CAF Investor Presentation May 2020
Table of contents 1. CAF Overview 2. Response to COVID-19 3. Financial Highlights 4. Funding Strategy 5. Key Investment Factors 2
CAF Overview
The Development Bank of Latin America • CAF is a Supranational financial institution owned by Latin American countries • 50 years financing sustainable development and regional integration • Leading development bank in financing infrastructure and energy projects in Latin America • Enjoys Preferred Creditor Treatment in its shareholder countries • Rated Aa3/A+/A+/AA by Moody’s, S&P, Fitch and JCR 4
Broad Shareholder Base Full Member Countries Other Shareholders Peru 17.7% Spain 4.9% 2019 From five shareholder Colombia 17.1% Mexico 1.4% countries at inception to its current nineteen Venezuela 15.8% Dominican 0.9% Republic Argentina 10.0% Chile 0.5% Brazil 8.4% Barbados 0.3% Ecuador 5.4% Costa Rica 0.3% Bolivia 5.4% Portugal 0.2% Uruguay 3.2% 1970 Jamaica 0.02% Paraguay 3.1% Commercial Panama 3.1% 0.05% Banks Trinidad & 2.2% Tobago Figures as of December 31, 2019 5
Preferred Creditor Treatment The Constitutive Agreement is an International Treaty that grants several privileges and immunities in its member countries Art. 47: “…assets of the Corporation, wherever they may be, shall enjoy immunity from expropriations , … or executive measures carried out by any of the Contracting States. ” Art. 48: “ The assets of any kind owned by the Corporation may be freely transferred and converted. ” Art. 50: “…assets of the Institution are exempt from all kinds of restrictions, regulations and control and moratorium measures. ” Art. 52: “ The Corporation is exempt from all kinds of tax encumbrances …” 6
Proven Preferred Creditor Treatment Venezuela (1994) EM (2012) Argentina (2001- 2002) Foreign Exchange controls Commodity Prices Financial crisis and downturn default on external debt Peru (1980 ’ s) Moratorium on external debt Ecuador (2008) Bolivia (1998) payments Default on several HIPC Initiative bonds CAF ’ s Baa2 A3 Baa3 Aa3 A2 A1 Rating ( * ) USA (2007) Venezuela (2003) Subprime Mexico (1994) Oil Strike Mortgage Asia (1997) “ Tequila Crisis ” Crisis Financial Crisis Venezuela (2017) Selective Default Russia (1998) Europe (2009) Default on debt Sovereign debt crisis (*) Assigned by Moody ’ s 7
Response to COVID-19
Response to COVID - 19 Committed to provide immediate assistance to our shareholder countries, derived from the COVID 19 outbreak, with the following initiatives: Emergency credit line of countercyclical nature of up to USD 2.5 billion 1 Contingent credit line of up to USD 300 million to provide direct attention to public health 2 systems Technical assistance resources of USD 400 thousand per country 3 Help cope with the potential economic and health effects of the outbreak while facilitating adequate risk management 9
Financial Highlights
Strong & Liquid Balance Sheet (USD billion) Liabilities/Equity Assets $13.9 Liquidity (33%) $28.1 Borrowings (67%) $26.5 Loans (63%) Other (3%) $12.8 Stockholders ’ Equity (30%) Other (4%) US$ 42.3 US$ 42.3 Figures as of December 31, 2019 11
Substantial Liquid Assets (USD billion) Supranationals 13,9 4,7% 13,0 12,7 Latam 5,0% 12,0 US & Canada; Middle East 10,8 30,4% 5,1% Australia & NZ 4,3% Asia; 22,2% Europe; 28,3% 2015 2016 2017 2018 2019 Figures as of December 31 of each year 12
Short-term and High-rated Liquidity Portfolio CP's Time 22% Deposits • 96% of liquid assets are rated A-/A3 or above 25% with an overall AA/Aa2 average US Treasury Notes Other (*) 14% • Maximum duration allowed: 1.5 years 8% • Present duration: 0.5 years CD's Coporate and 16% Financial Bonds 15% (*) Other correspond to cash and due from banks, liquidity funds and bonds of non-U.S. governments and other government entities. Figures as of December 31, 2019 13
Consistent Growth and High Quality Loan Portfolio (USD billion) 30,0 26,5 25,1 23,6 22,0 25,0 20,4 20,0 15,0 10,0 5,0 0,59% 0,55% 0,45% 0,26% 0,00% 0,0 2015 2016 2017 2018 2019 Loan Portfolio Non-accrual Loans / Loan Portfolio Compound annual growth rate (2015-2019): 6.7% Figures as of December 31 of each year 14
Diversified Loan Portfolio By Country & Sector Private Sector 15% Chile Brazil 1,8% Ecuador 8,4% 14,1% Bolivia 10,2% Colombia Barbados 10,8% 0,3% Costa Rica 0,31% Argentina Dominican 14,1% Republic 0,7% Public Sector Panama Trinidad &Tobago 7,7% 3,0% 85% Uruguay 3,6% Venezuela Peru Paraguay 13,8% 7,5% 1,9% Figures as of December 31, 2019 15
Diversified Loan Portfolio By Industries 30% 26% 28% Power generation (hydroelectric, thermal, Water and sanitation Transport (road, railway, aerial, maritime) • • • wind, solar) Urban development Urban mobility • • Transmissionand distribution Education T elecommunications • • • Health Logistics • • Child nutrition • Figures as of December 31, 2019 16
Strong Capital Base (USD billion) 12.8 11,9 11,1 Retained Earnings & 10,5 9,5 Reserves (3.4 bn) Paid-in capital (9.4 bn) 2015 2016 2017 2018 2019 In addition, CAF has US$1.6 bn in callable capital Figures as of December 31 of each year 17
Continuous Support from Shareholders Latest General Capital Increases (USD million) 4,500 2,300 2,500 1,500 250 606 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 18
Consistent Profitability (USD million) 460 3,7% 311 2,7% 204 164 135 2,1% 1,1% 1,5% 1,5% 0,8% 0,6% 0,4% 0,4% 2015 2016 2017 2018 2019 Operating Income ROE ROA Figures as of December 31 of each year 19
CAF vs AAA Rated Multilateral Institutions CAF’s Multilateral Financial Institution Ranking Ratings (Fitch/Moody’s/S&P) A+/Aa3/A+ AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA AAA/Aaa/AAA 1 st 30 25 21 27 26 10 Equity / Assets (%) 3 rd 33 25 37 16 47 18 Liquidity / Total Assets (%) Largest Exposure /Total Portfolio 2 nd 14 17 20 16 19 9 (%) Non-accrual loans/ Loan portfolio 3 rd 0.5 2.6 2.6 0.0 4.6 0.2 (%) Source: Standard & Poor’s “ Supranational Special Edition 2019”. Figures as of end of year 2018 20
Funding Strategy
Composition of Financial Liabilities Long-term loans Term Deposits 5% 10% CP's 3% CAF’s debt maturity profile is in line with the average life of its assets Bonds 82% Figures as of December 31, 2019 22
Bond Strategy i) Capital market programs in place in strategic markets Investor Diversification Investor Diversification ii) Issuance of thematic bonds Cost Optimization Generate various reference points Cost Optimization Use of private placements to modify the average Asset / Liability Duration Match Asset / Liability Duration Match duration of liabilities Liquid Bonds in Secondary Benchmark size issues Liquid Bonds in Secondary Market Market 23
Capital Markets Programs US Shelf EMTN Japan Shelf AMTN Domestic Programs • Benchmark deals in different • Australian Dollar • Aimed to foster currencies • Schedule B Issuer Benchmark deals • Samurai and Uridashi development of local financial markets • EUR, CHF, CAD, HKD • US Dollar Benchmark deals • Program size: AUD 2 Bn (USD 1-2 Bn) • Tenors 2-10 years • Targeted and custom made • Registered programs in notes • Targeted towards local and • Tenors 3-10 years Colombia, Peru, Mexico and foreign investors Venezuela • Tenors 2-30 years • Included in relevant indexes • Listed (when required) • Listed in LSE exchange • s Stand Alone Issues • Standard documentation • Schuldschein, other 24
Active in Debt Capital Markets Bonds by currency JPY CHF AUD 11% TRY 4% HKD Outstanding bonds for COP 3% MXN NOK EUR; 37% USD 23.4 bn in 17 3% BRL Others 5% different currencies ZAR INR IDR CAD USD; 37% PEN UIs Figures as of December 31, 2019 25
Recent Benchmark Issues EUR 750 mm – 7yr USD 1.25 bn – 3yr 0.625% 3.25% Maturity: 2026 Maturity: 2022 (Issued November, 2019) (Issued February, 2019) • CAF’s first public Green Bond • Order book of USD 1.7 billion • Seventh reference point of its Euro curve • Main investors were central banks and official institutions • 61% of the investors were labeled as ESG investors CAF’s regular benchmark -size issuances are a testament to its strengthening credit history 26
Investor Participation Distribution by Investor Type Distribution by Geographical Location Banks and Switzerland Others Intermediaries 17% 22% 14% Official Institutions Finland Insurance 37% Germany 4% Companies 16% 21% Uk 4% Asset Spain Managers France 5% 28% 13% Netherlands Supranational 10% 9% Figures referred to bond: CAF 0.625% 2024 EUR 750 mm, issued January 2019 27
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