteristics to the financial instrument being valued. The frequency and size of trading activity and the amount of the bid-ask spread are among the factors considered in determining the liquidity of markets and the relevance of observed quoted prices from those markets.
The following valuation methodologies are used to estimate the fair value and determine the classification in the fair value hierarchy of CAF’s financial instruments:
- | Marketable securities: CAF uses quoted prices in active markets to determine the fair value of trading securities. These securities are classified in Level 1 of the fair value hierarchy. |
- | Loans: The fair value of fixed rate loans is determined using a discounted cash flow technique 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: The fair value is calculated using market prices provided by an independent financial information services company, which are determined using discounted cash flow valuation technique using observable inputs. Derivative assets and liabilities are classified in Level 2 of the fair value hierarchy. |
- | Bonds, borrowings from other financial institutions and deposits: For CAF’s bonds issued and medium and long term borrowings from other financial institutions and deposits, fair value is determined by using a discounted cash flow valuation technique, taking into consideration benchmark interest yield curves at the end of the reporting period to discount the expected cash flows for the applicable maturity, thus reflecting market fluctuations of key variables such as interest and exchange rates. These yield curves are adjusted to incorporate CAF credit risk spread. Bonds, borrowings from other financial institutions and deposits are generally classified in Level 2 of the fair value hierarchy based on the observability of significant inputs to the discounted cash flow valuation technique. |
F-79
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(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 financial assets and liabilities that are measured at fair value on a recurring basis:
As of March 31, 2024 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. securities | 2,882,787 | — | — | 2,882,787 | ||||||||||||
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| |||||||||
Non-U.S. governments and government entities bonds | 178,275 | 149,944 | — | 328,219 | ||||||||||||
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|
|
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| |||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | — | 3,714,175 | — | 3,714,175 | ||||||||||||
Certificate of deposits | 2,847,111 | — | — | 2,847,111 | ||||||||||||
Bonds | 1,716,302 | — | — | 1,716,302 | ||||||||||||
Collateralized mortgage obligation | 369,070 | 1,543 | — | 370,613 | ||||||||||||
Liquidity funds | 124,763 | — | — | 124,763 | ||||||||||||
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| |||||||||
5,057,246 | 3,715,718 | — | 8,772,964 | |||||||||||||
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| |||||||||
Sub-total financial assets at fair value | 8,118,308 | 3,865,662 | — | 11,983,970 | ||||||||||||
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|
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| |||||||||
Loans | — | 2,393,242 | — | 2,393,242 | ||||||||||||
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|
|
|
|
| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 327,569 | — | 327,569 | ||||||||||||
Interest rate swap | — | 351,929 | — | 351,929 | ||||||||||||
U.S treasury futures | — | 4,135 | — | 4,135 | ||||||||||||
Cross-currency forward contracts | — | 1,127 | — | 1,127 | ||||||||||||
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| |||||||||
— | 684,760 | — | 684,760 | |||||||||||||
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| |||||||||
Total financial assets at fair value | 8,118,308 | 6,943,664 | — | 15,061,972 | ||||||||||||
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| |||||||||
Liabilities: | ||||||||||||||||
Borrowings from other financial institutions | — | 567,574 | — | 567,574 | ||||||||||||
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|
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| |||||||||
Bonds | — | 26,570,073 | — | 26,570,073 | ||||||||||||
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| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 2,261,745 | — | 2,261,745 | ||||||||||||
Interest rate swap | — | 313,150 | — | 313,150 | ||||||||||||
U.S treasury futures | — | 759 | — | 759 | ||||||||||||
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| |||||||||
— | 2,575,654 | — | 2,575,654 | |||||||||||||
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| |||||||||
Total financial liabilities at fair value | — | 29,713,301 | — | 29,713,301 | ||||||||||||
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F-80
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
As of December 31, 2023 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Marketable Securities: | ||||||||||||||||
U.S. securities | 2,542,017 | — | — | 2,542,017 | ||||||||||||
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|
|
|
|
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| |||||||||
Non-U.S. governments and government entities bonds | 209,372 | 214,536 | — | 423,908 | ||||||||||||
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|
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| |||||||||
Financial institutions and corporate securities: | ||||||||||||||||
Commercial papers | — | 2,610,195 | — | 2,610,195 | ||||||||||||
Certificate of deposits | 2,103,754 | — | — | 2,103,754 | ||||||||||||
Bonds | 1,818,551 | — | — | 1,818,551 | ||||||||||||
Collateralized mortgage obligation | 377,029 | 636 | — | 377,665 | ||||||||||||
Liquidity funds | 112,128 | — | — | 112,128 | ||||||||||||
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| |||||||||
4,411,462 | 2,610,831 | — | 7,022,293 | |||||||||||||
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| |||||||||
Sub-total financial assets at fair value | 7,162,851 | 2,825,367 | — | 9,988,218 | ||||||||||||
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| |||||||||
Loans | — | 2,549,568 | — | 2,549,568 | ||||||||||||
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| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 567,599 | — | 567,599 | ||||||||||||
Interest rate swap | — | 341,396 | — | 341,396 | ||||||||||||
U.S treasury futures | — | 2,600 | — | 2,600 | ||||||||||||
Cross-currency forward contracts | — | 154 | — | 154 | ||||||||||||
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| |||||||||
— | 911,749 | — | 911,749 | |||||||||||||
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| |||||||||
Total financial assets at fair value | 7,162,851 | 6,286,684 | — | 13,449,535 | ||||||||||||
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| |||||||||
Liabilities: | ||||||||||||||||
Borrowings from other financial institutions | — | 593,086 | — | 593,086 | ||||||||||||
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| |||||||||
Bonds | — | 24,608,695 | — | 24,608,695 | ||||||||||||
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| |||||||||
Derivative instruments: | ||||||||||||||||
Cross-currency swap | — | 2,059,602 | — | 2,059,602 | ||||||||||||
Interest rate swap | — | 269,100 | — | 269,100 | ||||||||||||
U.S treasury futures | — | 9,996 | — | 9,996 | ||||||||||||
Cross-currency forward contracts | 1,949 | 1,949 | ||||||||||||||
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— | 2,340,647 | — | 2,340,647 | |||||||||||||
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Total financial liabilities at fair value | — | 27,542,428 | — | 27,542,428 | ||||||||||||
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F-81
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Items that are not measured at fair value
The carrying amount and estimated fair values of CAF’s financial instruments that are not recognized in the balance sheets at fair value are as follows:
March 31, 2024 | December 31, 2023 | |||||||||||||||||||
Hierarchy Levels | Carrying amount | Estimated fair value | Carrying amount | Estimated fair value | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | 1 | 101,951 | 101,951 | 70,592 | 70,592 | |||||||||||||||
Deposits with banks | 1 | 3,535,261 | 3,535,261 | 4,963,938 | 4,963,938 | |||||||||||||||
Other investments: | ||||||||||||||||||||
Bank deposits | 1 | 2,147,000 | 2,147,000 | 1,139,169 | 1,139,169 | |||||||||||||||
Special Drawing Rights | 2 | 158,313 | 158,313 | 125,869 | 125,869 | |||||||||||||||
Loans, net | 2 | 30,409,431 | 30,398,083 | 30,696,872 | 30,684,248 | |||||||||||||||
Accrued interest and commissions receivable | 2 | 1,093,855 | 1,093,855 | 957,572 | 957,572 | |||||||||||||||
Derivate-related collateral | 1 | 2,111,254 | 2,111,254 | 1,823,920 | 1,823,920 | |||||||||||||||
Receivable from investment securities sold | 1 | 11,762 | 11,762 | 6,867 | 6,867 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 2 | 2,889,944 | 2,889,944 | 4,144,495 | 4,144,495 | |||||||||||||||
Commercial papers | 2 | 4,694,971 | 4,694,971 | 4,653,512 | 4,653,512 | |||||||||||||||
Borrowings from other financial institutions, net | 2 | 1,547,806 | 1,539,671 | 1,453,710 | 1,444,501 | |||||||||||||||
Bonds, net | 2 | 166,410 | 171,037 | 150,755 | 155,230 | |||||||||||||||
Accrued interest payable | 2 | 809,571 | 809,571 | 846,534 | 846,534 | |||||||||||||||
Derivate-related collateral | 1 | 92,846 | 92,846 | 152,447 | 152,447 | |||||||||||||||
Payable for investment securities purchased | 1 | 35,529 | 35,529 | 18,461 | 18,461 |
The following methods and assumptions were used to estimate the fair value of those financial instruments not accounted for at fair value on recurring basis:
- | Cash and due from banks, deposits with banks, other investments – Deposits with banks due more than 90 days, accrued interest and commissions receivable, deposits, commercial papers, accrued interest payable, derivative-related collateral, receivable from investment securities sold and payable for investment securities purchased: The carrying amounts approximate fair value because of the short maturity of these instruments. |
- | Other investments – Special drawing rights: The carrying amount approximates fair value because this asset is based on a basket of 5 international currencies (the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling) reviewed and published by the IMF. |
- | Loans: CAF is one of the few institutions that grant loans for development projects in the shareholder countries. A secondary market does not exist for the type of loans granted by CAF. As rates on variable rate loans 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 by using the |
F-82
Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
current variable interest rate for similar loans. The fair value of non-accrual status loans is estimated using the discounted cash flow technique. |
- | Equity investments: The direct investments in equity securities of companies without readily determinable fair values are measured at cost, less impairment plus or minus observable price changes of an identical or similar instrument of the same issuer. As of March 31, 2024 and December 31, 2023, the carrying amount of those investments amounted to US$ 123,581 and US$ 117,358, respectively. In addition, as of March 31, 2024 and December 31, 2023, investments in funds without a readily determinable fair value, with carrying amount of US$ 222,598 and US$ 221,909, respectively, and the net effects of impairment and the changes in fair value related to equity investment for the three-month period ended March 31, 2024 and 2023 amounted to US$ 5,191 and US$ (339), respectively, are accounted for at fair value applying the practical expedient, using the net asset value per share. These financial instruments are generally classified in level 3 of the fair value hierarchy based on the observability of significant inputs to the valuation methodology (these instruments are not disclosed in the table above). |
- | Bonds and borrowings from other financial institutions: For CAF’s bonds issued and medium and long term borrowings, fair value is determined using a discounted cash flow 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 financial instrument are generally classified in Level 2 of the fair value hierarchy based on the observability of significant inputs to the valuation methodology. |
16. | NET LOSS ON CHANGES IN FAIR VALUE RELATED TO FINANCIAL INSTRUMENTS |
The loss on changes in fair value of cross-currency swaps and financial liabilities carried at fair value under the fair value option are as follows:
For the three-month period ended March 31, 2024 | ||||||||||||
Gain (loss) on derivatives | Gain (loss) on hedged item | Net Gain (loss) | ||||||||||
Cross-currency swaps: | ||||||||||||
Bonds | (446,151 | ) | 488,802 | 42,651 | ||||||||
Loans | 8,662 | (30,889 | ) | (22,227 | ) | |||||||
Borrowings from other financial institutions | (4,683 | ) | (16,954 | ) | (21,637 | ) | ||||||
|
|
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|
|
| |||||||
(442,172 | ) | 440,959 | (1,213 | ) | ||||||||
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Table of Contents
CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
For the three-month period ended March 31, 2023 | ||||||||||||
Gain (loss) on derivatives | Gain (loss) on hedged item | Net Gain (loss) | ||||||||||
Cross-currency swaps: | ||||||||||||
Deposits | 2,433 | (3,628 | ) | (1,195 | ) | |||||||
Bonds | 369,790 | (363,739 | ) | 6,051 | ||||||||
Loans | (15,414 | ) | 11,456 | (3,958 | ) | |||||||
Borrowings from other financial institutions | 20,976 | (16,808 | ) | 4,168 | ||||||||
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377,785 | (372,719 | ) | 5,066 | |||||||||
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In addition, during the three-month periods ended March 31, 2024 and 2023, CAF recorded net gains of US$ 4,041 and US$ 5,588, respectively, related to changes in fair value of U.S. treasury futures and U.S. treasury forwards and changes in fair value of the U.S. Treasury Notes.
17. | COMMITMENTS AND CONTINGENCIES |
Commitments and contingencies include the following:
March 31, 2024 | December 31, 2023 | |||||||
Loan commitments subscribed – eligible | 6,114,246 | 6,278,476 | ||||||
Lines of credit | 4,495,523 | 5,120,740 | ||||||
Loan commitments subscribed – non eligible | 1,668,904 | 1,812,229 | ||||||
Equity investments agreements subscribed | 122,216 | 108,629 | ||||||
Guarantees | 84,255 | 83,917 |
These commitments and contingencies arose from the normal course of CAF’s business and are related principally to loans that have been approved or committed for disbursement.
In the ordinary course of business, CAF has entered into commitments to extend loans; such loan commitments are reported in the above table upon signing the corresponding loan agreement and are reported as loans in the balance sheets when disbursements are made. Loan commitments that have fulfilled the necessary requirements for disbursement are classified as eligible.
The commitments to extend loans have fixed expiration dates and in some cases expire without a loan being disbursed. Therefore, the amounts of total commitment to extend loans do not necessarily represent future cash requirements. Also, based on experience, portions of the loan commitments are disbursed on average two years after the signing of the loan agreement.
The lines of credit are extended to financial and corporate institutions as a facility to grant short term loans basically to finance working capital and international trade activities.
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
Guarantees mature as follows:
March 31, 2024 | December 31, 2023 | |||||||
Less than one year | 21,681 | 6,471 | ||||||
Between one and five years | 13,577 | 15,265 | ||||||
Over five years | 48,997 | 62,181 | ||||||
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84,255 | 83,917 | |||||||
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To the best knowledge of CAF’s management, CAF is not involved 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.
18. | SEGMENT REPORTING |
Management has determined that CAF has only one operating and 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 on the basis of the nature of the products or services provided, the preparation process, or the method for providing services among individual countries.
For the three-month periods ended March 31, 2024 and 2023, loans made to or guaranteed by two countries individually generated in excess, of 10% of interest income on loans, as follows:
2024 | 2023 | |||||||
Argentina | 92,288 | 66,357 | ||||||
Ecuador | 81,450 | 71,892 | ||||||
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173,738 | 138,249 | |||||||
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19. | SUBSEQUENT EVENTS |
Management has evaluated subsequent events through May 17, 2024, the date these financial statements were available to be issued. As a result of this evaluation, management has determined that there are no subsequent events that require a disclosure in these financial statements except for:
- | On April 04, 2024, CAF issued bonds for INR 4,000 million, equivalent to US$ 48.1 million, 7.50% due 2034, under its EMTN Programme. |
- | On April 08, 2024, CAF issued bonds for INR 4,500 million, equivalent to US$ 54.0 million, 7.50% due 2030, under its EMTN Programme. |
- | On April 15, 2024, CAF issued bonds for JMD 4,000 million, equivalent to US$ 26.1 million, 8.50% due 2028, under its EMTN Programme. |
- | On April 15, 2024, CAF issued bonds for PYG 150,000 million, equivalent to US$ 20.3 million, 7.25% due 2031, under its EMTN Programme. |
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
Notes to the Unaudited Condensed Interim Financial Statements Information
As of March 31, 2024 and December 31, 2023
and for the three-month periods ended March 31, 2024 and 2023
(In thousands of U.S. dollars)
- | On April 16, 2024, CAF issued bonds for GBP 1,000 million, equivalent to US$ 1,269.0 million, 4.75% due 2029, under its EMTN Programme. |
- | On April 17, 2024, The Bahamas subscribed 3,521 Series “C” ordinary shares of CAF to become a Shareholder Country, for total amount of US$ 49.9 million. |
- | On April 17, 2024, Grenada subscribed 352 Series “C” ordinary shares of CAF to become a Shareholder Country, for total amount of US$ 4.9 million. |
- | On April 22, 2024, CAF issued bonds for CRC 47,250 million, equivalent to US$ 94.9 million, 6.35% due 2032, under its Local A Bonds Programme. |
- | On April 22, 2024, CAF issued bonds for INR 2,700 million, equivalent to US$ 32.4 million, 7.70% due 2029, under its EMTN Programme. |
- | On April 25, 2024, the Shareholders’ Assembly of CAF approved a short-term loan for US$ 800 million in favor of the Republic of Ecuador, to support this country’s public account management efforts. |
- | On April 26, 2024, CAF issued bonds for INR 4,500 million, equivalent to US$ 53.9 million, 8.25% due 2034, under its EMTN Programme. |
- | On May 7, 2024, CAF issued bonds for CRC 15,000 million, equivalent to US$ 29.4 million, 6.06% due 2029, under its Local A Bonds Programme. |
- | On May 10, 2024, CAF issued bonds for INR 5,000 million, equivalent to US$ 60.0 million, 7.65% due 2031, under its EMTN Programme. |
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CORPORACIÓN ANDINA DE FOMENTO (CAF)
SUPPLEMENTARY INFORMATION (UNAUDITED)
As of March 31, 2024
BONDS
Title | Interest Rate | Coupon | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding as of March 31, 2024 (in millions) | ||||||||||||
4.25% Euro Bond (Schuldschein) | Fixed | 4.25% | 2012 | 2027 | EUR(1) | 82 | ||||||||||||
4.375% Euro Bond (Schuldschein) | Fixed | 4.38% | 2012 | 2032 | EUR | 60 | ||||||||||||
5.0% Euro Dollar Bond | Fixed | 5.00% | 2012 | 2042 | USD | 50 | ||||||||||||
4.0% Euro Hong Kong Dollar Bonds | Fixed | 4.00% | 2012 | 2024 | HKD(2) | 398 | ||||||||||||
3.25% Euro Bonds | Fixed | 3.25% | 2013 | 2033 | EUR | 100 | ||||||||||||
3.25% Euro Bonds | Fixed | 3.25% | 2013 | 2033 | EUR | 100 | ||||||||||||
4.27% Euro Hong Kong Dollar Bonds | Fixed | 4.27% | 2013 | 2028 | HKD | 940 | ||||||||||||
3.66% Euro Bond | Fixed | 3.66% | 2013 | 2033 | EUR | 51 | ||||||||||||
3.625% Euro Bond (Schuldschein) | Fixed | 3.63% | 2013 | 2033 | EUR | 200 | ||||||||||||
3.31% Euro Bonds | Fixed | 3.31% | 2013 | 2028 | EUR | 226 | ||||||||||||
3.31% Euro Bonds | Fixed | 3.31% | 2013 | 2028 | EUR | 25 | ||||||||||||
3.51% Euro Bonds | Fixed | 3.51% | 2014 | 2034 | EUR | 65 | ||||||||||||
3.500% Euro Bonds | Fixed | 3.50% | 2014 | 2039 | EUR | 200 | ||||||||||||
4.29% Euro Bonds | Fixed | 4.29% | 2014 | 2026 | NOK(3) | 1,500 | ||||||||||||
3.925% Euro Bonds | Fixed | 3.93% | 2014 | 2029 | HKD | 1,257 | ||||||||||||
3.05% Euro Bonds | Fixed | 3.05% | 2014 | 2030 | EUR | 50 | ||||||||||||
1.50% Swiss Franc Bonds | Fixed | 1.50% | 2014 | 2028 | CHF(4) | 225 | ||||||||||||
0.51% Swiss Franc Bonds | Fixed | 0.51% | 2015 | 2026 | CHF | 200 | ||||||||||||
0.68% Euro Yen Bonds | Fixed | 0.68% | 2015 | 2025 | JPY(5) | 8,900 | ||||||||||||
0.51% Swiss Franc Bonds | Fixed | 0.51% | 2015 | 2026 | CHF | 150 | ||||||||||||
3.05% Euro Bonds | Fixed | 3.05% | 2015 | 2035 | NOK | 1,000 | ||||||||||||
4.50% Kangaroo Bonds | Fixed | 4.50% | 2015 | 2025 | AUD(6) | 225 | ||||||||||||
4.50% Kangaroo Bonds | Fixed | 4.50% | 2015 | 2025 | AUD | 50 | ||||||||||||
4.50% Kangaroo Bonds | Fixed | 4.50% | 2015 | 2025 | AUD | 50 | ||||||||||||
3.05% Euro Bonds | Fixed | 3.05% | 2015 | 2030 | NOK | 800 | ||||||||||||
0.45% Samurai Market | Fixed | 0.45% | 2016 | 2026 | JPY | 4,500 | ||||||||||||
0.304% Swiss Market Bond | Fixed | 0.30% | 2016 | 2024 | CHF | 125 | ||||||||||||
0.51% Swiss Market Bond | Fixed | 0.51% | 2016 | 2026 | CHF | 125 | ||||||||||||
2.89% Euro Bonds | Fixed | 2.89% | 2016 | 2026 | HKD | 320 | ||||||||||||
4.50% Kangaroo Market Bond | Fixed | 4.50% | 2016 | 2026 | AUD | 110 | ||||||||||||
1.70% Euro Bonds | Fixed | 1.70% | 2016 | 2031 | EUR | 70 | ||||||||||||
1.803% Euro Bonds | Fixed | 1.80% | 2016 | 2031 | EUR | 100 | ||||||||||||
4.50% Kangaroo Market Bond | Fixed | 4.50% | 2016 | 2026 | AUD | 80 | ||||||||||||
1.796% Euro Bonds | Fixed | 1.80% | 2016 | 2031 | EUR | 50 | ||||||||||||
3.50% Euro Bonds | Fixed | 3.50% | 2017 | 2037 | CAD(7) | 40 | ||||||||||||
4.50% Kangaroo Market Bond | Fixed | 4.50% | 2017 | 2027 | AUD | 175 | ||||||||||||
3.265% Euro Bonds | Fixed | 3.27% | 2017 | 2027 | HKD | 1,620 | ||||||||||||
0.30% Swiss Market Bond | Fixed | 0.30% | 2017 | 2025 | CHF | 160 | ||||||||||||
4.50% Kangaroo Market Bond | Fixed | 4.50% | 2017 | 2027 | AUD | 75 | ||||||||||||
4.50% Kangaroo Market Bond | Fixed | 4.50% | 2018 | 2027 | AUD | 75 | ||||||||||||
1.125% Euro Bond | Fixed | 1.13% | 2018 | 2025 | EUR | 1,000 | ||||||||||||
8.50% Mexican Pesos Bond | Fixed | 8.50% | 2018 | 2028 | MXN(8) | 3,000 | ||||||||||||
0.30% Swiss Market Bond | Fixed | 0.30% | 2018 | 2025 | CHF | 115 | ||||||||||||
6.77% Euro Bond | Fixed | 6.77% | 2018 | 2028 | COP(9) | 510,000 |
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Title | Interest Rate | Coupon | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding as of March 31, 2024 (in millions) | ||||||||||||
6.75% Euro Bond | Fixed | 6.75% | 2018 | 2028 | COP | 150,000 | ||||||||||||
3.90% Uruguayan Bond | Fixed | 3.90% | 2019 | 2040 | UIU(10) | 39 | ||||||||||||
6.77% Colombian Pesos Bond | Fixed | 6.77% | 2019 | 2028 | COP | 99,500 | ||||||||||||
9.60% Mexican Pesos | Fixed | 9.60% | 2019 | 2039 | MXN | 965 | ||||||||||||
3.90% Uruguayan Bond | Fixed | 3.90% | 2019 | 2040 | UIU | 7 | ||||||||||||
2.97% Euro Dollar Bond | Fixed | 2.97% | 2019 | 2029 | USD | 140 | ||||||||||||
10.4% Uruguayan Peso Bond | Fixed | 10.40% | 2019 | 2024 | UIU | 1,752 | ||||||||||||
0.18% Euro Bond | Fixed | 0.18% | 2019 | 2027 | EUR | 50 | ||||||||||||
10.4% Uruguayan Peso Bond | Fixed | 10.40% | 2019 | 2024 | UYU(11) | 1,814 | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2019 | 2039 | UIU | 3 | ||||||||||||
0.625%Euro Bond | Fixed | 0.63% | 2019 | 2026 | EUR | 750 | ||||||||||||
3.90% Uruguayan Bond | Fixed | 3.90% | 2019 | 2040 | UIU | 8 | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2020 | 2039 | UIU | 5 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2020 | 2038 | UIU | 2 | ||||||||||||
3.30% Uruguayan Bond | Fixed | 3.20% | 2020 | 2037 | UIU | 7 | ||||||||||||
4.2581% Uruguayan Bond | Fixed | 4.26% | 2020 | 2039 | UIU | 1 | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2020 | 2039 | UIU | 6 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2020 | 2038 | UIU | 6 | ||||||||||||
1.025% Japanese Bond | Fixed | 1.03% | 2020 | 2040 | JPY | 3,000 | ||||||||||||
6.78% Mexican Bond | Fixed | 6.78% | 2020 | 2027 | MXN | 1,200 | ||||||||||||
3.30% Uruguayan Bond | Fixed | 3.20% | 2020 | 2037 | UIU | 15 | ||||||||||||
1.625% Euro Bond | Fixed | 1.63% | 2020 | 2025 | EUR | 700 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2020 | 2038 | UIU | 9 | ||||||||||||
7.5% Mexican Bond | Fixed | 7.50% | 2020 | 2030 | MXN | 1,525 | ||||||||||||
1.80% New Zealand Bond | Fixed | 1.80% | 2020 | 2025 | NZD(12) | 21 | ||||||||||||
1.83% Australian Bond | Fixed | 1.83% | 2020 | 2025 | AUD | 31 | ||||||||||||
0.65% Japanese Bond | Fixed | 0.65% | 2020 | 2025 | JPY | 3,500 | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2020 | 2039 | UIU | 7 | ||||||||||||
0.77% Japanese Bond | Fixed | 0.77% | 2020 | 2025 | JPY | 17,200 | ||||||||||||
0.70% Swiss Market Bond | Fixed | 0.70% | 2020 | 2025 | CHF | 350 | ||||||||||||
1.60% Euro Bond | Fixed | 1.60% | 2020 | 2025 | USD | 40 | ||||||||||||
0.727% Japanese Bond | Fixed | 0.73% | 2020 | 2025 | JPY | 20,000 | ||||||||||||
6.75% Colombian Bond | Fixed | 6.75% | 2020 | 2028 | COP | 104,200 | ||||||||||||
3.30% Uruguayan Bond | Fixed | 3.20% | 2020 | 2037 | UIU | 11 | ||||||||||||
4.26% Uruguayan Bond | Fixed | 4.26% | 2020 | 2029 | UIU | 5 | ||||||||||||
1.625% Euro Bond | Fixed | 1.63% | 2020 | 2025 | USD | 750 | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2020 | 2039 | UIU | 9 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2020 | 2038 | UIU | 11 | ||||||||||||
6.77% Colombian Bond | Fixed | 6.77% | 2020 | 2028 | COP | 145,000 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2020 | 2037 | UIU | 5 | ||||||||||||
1.332% Euro Bond | Fixed | 1.33% | 2020 | 2025 | USD | 30 | ||||||||||||
4.2% Uruguayan Bond | Fixed | 4.26% | 2020 | 2039 | UIU | 6 | ||||||||||||
1.327% Euro Bond | Fixed | 1.33% | 2020 | 2025 | USD | 30 | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2021 | 2039 | UIU | 6 | ||||||||||||
0.25% Euro Bond | Fixed | 0.25% | 2021 | 2026 | EUR | 1,250 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2021 | 2038 | UIU | 12 | ||||||||||||
0.35% Samurai Bond | Fixed | 0.35% | 2021 | 2026 | JPY | 13,300 | ||||||||||||
0.45% Samurai Bond | Fixed | 0.45% | 2021 | 2028 | JPY | 1,400 | ||||||||||||
0.35% Samurai Bond | Fixed | 0.35% | 2021 | 2026 | JPY | 16,600 | ||||||||||||
6.8% Mexican Bond | Fixed | 6.82% | 2021 | 2031 | MXN | 3,535 | ||||||||||||
1.58% Euro Bond | Fixed | 1.58% | 2021 | 2026 | USD | 50 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2021 | 2037 | UIU | 9 | ||||||||||||
4.26% Uruguayan Bond | Fixed | 4.26% | 2021 | 2039 | UIU | 9 |
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Title | Interest Rate | Coupon | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding as of March 31, 2024 (in millions) | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2021 | 2039 | UIU | 5 | ||||||||||||
1.00% Samurai Bond | Fixed | 1.00% | 2021 | 2026 | AUD | 30 | ||||||||||||
2.5% Euro Bonds | Fixed | 2.50% | 2021 | 2031 | NOK | 600 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2021 | 2038 | UIU | 9 | ||||||||||||
Brazilian Real Bond | Index-linked | N.A. | 2021 | 2033 | BRL(13) | 215 | ||||||||||||
Brazilian Real Bond | Index-linked | N.A. | 2021 | 2026 | BRL | 70 | ||||||||||||
0.30% Euro Yen Bonds | Fixed | 0.30% | 2021 | 2031 | JPY | 3,000 | ||||||||||||
Brazilian Real Bond | Index-linked | N.A. | 2021 | 2033 | BRL | 239 | ||||||||||||
Brazilian Real Bond | Index-linked | N.A. | 2021 | 2026 | BRL | 80 | ||||||||||||
3.54% Mexican Bond | Fixed | 3.54% | 2021 | 2031 | MXN-UDI (14) | 211 | ||||||||||||
Euro FRN Bond | Floating | SOFR + 0.62% | 2021 | 2024 | USD | 400 | ||||||||||||
0.45% Japanese Bond | Fixed | 0.45% | 2021 | 2028 | JPY | 20,000 | ||||||||||||
0.32% Japanese Bond | Fixed | 0.32% | 2021 | 2027 | JPY | 5,500 | ||||||||||||
0.09% Japanese Bond | Fixed | 0.09% | 2021 | 2024 | JPY | 3,000 | ||||||||||||
0.22% Japanese Bond | Fixed | 0.22% | 2021 | 2026 | JPY | 5,000 | ||||||||||||
3.20% Uruguayan Bond | Fixed | 3.20% | 2021 | 2037 | UIU | 7 | ||||||||||||
3.61% Uruguayan Bond | Fixed | 3.61% | 2021 | 2039 | UIU | 1 | ||||||||||||
4.26% Uruguayan Bond | Fixed | 4.26% | 2021 | 2039 | UIU | 6 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2021 | 2038 | UIU | 12 | ||||||||||||
Brazilian Real Bond | Index-linked | N.A. | 2021 | 2026 | BRL | 261 | ||||||||||||
Brazilian Real Bond | Index-linked | N.A. | 2021 | 2026 | BRL | 40 | ||||||||||||
Brazilian Real Bond | Index-linked | N.A. | 2021 | 2033 | BRL | 163 | ||||||||||||
2.16% Australian Bond | Fixed | 2.16% | 2021 | 2031 | AUD | 65 | ||||||||||||
1.92% Euro Bond | Fixed | 1.92% | 2021 | 2031 | USD | 50 | ||||||||||||
3.90% Uruguayan Bond | Fixed | 3.90% | 2021 | 2040 | UIU | 8 | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2021 | 2039 | UIU | 4 | ||||||||||||
3.78% Uruguayan Bond | Fixed | 3.78% | 2021 | 2038 | UIU | 7 | ||||||||||||
4.26% Uruguayan Bond | Fixed | 4.26% | 2021 | 2039 | UIU | 2 | ||||||||||||
3.61% Uruguayan Bond | Fixed | 3.61% | 2021 | 2039 | UIU | 2 | ||||||||||||
1.25% Yankee Bond | Fixed | 1.25% | 2021 | 2024 | USD | 1,000 | ||||||||||||
3.20% Uruguayan Bond | Fixed | 3.20% | 2021 | 2037 | UIU | 6.5 | ||||||||||||
0.46% Swiss Bond | Fixed | 0.46% | 2022 | 2027 | CHF | 350 | ||||||||||||
2.25% Yankee Bond | Fixed | 2.25% | 2022 | 2027 | USD | 650 | ||||||||||||
0.60% Samurai Bond | Fixed | 0.60% | 2022 | 2032 | JPY | 7,200 | ||||||||||||
3.64% Uruguayan Bond | Fixed | 3.64% | 2022 | 2039 | UIU | 2 | ||||||||||||
6.8% Mexican Bond | Fixed | 6.82% | 2022 | 2031 | MXN | 7,500 | ||||||||||||
9.0% Mexican Bond | Fixed | 9.0% | 2022 | 2027 | MXN | 2,000 | ||||||||||||
3.64% Uruguayan Bond | Fixed | 3.64% | 2022 | 2039 | UIU | 4 | ||||||||||||
4.04% Uirdashi Bond | Fixed | 4.04% | 2022 | 2027 | NZD | 22 | ||||||||||||
3.40% Uridashi Bond | Fixed | 3.40% | 2022 | 2027 | AUD | 12 | ||||||||||||
2.81% Uridashi Bond | Fixed | 2.81% | 2022 | 2027 | USD | 7 | ||||||||||||
3.61% Uruguayan Bond | Fixed | 3.61% | 2022 | 2039 | UIU | 1 | ||||||||||||
4.26% Uruguayan Bond | Fixed | 4.26% | 2022 | 2039 | UIU | 4 | ||||||||||||
2.88% Uruguayan Bond | Fixed | 2.88% | 2022 | 2039 | UIU | 15 | ||||||||||||
2.38% Euro Bond | Fixed | 2.38% | 2022 | 2027 | EUR | 500 | ||||||||||||
5.00% Kangaroo Bond | Fixed | 5.00% | 2022 | 2029 | AUD | 55 | ||||||||||||
3.61% Uruguayan Bond | Fixed | 3.61% | 2022 | 2039 | UIU | 0.8 | ||||||||||||
3.20% Uruguayan Bond | Fixed | 3.20% | 2022 | 2037 | UIU | 8.3 | ||||||||||||
4.26% Uruguayan Bond | Fixed | 4.26% | 2022 | 2039 | UIU | 3.2 | ||||||||||||
2.09% Swiss Bond | Fixed | 2.09% | 2022 | 2028 | CHF | 235 | ||||||||||||
2.72% Euro Bond (Schuldschein) | Fixed | 2.72% | 2022 | 2046 | EUR | 111 | ||||||||||||
3.50% Panamanian Bond | Fixed (Step-up) | 3.50% | 2022 | 2042 | USD | 200 | ||||||||||||
4.83% Mexican Bond | Fixed | 4.83% | 2022 | 2037 | MXN-UDI | 750 |
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Title | Interest Rate | Coupon | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding as of March 31, 2024 (in millions) | ||||||||||||
2.88% Uruguayan Bond | Fixed | 2.88% | 2022 | 2039 | UIU | 13 | ||||||||||||
5.90% Kangaroo Bond | Fixed | 5.90% | 2022 | 2037 | AUD | 35 | ||||||||||||
37.0% Turkish Lire | Fixed | 37.0% | 2022 | 2027 | TRY(15) | 850 | ||||||||||||
3.61% Uruguayan Bond | Fixed | 3.61% | 2022 | 2039 | UIU | 0.5 | ||||||||||||
3.20% Uruguayan Bond | Fixed | 3.20% | 2022 | 2037 | UIU | 6.0 | ||||||||||||
5.25% Yankee Bond | Fixed | 5.25% | 2022 | 2025 | USD | 800 | ||||||||||||
1.13% Euro Bond | Fixed | 1.13% | 2022 | 2025 | EUR | 50 | ||||||||||||
2.88% Uruguayan Bond | Fixed | 2.88% | 2022 | 2039 | UIU | 5.8 | ||||||||||||
32.5% Turkish Lire Bond | Fixed | 32.5% | 2023 | 2026 | TRY | 500 | ||||||||||||
4.75% Yankee Bond | Fixed | 4.75% | 2023 | 2026 | USD | 1,500 | ||||||||||||
2.44% Swiss Bond | Fixed | 2.44% | 2023 | 2030 | CHF | 190 | ||||||||||||
USD FRN Bond | Float | SOFR + 0.97% | 2023 | 2026 | USD | 50 | ||||||||||||
5.00% Kangaroo Bond | Fixed | 5.00% | 2023 | 2033 | AUD | 45 | ||||||||||||
USD FRN Bond | Float | SOFR + 1.20% | 2023 | 2028 | USD | 30 | ||||||||||||
5.87% Czech Koruna Bond | Fixed | 5.87% | 2023 | 2025 | CZK(16) | 250 | ||||||||||||
5.55% New Zealand Bond | Fixed | 5.55% | 2023 | 2028 | NZD | 50 | ||||||||||||
0.84% Yen Bonds | Fixed | 0.84% | 2023 | 2028 | JPY | 10,000 | ||||||||||||
6.77% Colombian Bond | Fixed | 6.77% | 2023 | 2028 | COP | 200,000 | ||||||||||||
4.50% Euro Bond | Fixed | 4.50% | 2023 | 2028 | EUR | 1,000 | ||||||||||||
5.95% Kangaroo Bond | Fixed | 5.95% | 2023 | 2033 | AUD | 75 | ||||||||||||
5.80% Euro Dollar Bond | Fixed | 5.80% | 2023 | 2025 | USD | 100 | ||||||||||||
25.0% Turkish Lire | Fixed | 25.0% | 2023 | 2027 | TRY | 675 | ||||||||||||
10.35% Mexican Bond | Fixed | 10.35% | 2023 | 2033 | MXN | 2,000 | ||||||||||||
8.55% Polish Bond | Fixed | 8.55% | 2023 | 2025 | PLN(17) | 271 | ||||||||||||
USD FRN Bond | Float | SOFR + 1.15% | 2023 | 2028 | USD | 59 | ||||||||||||
11.5% Colombian Bond | Fixed | 11.5% | 2023 | 2031 | COP | 142,120 | ||||||||||||
3.81% Uruguayan Bond | Fixed | 3.81% | 2023 | 2042 | UIU | 2 | ||||||||||||
4.71% Euro Dollar Bond | Fixed | 4.17% | 2023 | 2028 | USD | 51 | ||||||||||||
4.28% Kangaroo Bond | Fixed | 4.28% | 2023 | 2028 | AUD | 62 | ||||||||||||
2.88% Uruguayan Bond | Fixed | 2.88% | 2023 | 2039 | UIU | 1.4 | ||||||||||||
3.61% Uruguayan Bond | Fixed | 3.61% | 2023 | 2039 | UIU | 0.3 | ||||||||||||
5.30% Kangaroo Bond | Fixed | 5.30% | 2023 | 2033 | AUD | 45 | ||||||||||||
4.50% Kangaroo Bond | Fixed | 4.50% | 2023 | 2033 | AUD | 70 | ||||||||||||
5.79% Kangaroo Bond | Fixed | 5.79% | 2023 | 2038 | AUD | 115 | ||||||||||||
USD FRN Bond | Float | SOFR + 1.12% | 2023 | 2028 | USD | 36 | ||||||||||||
USD FRN Bond | Float | SOFR + 0.95% | 2023 | 2026 | USD | 100 | ||||||||||||
5.79% Australian Bond | Fixed | 5.79% | 2023 | 2038 | AUD | 145 | ||||||||||||
7.08% Costa Rican Bond | Fixed | 7.08% | 2023 | 2028 | CRC(18) | 28 | ||||||||||||
7.68% Costa Rican Bond | Fixed | 7.68% | 2023 | 2033 | CRC | 25 | ||||||||||||
7.75% Paraguayan Bond | Fixed | 7.75% | 2023 | 2026 | PYG(19) | 72.4 | ||||||||||||
2.88% Uruguayan Bond | Fixed | 2.88% | 2023 | 2039 | UIU | 4.8 | ||||||||||||
USD FRN Bond | Float | SOFR + 0.46% | 2023 | 2024 | USD | 40 | ||||||||||||
4.50% Australian Bond | Fixed | 4.50% | 2023 | 2027 | AUD | 50 | ||||||||||||
1.10% Yen Bond | Fixed | 1.10% | 2023 | 2033 | JPY | 5,000 | ||||||||||||
5.79% Australian Bond | Fixed | 5.79% | 2023 | 2038 | AUD | 160 | ||||||||||||
2.55% Swiss Bond | Fixed | 2.55% | 2023 | 2029 | CHF | 110 | ||||||||||||
2.88% Uruguayan Bond | Fixed | 2.88% | 2023 | 2039 | UIU | 10.3 | ||||||||||||
3.64% Uruguayan Bond | Fixed | 3.64% | 2023 | 2039 | UIU | 0.4 | ||||||||||||
6.00% Yankee Bond | Fixed | 6.00% | 2023 | 2027 | USD | 1,750 | ||||||||||||
5.04% Uridashi Bond | Fixed | 5.04% | 2023 | 2028 | USD | 29.7 | ||||||||||||
5.00% Australian Bond | Fixed | 5.00% | 2023 | 2033 | AUD | 50 | ||||||||||||
0.73% Samurai Bond | Fixed | 0.73% | 2023 | 2027 | JPY | 18,300 | ||||||||||||
0.96% Samurai Bond | Fixed | 0.96% | 2023 | 2028 | JPY | 17,700 |
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Title | Interest Rate | Coupon | Date of Agreement of Issue | Year of Final Maturity | Currency | Principal Amount Outstanding as of March 31, 2024 (in millions) | ||||||||||||
3.81% Uruguayan Bond | Fixed | 3.81% | 2023 | 2042 | UIU | 5.2 | ||||||||||||
3.64% Uruguayan Bond | Fixed | 3.64% | 2023 | 2039 | UIU | 1.4 | ||||||||||||
3.61% Uruguayan Bond | Fixed | 3.61% | 2023 | 2039 | UIU | 1.0 | ||||||||||||
3.90% Uruguayan Bond | Fixed | 3.90% | 2023 | 2040 | UIU | 55.5 | ||||||||||||
3.76% Uruguayan Bond | Fixed | 3.76% | 2023 | 2039 | UIU | 39.3 | ||||||||||||
USD FRN Bond | Float | SOFR + 0.68% | 2024 | 2026 | USD | 25 | ||||||||||||
3.61% Uruguayan Bond | Fixed | 3.61% | 2024 | 2039 | UIU | 9.1 | ||||||||||||
5.0% Yankee Bond | Fixed | 5.0% | 2024 | 2029 | USD | 1,750 | ||||||||||||
7.80% Paraguayan Bond | Fixed | 7.80% | 2024 | 2029 | PYG | 222,000 | ||||||||||||
3.63% Euro Bond | Fixed | 3.63% | 2024 | 2030 | EUR | 1,500 | ||||||||||||
5.30% Kangaroo Bond | Fixed | 5.30% | 2024 | 2029 | AUD | 500 | ||||||||||||
2.375% Euro Bond | Fixed | 2.375% | 2024 | 2027 | EUR | 200 | ||||||||||||
5.90% Australian Bond | Fixed | 5.90% | 2024 | 2040 | AUD | 100 | ||||||||||||
7.65% Indian Rupee Bond | Fixed | 7.65% | 2024 | 2031 | INR(20) | 4,200 | ||||||||||||
7.70% Indian Rupee Bond | Fixed | 7.70% | 2024 | 2029 | INR | 3,300 | ||||||||||||
3.10% Uruguayan Bond | Fixed | 3.10% | 2024 | 2032 | UIU | 20.4 |
Notes: |
1) | Euros |
2) | Hong Kong Dollars |
3) | Norwegian Kroner |
4) | Swiss Francs |
5) | Japanese Yen |
6) | Australian Dollars |
7) | Canadian Dollar |
8) | Mexican Pesos |
9) | Colombian Pesos |
10) | Uruguayan Indexed Units |
11) | Uruguayan Pesos |
12) | New Zealand Dollar |
13) | Brazilian Real |
14) | Mexican Indexed Units |
15) | Turkish Lire |
16) | Czech Koruna |
17) | Polish Zloty |
18) | Costa Rican Colon |
19) | Paraguayan Guarani |
20) | Indian Rupees |
Subsequent Events related to supplementary information:
• | On April 17, 2024, The Bahamas subscribed 3,521 Series “C” ordinary shares of CAF to become a Shareholder Country, for total amount of USD 49.9 million. |
• | On April 17, 2024, Grenada subscribed 352 Series “C” ordinary shares of CAF to become a Shareholder Country, for total amount of USD 4.9 million. |
• | On April 25, 2024, the Shareholders’ Assembly of CAF approved a short-term loan for USD 800 million in favor of the Republic of Ecuador, to support this country’s public account management efforts. |
• | During June 2024, CAF repurchased a total of 10,692 shares from Venezuela, totaling US$ 151.9 million. |
• | During July 2024, CAF repurchased a total of 3,461 shares from Venezuela, totaling US$ 81.7 million. |
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Bond Issuances:
Effective Date | Local Currency (in millions) | USD Equivalent (in millions) | Interest Rate | Maturity | Programme | |||||
April 04, 2024 | INR 4,000 | USD 48.1 | 7.50% | 2034 | EMTN | |||||
April 08, 2024 | INR 4,500 | USD 54.0 | 7.50% | 2030 | EMTN | |||||
April 15, 2024 | JMD 4,000 | USD 26.1 | 8.50% | 2028 | EMTN | |||||
April 15, 2024 | PYG 150,000 | USD 20.3 | 7.25% | 2031 | EMTN | |||||
April 16, 2024 | GBP 1,000 | USD 1,269.0 | 4.75% | 2029 | EMTN | |||||
April 22, 2024 | CRC 47,250 | USD 94.9 | 6.35% | 2032 | Costa Rican Local Debt Programme | |||||
April 22, 2024 | INR 2,700 | USD 32.4 | 7.70% | 2029 | EMTN | |||||
April 26, 2024 | INR 4,500 | USD 53.9 | 8.25% | 2034 | EMTN | |||||
May 7, 2024 | CRC 15,000 | USD 29.4 | 6.06% | 2029 | Costa Rican Local Debt Programme | |||||
May 10, 2024 | INR 5,000 | USD 60.0 | 7.65% | 2031 | EMTN | |||||
May 28, 2024 | AUD 40 | USD 26.6 | 4.50% | 2034 | AMTN | |||||
June 7, 2024 | CNH 383 | USD 52.7 | 3.12% | 2028 | EMTN | |||||
June 7, 2024 | USD 10 | USD 10 | 6.00% | 2034 | EMTN | |||||
June 11, 2024 | USD 30 | USD 30 | 5.18% | 2027 | EMTN | |||||
June 17, 2024 | UIU 59.1 | USD 8.9 | 3.78% | 2038 | EMTN | |||||
June 17, 2024 | UIU 33.2 | USD 5.0 | 4.26% | 2039 | EMTN | |||||
June 17, 2024 | UIU 55.3 | USD 8.4 | 2.88% | 2039 | EMTN | |||||
June 17, 2024 | UIU 1.8 | USD 0.27 | 3.64% | 2039 | EMTN | |||||
June 21, 2024 | TRY 650 | USD 20.1 | 30.00% | 2028 | EMTN | |||||
June 26, 2024 | USD 20 | USD 20 | Compounded Daily SOFR + 0.72% | 2029 | EMTN | |||||
July 2, 2024 | UIU 68.9 | USD 10.4 | 3.20% | 2037 | EMTN | |||||
July 2, 2024 | UIU 20.1 | USD 3.0 | 3.10% | 2032 | EMTN |
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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 as of March 31, 2024 | |||||||||||
(in USD millions) | ||||||||||||||||
Borrowings from other financial institutions, net | Various | Various | Various | Various | 2,177.1 | |||||||||||
Deposits | Floating | Various | Various | Various | 2,773.3 | |||||||||||
Commercial Paper | Floating | Various | Various | USD | 4,695.0 |
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 as of March 31, 2024 (in USD millions) | |||||||
Agencia Francesa de Desarrollo — AfD | Various | Various | Various | Various | 383.6 | |||||||
Cassa Depositi e Prestiti S.P.P.A | Floating | Various | Various | EUR | 134.9 | |||||||
Financiera de Desarrollo Nacional S.A. | Fixed | Various | Various | COP | 28.8 | |||||||
Instituto de Crédito Oficial — ICO | Floating | Various | Various | USD | 420.6 | |||||||
JBIC, Japan | Floating | Various | Various | USD | 157.7 | |||||||
KfW (Germany) | Various | Various | Various | USD | 618.4 | |||||||
Nordic Investment Bank | Floating | Various | Various | USD | 4.2 | |||||||
Banco Bilbao Vizcaya IBF | Various | 2022 | Various | USD | 400.0 | |||||||
Banco Económico S.A. | Fixed | 2023 | 2024 | BOB | 4.9 |
GUARANTEED DEBT
Borrower | Date of Issue | Year of Final Maturity | Principal Amount Outstanding as of March 31, 2024 (in USD millions) | |||||||||
Planta de Reserva Fría de Generación de Eten S.A. | 05/12/2013 | 05/12/2033 | 19.4 | |||||||||
H2Olmos S.A. | 24/10/2012 | 25/10/2032 | 17.6 | |||||||||
República del Perú | 13/02/2006 | 13/02/2025 | 15.3 | |||||||||
Promotora de Infraestructura Registral, S.A de C.V SOFOM | 23/08/2010 | 23/08/2030 | 12.0 | |||||||||
Concessionária Linha Universidade Participaçóes S.A. | 28/07/2022 | 29/10/2027 | 13.6 | |||||||||
ATN 3 S.A. | 21/06/2013 | 21/06/2024 | 5.0 |
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CORPORACIÓN ANDINA DE FOMENTO
Debt Securities
Guarantees
Table of Contents
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 | USD | 590,400 | ||
Fiscal and Paying Agent Fees | USD | 10,000 | ||
Fees of rating agencies | USD | 350,000 | ||
Legal fees | * | |||
Printing of registration statement, prospectus, and other documents | USD | 75,000 | ||
Blue Sky expenses (including counsel fees) | USD | 10,000 | ||
Other | USD | 75,000 | ||
|
| |||
Total | USD | 1,110,400 |
(*) | Expenses are presently not known and cannot be estimated. |
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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: |
A. |
B. | Form of Underwriting Agreement pertaining to Guarantees* |
C. |
D. |
E. | Form of Guarantee Agreement, including the form of Guarantee* |
F. | Form of Note (incorporated by reference to CAF’s registration statement No. 333-233212) |
G. |
H. | Opinion and consent of Jorge Luis Silva, General Counsel to CAF |
I. | Consent of Lara Marambio & Asociados, a member firm of Deloitte Touche Tohmatsu Limited |
J. |
K. | List of names and addresses of the underwriters for Guarantees* |
* | 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 Bogota, Colombia, on the 29th day of July, 2024.
CORPORACIÓN ANDINA DE FOMENTO | ||||
By: | /s/ Gabriel Felpeto | |||
Name: | Gabriel Felpeto | |||
Title: | Vice President of Finance and Chief Financial Officer |
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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 on the 29th day of July, 2024.
PUGLISI & ASSOCIATES | ||
By: | /s/ Donald J. Puglisi | |
Name: Donald J. Puglisi | ||
Title: Managing Director |
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EXHIBITS
Exhibit Number | Exhibits | |
A. | Underwriting Agreement for Debt Securities, dated August 9, 2019 (incorporated by reference to CAF’s registration statement No. 333-233212) | |
B. | Form of Underwriting Agreement pertaining to Guarantees* | |
C. | Form of Pricing Agreement (included in Exhibit A) | |
D. | Fiscal Agency Agreement, dated March 17, 1998 (incorporated by reference to CAF’s registration statement No. 333-180499) | |
E. | Form of Guarantee Agreement, including the form of Guarantee* | |
F. | Form of Note (incorporated by reference to CAF’s registration statement No. 333-233212) | |
G. | Opinion and consent of Latham & Watkins LLP | |
H. | Opinion and consent of Jorge Luis Silva, General Counsel to CAF | |
I. | Consent of Lara Marambio & Asociados, a member firm of Deloitte Touche Tohmatsu Limited | |
J. | List of names and addresses of the underwriters for Debt Securities (incorporated by reference to CAF’s registration statement No. 333-180499) | |
K. | List of names and addresses of the underwriters for Guarantees* |
* To be filed by post-effective amendment.
II-7