The past year has not been easy for Corporación Andino Formento (CAF), the Andean Development Bank. Troubles in Venezuela, where the agency is based, have meant that investors have started charging a premium for its paper, and the Andean region in general has suffered from both Venezuelan instability and civil war in Colombia.
But one bright spot in CAF's year has been its borrowing programme. The bank has issued no fewer than eight different bonds in three different currencies over the past 12 months, making it Latin America's most prolific borrower. Between them, the bonds add up to more than $1.66 billion, which might not sound like all that much until you realize that CAF's total amount of debt outstanding - including all eight issues - only comes to about $3.8 billion.
CAF's most recent yankee bond is typical of how it goes about issuing its paper. A $500 million 10-year deal from Merrill Lynch in May, it was upsized from $300 million after receiving more than $2.1 billion in orders despite a coupon of just 5.2%. From price talk in the 175 to 180 basis point range, the bond actually came at 168bp over treasuries, and immediately tightened even further in the aftermarket.