As filed with the Securities and Exchange Commission on August 24, 2022

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 3,000,000,000(2)		USD 278,100

 

(1)	The securities registered hereunder shall not have an aggregate offering price which exceeds USD 3,000,000,000 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.

 

 

 

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 AUGUST 24, 2022

USD 3,000,000,000

 

 

CORPORACIÓN ANDINA DE FOMENTO

Debt Securities

Guarantees

 

 

Corporación Andina de Fomento (“CAF”) may from time to time offer up to USD 3,000,000,000 (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 3,000,000,000 (or its equivalent).

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                 , 2022

TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS			1
FORWARD-LOOKING INFORMATION			1
CORPORACIÓN ANDINA DE FOMENTO			2
LEGAL STATUS OF CAF			3
USE OF PROCEEDS			4
RECENT DEVELOPMENTS			4
CAPITALIZATION AND INDEBTEDNESS			5
CAPITAL STRUCTURE			6
SELECTED FINANCIAL INFORMATION			12
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			14
OPERATIONS OF CAF			24
FUNDED DEBT			35
DEBT RECORD			36
ASSET AND LIABILITY MANAGEMENT			37
ADMINISTRATION			38
THE FULL MEMBER SHAREHOLDER COUNTRIES			42
DESCRIPTION OF THE DEBT SECURITIES			43
DESCRIPTION OF THE GUARANTEES			49
TAXATION			50
PLAN OF DISTRIBUTION			60
VALIDITY OF THE DEBT SECURITIES			61
VALIDITY OF THE GUARANTEES			61
EXPERTS			61
WHERE YOU CAN FIND MORE INFORMATION			62
INDEX TO FINANCIAL STATEMENTS			F-1
SUPPLEMENTARY INFORMATION (UNAUDITED)			F-84

ABOUT THIS PROSPECTUS

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 3,000,000,000 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 document.

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 references to “we,” “us” and “our” refer to CAF.

All discrepancies between totals and the sums of the amounts appearing in this prospectus are due to rounding.

FORWARD-LOOKING INFORMATION

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.

 

1

CORPORACIÓN ANDINA DE FOMENTO

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 — the Plurinational State of Bolivia, the Argentine Republic, the Republics of Colombia, Ecuador, Panama, Paraguay, Peru, and Trinidad and Tobago, the Federative Republic of Brazil, the Oriental Republic of Uruguay, and the Bolivarian Republic of Venezuela (each a “full member shareholder country” and collectively, the “full member shareholder countries”). As of December 31, 2021, the full member shareholder countries of CAF collectively accounted for 90.75% of the nominal value of CAF’s paid-in capital. The other shareholder countries of CAF are Barbados, Chile, Costa Rica, Dominican Republic, Jamaica, Mexico, Portugal and Spain (each an “associated shareholder country” and collectively, the “associated shareholder countries” and together with the full member shareholder countries, “CAF’s shareholder countries”). As of December 31, 2021, the associated shareholder countries collectively accounted for 9.20% of the nominal value of CAF’s paid-in capital. CAF’s shares are also held by 13 financial institutions based in the full member shareholder countries, which collectively accounted for 0.05% of the nominal value of the paid-in capital As of December 31, 2021

CAF commenced operations in 1970. CAF is headquartered in Caracas, Venezuela and has offices in Asunción, Paraguay; Bogotá, Colombia; Brasilia, 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; and Quito, Ecuador.

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.

CAF offers financial and related services to the governments of its stockholder countries, as well as their public and private institutions, corporations and joint ventures. CAF’s principal activity is to provide short, medium and long-term loans to finance projects, working capital, trade activities and to undertake feasibility studies for investment opportunities in 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

LEGAL STATUS OF CAF

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 its 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:

(1)    immunity from expropriation, search, requisition, confiscation, seizure, sequestration, attachment, retention or any other form of forceful seizure by reason of executive or administrative action and immunity from enforcement of judicial proceedings by any party prior to final judgment;

(2)    free convertibility and transferability of CAF’s assets;

(3)    exemption from all taxes and tariffs on income, properties or assets, and from any liability involving payment, withholding or collection of any taxes; and

(4)    exemption from any restrictions, regulations, controls or moratoria with respect to 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.

 

3

USE OF PROCEEDS

Unless otherwise specified in the accompanying prospectus supplement, CAF will use the net proceeds of the sale of the securities for its general corporate purposes.

RECENT DEVELOPMENTS

On August 22, 2022, CAF’s Shareholder Assembly (the “Shareholder Assembly”) approved Honduras and Chile as full member shareholder countries effective after they meet all the necessary requirements. As of the date of this prospectus, Honduras and Chile must fulfill certain pending requirements in order to formalize their respective change of status to full member shareholder country.

On July 13, 2022, El Salvador became a full member shareholder country of CAF after meeting all the necessary requirements and approvals.

On March 8, 2022, the Shareholder Assembly approved the Dominican Republic as a full member shareholder country effective after it meets all the necessary requirements. As of the date of this prospectus, the Dominican Republic must fulfill certain pending requirements in order to formalize its change of status to full member shareholder country.

 

4

CAPITALIZATION AND INDEBTEDNESS

The following table sets forth CAF’s capitalization and indebtedness as of March 31, 2022 and does not give effect to any transaction since that date.

 

		As of March 31,           2022(4)
		(in USD millions)
Total Liabilities(1)(3)			33,854.9
Shareholders’ equity
Capital
Subscribed and paid-in capital (authorized capital USD 25.0 billion)(2)(4)			5,447.1
Additional paid-in capital			4,111.1
Total capital			9,558.2
Reserves
Mandatory reserve pursuant to Article 42 of the Constitutive Agreement			582.7
General reserve			3,189.3
Total reserves			3,772.0
Retained loss			(10.7	)
Total shareholders’ equity			13,319.5
Total liabilities and shareholders’ equity			47,174.4

 

(1)	Commercial paper, bonds and borrowings from other financial institutions, accrued interest payable, accrued expenses and other liabilities and derivative instrument liabilities.

(2)	Authorized capital also includes callable capital of USD 7.0 billion as of March 31, 2022. Subscribed capital USD 7.9 billion less callable capital portion USD 1.6 billion and less capital subscriptions receivable USD 0.8 billion.

(3)	After March 31, 2022, CAF has conducted certain additional issuances of bonds as described in “Supplementary Information (Unaudited).”

(4)	See “Recent Developments” for more information on the most recent changes to capital since March 31, 2022.

 

5

CAPITAL STRUCTURE

General

As of March 31, 2022, 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, CAF’s Shareholder Assembly approved a general paid-in capital increase for a total amount of USD 7.0 billion. Bilateral subscription agreements with each shareholder country in connection with this capital increase are currently being negotiated and expected to be signed throughout 2022 and 2023.

Our shares are divided into Series “A” shares, Series “B” shares and Series “C” shares.

Series “A” shares may be owned only by the full member shareholder countries (as defined above). Each full member shareholder country owns one Series “A” share, which is held by the government, either directly or through a government-designated social or public purpose institution. Each of the full member shareholder countries owning a Series “A” share is entitled to elect one Director and one Alternate Director to the Board of Directors.

Series “B” shares are currently owned by the full member shareholder countries, and are held by the governments either directly or through designated governmental entities, except for certain Series “B” shares currently constituting approximately 0.05% of the outstanding shares of CAF, which are owned by 13 private sector financial institutions in the 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 additional Directors and five additional Alternate Directors through cumulative voting, and the 13 private sector financial institutions collectively are entitled to elect one Director and one Alternate Director.

Series “C” shares are currently owned by eight associated shareholder countries (as defined above). 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 us. Holders of Series “C” shares collectively are entitled to elect two Directors and two Alternate Directors.

Under the Constitutive Agreement, Series “A” shares may be held by or transferred only to governments or government-designated social or public purpose institutions. Series “B” shares also may be held by or transferred to such entities and, in addition, may be held by or transferred to private entities or individuals in the full member shareholder countries, except that no more than 49% of the Series “B” shares within any country may be held by private entities or individuals. Series “C” shares may be held by or transferred to public or private entities or individuals outside the full member shareholder countries. Unless a 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. In general, in order to become a full member shareholder country, a country must (i) subscribe, directly or indirectly, for one Series “A” share, (ii) exchange all of its ordinary and callable Series “C” capital shares for Series “B” share equivalents, (iii) meet any conditions for its accession as determined by the General Shareholders’ Meeting, and (iv) deposit its instrument of adhesion with the Ministry of Foreign Affairs of the Bolivarian Republic of Venezuela. The country is deemed to have become a full member shareholder country 30 days after the General Shareholders’ Meeting determines that the conditions for its adhesion have been complied with, including the depositing of the instrument of adhesion.

 

6

All figures as of March 31, 2022, that refer to “full member shareholder countries” include only the Republic of Argentina, the Plurinational State of Bolivia, the Republics of Colombia, Ecuador, Panama, Paraguay, Peru, and Trinidad and Tobago, the Federative Republic of Brazil, the Oriental Republic of Uruguay, and the Bolivarian Republic of Venezuela. All figures as of March 31, 2022 that refer to “associated shareholder countries” encompass all of the associated shareholder countries.

Paid-in Capital and Unpaid Capital

As of March 31, 2022, CAF’s subscribed paid-in and unpaid capital (excluding callable capital) was USD 6.2 billion, of which USD 5.4 billion was paid-in capital and USD 0.8 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.

Information regarding recent capital subscriptions and annual capital contributions made by shareholder countries as of March 31, 2022 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, of which it paid USD 41.7 million in 2017, USD 88.4 million in 2018, USD 88.4 million in 2019, USD 88.4 million in 2020 and USD 88.4 million in 2021.

Bolivia

In 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, of which it paid USD 17.2 million in 2017 and USD 34.6 million in 2018, USD 34.6 million in 2019, USD 34.6 million in 2020 and USD 34.6 million in 2021.

Brazil

In 2009, Brazil subscribed for an additional USD 190.0 million in Series “C” shares to be paid in seven installments. The final installment was paid in 2017.

In July 2017, Brazil subscribed for an additional USD 572.0 million in Series “B” shares, to be paid in eight installments, of which it paid USD 20.1 million in 2018, USD 45.0 million in 2020 and USD 26.2 million in 2021.

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 August 2012, Colombia subscribed for an additional USD 228.6 million in Series “B” shares. The final installment was paid in 2017.

 

7

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 and USD 46.8 million in 2022.

Costa Rica

In September 2019, Costa Rica subscribed for USD 110.0 million in Series “C” shares, which it paid in full in 2019.

The Dominican Republic

In 2009, the Dominican Republic subscribed for an additional USD 17.0 million in Series “C” shares. The final installment was paid in 2017.

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 instalment was paid in 2020.

Ecuador

In 2009, Ecuador 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 June 2016, Ecuador subscribed for an additional USD 190.0 million in Series “B” shares, to be paid in six installments. The final instalment was paid in 2020.

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 installments. Payment of the installment will begin in the year 2022.

In December 2021, El Salvador subscribed for USD 36.0 million in callable capital.

Mexico

In February 2017, Mexico subscribed for an additional USD 51.3 million in Series “C” shares, which it paid in full in 2017.

Panama

In 2009, Panama 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 February 2012, Panama 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 February 2016, Panama subscribed for an additional USD 190.0 million in Series “B” shares, to be paid in six installments beginning in 2017, of which it paid USD 17.2 million in 2017 and USD 34.6 million in 2018, USD 34.6 million in 2019, USD 34.6 million in 2020 and USD 34.6 million in 2021.

 

8

Paraguay

In 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, of which it paid USD 17.2 million in 2017 and USD 34.6 million in 2018, USD 34.6 million in 2019, USD 34.6 million in 2020, USD 34.6 million in 2021.

Peru

In March 2016, Peru subscribed for an additional USD 572.0 million in Series “B” shares, to be paid in eight installments, of which it paid USD 35.0 million in 2017, USD 76.7 million in 2018, USD 76.7 million in 2019, USD 76.7 million in 2020 and USD 230.2 million in 2021.

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 instalment was paid in 2021.

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 installments, of which it paid USD 20.0 million in 2019, USD 20.0 million in 2020 and USD 25.0 million in 2021.

Uruguay

In 2009, Uruguay subscribed for an additional USD 55.0 million in Series “C” shares to be paid in seven annual installments. The final installment was paid in 2017.

In March 2016, Uruguay subscribed for an additional USD 190.0 million in Series “B” shares, to be paid in six installments, of which it paid USD 17.2 million in 2017, USD 34.6 million in 2018. USD 34.6 million in 2019, USD 34.6 million in 2020 and USD 34.6 million in 2021.

Venezuela

In 2009, Venezuela subscribed for an additional USD 380.0 million in Series “B” shares to be paid in eight installments. In December 2016, the subscription agreement was amended to provide for payment in nine installments. Venezuela has paid a total of USD 268.2 million as of September 30, 2017. In March 2018, the subscription 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 subscription agreement, as amended in March 2018, is past due.

 

9

In March 2016 and May 2016, Venezuela subscribed for an additional USD 572.0 million in Series “B” shares. In March 2018, the subscription agreement was amended to provide for payment in eight installments, with the final installment scheduled to be paid in 2025. As of the date of this prospectus, USD 206.6 million to be paid under the agreement, as amended in March 2018, is past due.

On March 31, 2020, CAF implemented the Support Program for the Liquidity Management in Exceptional Situations (the “Program”), as it was approved by General Shareholders’ Meeting 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 debt service. Pursuant to the Program, CAF notified Venezuela that it met the necessary conditions and subsequently executed various transactions by repurchasing a total of 80,100 shares totaling USD 1.1 billion and applying 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 USD 400.5 million and USD 736.9 million respectively, as of March 31, 2022. As a result of the Program, Venezuela is current with its debt obligations with CAF as of the date of this prospectus.

The following table sets out the nominal value of CAF’s subscribed paid-in capital and unpaid capital as of March 31, 2022:

 

Shareholders		Paid-in Capital				Unpaid Capital
		(in USD thousands)
Series “A” Shares:
Argentina			1,200				—
Bolivia			1,200				—
Brazil			1,200				—
Colombia			1,200				—
Ecuador			1,200				—
Panama			1,200				—
Paraguay			1,200				—
Peru			1,200				—
Trinidad y Tobago			1,200				—
Uruguay			1,200				—
Venezuela			1,200				—
Series “B” Shares:
Argentina			595,395				62,225
Bolivia			311,800				12,170
Brazil			471,420				169,295
Colombia			1,016,045				65,960
Ecuador			325,575				—
El Salvador			—				161,985
Panama			188,965				12,170
Paraguay			186,565				12,170
Peru			1,057,160				27,015
Trinidad and Tobago			140,185				44,005
Uruguay			195,130				12,170
Venezuela			442,890				240,780
Commercial Banks			2,485				—
Series “C” Shares:
Barbados			17,610				—
Chile			27,705				—
Costa Rica			55,190				—
The Dominican Republic			52,780				—

 

10

Shareholders		Paid-in Capital				Unpaid Capital
		(in USD thousands)
Jamaica			910				—
Mexico			76,835				—
Portugal			9,600				—
Spain			259,695				—
Total			5,447,140				819,945

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, 2022, CAF’s reserves totaled USD 3.8 billion. At such date, the mandatory reserve pursuant to Article 42 of the Constitutive Agreement amounted to USD 0.6 billion, or 7.0%, of subscribed paid-in and capital subscriptions receivable, and the general reserve amounted to USD 3.2 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 1.6 billion as of March 31, 2022. 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 16 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.

 

11

SELECTED FINANCIAL INFORMATION

The following selected financial information as of and for the years ended December 31, 2021, 2020, and 2019 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, 2022 and 2021 (balance sheet as of March 31, 2021 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, 2022, 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,												March 31,
		2021				2020				2019				2022				2021
		(in USD thousands, except ratios)
Statements of Comprehensive Income
Interest income			671,991				1,081,165				1,611,791				126,517				165,770
Interest expense			371,275				595,157				951,077				99,763				98,527
Net interest income			300,716				486,008				660,714				26,754				67,243
Provision (credit) for loan losses			29,869				2,923				52,395				(2,316	)			(463	)
Net interest income after provision (credit) for loan losses			270,847				483,085				608,319				29,070				67,706
Non-interest income			38,957				17,717				14,492				8,743				15,430
Non-interest expenses			171,401				186,876				162,730				57,624				49,783
(Loss) income before unrealized changes in fair value related to financial instruments and contributions to Stockholders’ Special Funds			138,403				313,926				460,081				(19,811	)			33,353
Unrealized changes in fair value related to other financial instruments			(3,388	)			(2,089	)			(5,273	)			9,084				7,759
(Loss) income before Contributions to Stockholders’ Special Funds, net			135,015				311,837				454,808				(10,727	)			41,112
Contributions to Stockholders’ Special Funds			30,000				72,015				129,226				0				364
Net (loss) income and total comprehensive income			105,015				239,822				325,582				(10,727	)			40,748
Summarized Balance Sheet Data (end of period)
Total assets			47,592,350				46,845,903				42,293,634				47,174,367				47,925,124
Total liabilities			34,292,711				33,851,002				29,496,906				33,854,882				34,860,819
Total stockholders’ equity			13,299,639				12,994,901				12,796,728				13,319,485				13,064,305
Total liabilities and stockholders’ equity			47,592,350				46,845,903				42,293,634				47,174,367				47,925,124

 

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		Year Ended December 31,												March 31,
		2021				2020				2019				2022				2021
		(in USD thousands, except ratios)
Loan Portfolio and Equity Investments
Loans before allowance for loan losses and loan commissions, net of origination cost			29,595,386				28,117,867				26,520,618				28,224,131				28,038,824
Allowance for loan losses			76,650				95,015				91,642				74,333				94,552
Equity investments			433,350				432,600				463,825				411,236				441,685
Selected Financial Ratios
Return on average total stockholders’ equity(1)			1.0	%			2.4	%			3.7	%			-0.2	%			1.0	%
Return on average paid-in capital(2)			2.6	%			5.8	%			8.7	%			-0.4	%			2.5	%
Return on average assets(3)			0.3	%			0.7	%			1.1	%			-0.0	%			0.3	%
Administrative expenses divided by average total assets			0.3	%			0.3	%			0.4	%			0.4	%			0.4	%
Overdue loan principal as a percentage of loan portfolio (excluding non-accrual loans)			0.0	%			0.0	%			0.5	%			0.0	%			0.0	%
Non-accrual loans as a percentage of loan portfolio			0.4	%			0.2	%			0.3	%			0.4	%			0.2	%
Allowance for loan losses as a percentage of loan portfolio			0.3	%			0.3	%			0.3	%			0.3	%			0.3	%

 

(1)

(Loss) income before unrealized changes in fair value related to financial instruments and Contributions to Stockholders’ Special Funds divided by annual average total stockholders’ equity. Annual average total stockholders’ equity is computed as the arithmetic average of total stockholders’ equity as of the beginning and the end of each period. Data for interim periods has been annualized.

(2)

(Loss) income before unrealized changes in fair value related to financial instruments and Contributions to Stockholders’ 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)

(Loss) income before unrealized changes in fair value related to financial instruments and Contributions to Stockholders’ 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 couple of years, important global developments have occurred, including the (i) COVID-19 global pandemic (ii) low growth in Latin America, (iii) volatility in the price of certain commodities and more recently (iii) high levels of inflation and increase in global interest rates. In addition, CAF is transitioning out of the use of the London Interbank Offered rates (“LIBOR”) both in its loan portfolio and hedging of its financial liabilities.

The COVID-19 pandemic and the volatility in commodity prices have not adversely affected CAF’s results of operations; however they have resulted in a downward adjustment of the external risk rating of some of its sovereign borrowers specifically during 2020 and to a lesser extent 2021 which lead to a corresponding increase in its allowance for loan losses, according to the methodology described in “— Income Statement — Provision (Credit) for Loan Losses” below. The increase rise in global interest rates due to rising inflation, has had an impact on the valuation of the marketable securities of CAF’s liquidity portfolio, however this is offset by the increase in interest rates charged to clients from CAF’s loan portfolio given that the majority of its loans are made in USD floating rate.

Both 2022 and 2021 were characterized by growth in CAF’s loan portfolio as a result of its strategy to expand its shareholder base, 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 5.3% in 2021, 6.0% in 2020 and 5.3% in 2019.

As of March 31, 2022, CAF’s loan portfolio was distributed by country as follows:

 

Ecuador			15.0	%
Argentina			13.1	%
Colombia			11.1	%
Venezuela			9.9	%
Bolivia			9.5	%
Brazil			8.7	%
Panama			8.7	%
Paraguay			5.6	%
Peru			5.4	%
Trinidad and Tobago			4.1	%
Uruguay			3.3	%
Costa Rica			1.9	%
Mexico			1.4	%
the Dominican Republic			1.4	%
Chile			0.3	%
Barbados			0.6	%

Notwithstanding the increasing presence of other state-sponsored development banks in the regions in which CAF’s operate, CAF does not expect that the growth of its loan portfolio will be materially affected by the activities of other development banks in the region, since the financing needs of its shareholder countries exceed the current supply of lending resources. CAF believes that activities of other development banks are complementary to its lending operations.

 

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LIBOR Replacement

The replacement of LIBOR 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 LIBOR that affect the loan and derivatives markets, including the International Swaps and Derivatives Association (“ISDA”) and its recent publication of the ISDA 2020 IBOR Fallbacks Protocol, to which CAF 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 replacement may have. As of January 1, 2022, all loans originated will be linked to the reference rate Term Secured Overnight Funding Rate (“SOFR”). New financial liabilities will also be hedged to SOFR. Legacy loans that are referenced to LIBOR rate will be converted after June 2023 when LIBOR rate ceases to be representative. It is for this reason that CAF expected the LIBOR transition to occur smoothly. 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.

On the funding side, CAF has ceased issuance of Floating Rate Notes (“FRN”) linked to LIBOR, and all outstanding LIBOR FRNs (totaling US$ 100 million) will reset before the first half of 2023. 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.

Recent Developments Relating to Sanctions

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 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, (a) 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 25 August 2017, and dividend payments or other distributions of profits to the Government of Venezuela from its controlled entities, and (b) 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)

 

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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 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 involvement in funds flows in respect of CAF’s loan operations, including CAF’s loans to the Government of Venezuela. 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 31 March 2019 from the USD 19.8 million reported in September 2017. In 2020, as a result of the change in the methodology described in “— Income Statement — Provision (Credit) for Loan Losses” below, the provision for loan losses for Venezuela was USD 0.0. See Note 2(i) and Note 6 of the audited financial statements included elsewhere in this prospectus. On 29 December 2017, CAF granted to the Central Bank of Venezuela a credit facility in a total amount of USD 400 million. As of 30 September 2018, the credit facility was disbursed in full.

On 14 December 2018, CAF granted to the Central Bank of Venezuela a credit facility in a total amount of USD 500 million. As of 31 December 2019, the credit facility was disbursed in full.

On 25 January 2019, President Trump signed an Executive Order amending prior economic sanctions targeting the Maduro government, and on 28 January 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.

On 22 March 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 is a “B” shareholder of CAF and holds approximately 8% 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 17 April 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 amended the relevant general

 

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license twice since April 2019, most recently on 21 January 2020 with the issuance of GL 20B. GL 20B 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, to the same extent as was permitted prior to the designation of the Central Bank of Venezuela. 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 5 August 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 shareholder and by BANDES as a Series B Shareholder may be considered to fall within the definition of “Government of Venezuela” in the Executive Order. On 6 August 2019, OFAC issued GL 20A, authorizing official activities of certain international organizations, including CAF, involving the Government of Venezuela. Although GL 20A and GL 20B cover any Government of Venezuela person that is blocked solely pursuant to Executive Order 13884, they do 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. 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.

Other Recent Developments

In December 2021, El Salvador began its process to become a full shareholder member of CAF and subscribed to USD 460.0 million in Series “B” shares to be paid in seven installments. On July 15,2022, after meeting all the necessary requirements, the Board of Directors approved El Salvador’s incorporation as a full shareholder member.

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: (1) they require significant management judgment and assumptions about matters that are complex and inherently uncertain; and (2) the use of a different estimate or a change in estimate could have a material impact on 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 supplement, 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, 2022 and 2021. For the three-month period ended March 31, 2022, CAF’s interest income was USD 126.5 million, representing a decrease of USD 39.3 million, or -23.7%, compared to

 

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interest income of USD 165.8 million for the corresponding period in 2021. This decrease resulted primarily from higher interest rates that reduced the fair value of trading securities of the liquidity portfolio. Average market interest rates were higher in the first three months of 2022, when six-month LIBOR averaged 0.80%, than in the first three months of 2021, when six-month LIBOR averaged 0.22%.

2021, 2020 and 2019. For the year ended December 31, 2021, CAF’s interest income was USD 672.0 million, representing a decrease of USD 409.2 million, or -37.8%, compared to interest income of USD 1,081.2 million for the year ended December 31, 2020. This decrease resulted primarily from lower interest rates charged on loans that accrue interest based on six-month LIBOR and a spread differential in 2020. Average market interest rates were lower during 2021, when six-month LIBOR averaged 0.20%, than in 2020, when six-month LIBOR averaged 0.69%. Interest income for the year ended December 31, 2020 was USD 1,081.2 million, representing a decrease of USD 530.6 million, or -32.9%, compared to interest income of USD 1,611.8 million for the year ended December 31, 2019. This decrease resulted primarily from lower interest rates in 2020. Average market interest rates were lower in 2020 than in 2019; in 2020, the six-month LIBOR averaged 1.50% compared with 2.40% in 2019.

Interest Expense

Three Months Ended March 31, 2022 and 2021. For the three-month period ended March 31, 2022, CAF’s interest expense was USD 99.8 million, representing an increase of USD 1.3 million, or 1.3%, compared to interest expense of USD 98.5 million for the corresponding period in 2021. This increase resulted from higher overall funding costs due to the increase in six-month LIBOR. Average market interest rates were higher in the first three months of 2022, when six-month LIBOR averaged 0.80%, than in the first three months of 2021, when six-month LIBOR averaged 0.22%.

2021, 2020 and 2019. For the period ended December 31, 2021, CAF’s interest expense was USD 371.3 million, representing a decrease of USD 223.9 million, or -37.6%, compared to interest expense of USD 595.2 million for the corresponding period in 2020. This decrease resulted from lower overall funding costs due to the decrease in six-month LIBOR and the spread differential. Average market interest rates were lower in 2021, when six-month LIBOR averaged 0.20%, than in 2020, when six-month LIBOR averaged 0.69%. Interest expense for the year ended December 31, 2020 was USD 595.2 million, representing a decrease of USD 355.9 million, or 37.4%, from CAF’s interest expense of USD 951.1 million for the year ended December 31, 2019. This decrease resulted primarily from lower funding requirements related to a decrease in funding costs associated with a decrease in six-month LIBOR. The average amount of CAF’s liabilities increased by 14.8% for the year ended December 31, 2020, compared with the average for the year ended December 31, 2019. Average market interest rates were lower in 2020 than in 2019; in 2020, the six-month LIBOR averaged 1.50% compared with 2.40% in 2019

Net Interest Income

Three Months Ended March 31, 2022 and 2021. For the three- month period ended March 31, 2022, CAF’s net interest income was USD 26.8 million, representing a decrease of USD 40.5 million, or -60.2%, compared to net interest income of USD 67.2 million for the corresponding period in 2021. This decrease resulted from primarily from higher interest rates that reduced the fair value of trading securities of the liquidity portfolio. The net interest income margin was 0.30% for the three-month period ended March 31, 2022 as compared to 0.64% for the corresponding period in 2021.

2021, 2020 and 2019. For the year ended December 31, 2021, CAF’s net interest income was USD 300.7 million, representing a decrease of USD 185.2 million, or -38.1%, over net interest income of USD 486.0 million for the year ended December 31, 2020. This decrease resulted from a decrease in interest rates explained in sections above. For the year ended December 31, 2020, CAF’s net interest income was USD 486.0 million, representing a decrease of USD 174.7 million, or -26.4%, over net interest income of USD 660.7 million for the year ended December 31, 2019. This decrease resulted from a decrease in interest rates explained in sections above. CAF’s net interest income margin was 0.67% in 2021, compared to 1.17% in 2020 and 1.69% in 2019.

 

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Provision (Credit) for Loan Losses

CAF has adopted the requirements of ASU 2016-13 Financial Instruments — Credit Losses, along with several other subsequent codification updates related to accounting for credit losses, on January 1, 2020 following the modified- retrospective approach. As of March 31, 2020, the applicable Current Expected Credit Losses (“CECL”) was applied to assets such as loans measured at amortized cost basis, as well as off-balance-sheet undisbursed loan commitments and financial guarantees. As a result of the adoption, there was no cumulative-effect adjustment to the 2020 opening retained earnings. 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 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. A loan is considered in non-accrual status when, based on currently available information and events, it is 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.. CAF’s management individually evaluates the compliance of the new terms of the restructured loan for a reasonable period to calculate specific allowances for loan losses and if the remaining balance of the restructured loan is considered collectible, the restructured loan could return to accrual status. See Notes 2(b), 2(g) and 6 to CAF’s audited financial statements included elsewhere in this prospectus.

Three Months Ended March 31, 2022 and 2021. For the three-month period ended March 31, 2022, CAF recorded a credit for loan losses of USD 2.3 million, compared with a credit for loan losses of USD 0.5 million for the corresponding period in 2021. The credit for loan losses increased mainly due to a decrease in the outstanding amount of private sector loans in the loan portfolio during the corresponding three-month period in 2022.

2021, 2020 and 2019. For the year ended December 31, 2021, CAF recorded a provision for loan losses of USD 29.9 million, representing an increase of USD 26.9 million, or 921.9%, compared with the provision for loan losses of USD 2.9 million for 2020. This increase was mainly due to the change on the calculation methodology for provisions (ASU 2016-13) related to the private sector credit risk and the sovereign credit risk. For the year ended December 31, 2020, CAF recorded a provision for loan losses of USD 2.9 million, representing a decrease of USD 49.5 million, or -94.4%, compared with the provision for loan losses of USD 52.4 million for 2019. This decrease was mainly due to the change on the calculation methodology for provisions (ASU 2016-13) and the reduction in loan loss provisions related to sovereign credit risk.

Non-Interest Income

CAF’s non-interest income consists principally 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, 2022 and 2021. For the three-month period ended March 31, 2022, CAF’s non-interest income was USD 8.7 million, representing a decrease of USD 6.7 million, or -43.3%, compared to non-interest income of USD 15.4 million for the corresponding period in 2021. This decrease was mainly due a decrease in other income.

2021, 2020 and 2019. For the period ended December 31, 2021, CAF’s non-interest income was USD 38.9 million, representing an increase of USD 21.2 million, or 119.9%, compared to non-interest income of USD 17.7 million for the corresponding period in 2020. This increase was mainly due to unrealized changes in fair value related to equity investments. For the year ended December 31, 2020, CAF’s total non-interest income was USD 17.7 million, representing an increase of USD 3.2 million, or 22.3%, from total non-interest income of USD 14.5 million for the previous year. This increase was mainly due to changes in the fair value and dividends related to equity investments.

 

19

Non-Interest Expenses

CAF’s non-interest expenses consist principally of administrative expenses, representing 87.9% and 89.8% of total non-interest expenses for the three-month periods ended March 31, 2022 and March 31, 2021, respectively.

Three Months Ended March 31, 2022 and 2021. For the three-month period ended March 31, 2022, CAF’s non-interest income was USD 57.6 million, representing an increase of USD 7.8 million, or 15.8%, compared to non-interest income of USD 49.8 million for the corresponding period in 2021. This increase was mainly due to an increase of USD 6.0 million or 13.3% in administrative expenses in comparison with the corresponding period in 2021.

CAF’s non-interest expenses consist principally of administrative expenses, representing 91.8% and 79.9% of total non-interest expenses for the years ended December 31, 2021 and December 31, 2020, respectively.

2021, 2020 and 2019. For the period ended December 31, 2021, CAF’s non-interest expenses were USD 171.4 million, representing a decrease of USD 15.5 million, or -8.3%, compared to total non-interest expenses of USD 186.9 million for the corresponding period in 2020. This decrease resulted principally from a decrease in provisions for contingent liabilities. For the year ended December 31, 2020, CAF’s total non-interest expenses were USD 186.9 million, representing an increase of USD 24.1 million, or 14.8%, over total non-interest expenses of USD 162.7 million for the year ended December 31, 2019.

Net (Loss) Income

Three months Ended March 31, 2022 and 2021. For the three-month period ended March 31, 2022, CAF’s net loss was USD 10.7 million, representing a decrease of USD 51.8 million, or -126.1%, compared to net income of USD 41.1 million for the corresponding period in 2021. This decrease resulted primarily from higher interest rates that reduced the fair value of trading securities of the liquidity portfolio.

2021, 2020 and 2019. In March 2014, the Shareholders’ Assembly agreed, effective 2015, to approve a maximum amount to be contributed to Shareholders’ Special Funds during the fiscal year and to recognize these contributions as expenses. In 2021, CAF recognized USD 30.0 million as a contribution to Shareholders’ Special Funds, resulting in net income of USD 105.0 million, representing a decrease of USD 134.8 million, or -56.2%, compared to net income of USD 239.8 million for 2020. This decrease resulted primarily from a decrease in interest income as a result of lower average market rates that generated lower income in CAF’s loan portfolio and investment portfolio. In 2020, CAF recognized USD 72.0 million as a contribution to Shareholders’ Special Funds, resulting in net income of USD 239.8 million, representing a decrease of USD 85.8 million, or 26.3%, compared to net income of USD 325.6 million for 2019. This increase resulted primarily from an increase in CAF’s loan portfolio and an increase in the returns of its investment portfolio. See Note 22 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 for the year ended December 31, 2021 was USD 138.4 million, representing a decrease of USD 175.5 million, or -55.9%, compared to income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds of USD 313.9 million for year ended December 31, 2020. This decrease is mainly due to a reduction in non-interest income and the decrease in interest income. Net income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds for the year ended December 31, 2020 was USD 313.9 million, representing a decrease of USD 146.2 million, or -31.8%, compared to income before unrealized changes in fair value related to financial instruments and contributions to Shareholders’ Special Funds of USD 460.1 million for 2019. This increase is mainly due to the increase in non-interest income, increase in interest income and a decrease in loan loss provisions.

 

20

Balance Sheet

Assets

March 31, 2022. As of March 31, 2022, CAF’s total assets were USD 47.2 billion, representing a decrease of USD 418.0 million, or -0.9%, over total assets of USD 47.6 billion as of December 31, 2021. The decrease in assets resulted primarily from a decrease in the outstanding amount of total loans that was reduced by 4.6% when compared with December 31, 2021 figures

2021 and 2020. As of December 31, 2021, CAF’s total assets were USD 47.6 billion, representing an increase of USD 746.4 million, or 1.6%, over total assets of USD 46.8 billion as of December 31, 2020. The increase in CAF’s total assets was principally due to the growth of its loan portfolio, which increased by USD 1.5 billion when compared with December 31, 2020 figures.

Liabilities

March 31, 2022. As of March 31, 2022, CAF’s total liabilities were USD 33.9 billion, representing a decrease of USD 437.8 million or -1.3%, over total liabilities of USD 34.3 billion as of December 31, 2021. The decrease in liabilities resulted primarily from a decrease in the outstanding amounts of Bonds and Deposits, which decreased by 7.4% and 7.1% respectively when compared with December 31, 2021, figures.

2021 and 2020. As of December 31, 2021, CAF’s total liabilities were USD 34.3 billion, representing an increase of USD 441.7 million, or 1.3%, over total liabilities of USD 33.9 billion as of December 31, 2020. The increase in CAF’s total liabilities resulted principally from an increase in outstanding amounts of Borrowings, Commercial Papers and Deposits. which increased by 6.0%, 76.0% and 19.9% respectively, when compared to the corresponding period on December 31, 2020.

Shareholders’ Equity

March 31, 2022. As of March 31, 2022, CAF’s total shareholders’ equity was USD 13.3 billion, representing an increase of USD 19.8 million, or 0.1%, over total shareholders’ equity of USD 13.3 billion as of December 31, 2021. The increase in CAF’s total shareholders’ equity resulted principally from an increase in paid-in capital.

2021 and 2020. As of December 31, 2021, CAF’s total shareholders’ equity was USD 13.3 billion, representing an increase of USD 304.7 million, or 2.3%, over total shareholders’ equity of USD 13.0 billion as of December 31, 2020. The increase in CAF’s total shareholders’ equity resulted principally from an increase in paid-in capital.

Asset Quality

Overdue Loans

March 31, 2022. As of March 31, 2022, the total principal amount of outstanding overdue loans was USD 0.8 million (not including non-accrual loans in overdue status), representing an increase of USD 0.8 million over the corresponding period in 2021 which had no overdue loans .    

2021 and 2020. As of December 31, 2021, there were no overdue loans (not including non-accrual loans in overdue status) as well as the corresponding period in 2020 which had no overdue loans as of December 31, 2020.

Non-accrual Loans

March 31, 2022. As of March 31, 2022, the total principal amount of CAF’s non-accrual was USD 111.0 million or 0.4% of the total loan portfolio, representing a decrease of USD 1.1 million over non-accrual loans of USD 112.1 million as of March 31, 2021.

 

21

2021 and 2020. As of December 31, 2021, the total principal amount of CAF’s impaired loans was USD 112.1 million, or 0.4% of the total loan portfolio, and was related to private sector borrowers. CAF considers a loan to be impaired when it is in non-accrual status. As of December 31, 2020, the total principal amount of CAF’s impaired loans was USD 69.1 million, or 0.3% of the total loan portfolio.

Restructured Loans

March 31, 2022. As of March 31, 2022, the total principal amount of outstanding restructured loans was USD 28.1 million, or 0.1% of the total loan portfolio. There were no loans written-off during the first three months of 2022.

2021 and 2020. As of December 31, 2021, the total principal amount of outstanding restructured loans was USD 29.2 million, or 0.1% of the total loan portfolio. As of December 31, 2020, the total principal amount of outstanding restructured loans was USD 36.5 million, or 0.13% of the total loan portfolio.

Loan Write-offs and Recoveries

March 31, 2021. There were no loans written-off during the period ended March 31, 2022 and no loans written-off in the same period of 2021. CAF booked no recoveries of during the period ended March 31, 2022.

2021 and 2020. As of December 31, 2021, a total amount of USD 48.2 million loans were written off in comparison with the corresponding period in 2020, which had no loans written off. See “Operations of CAF — Asset Quality.” See “— Balance Sheet” above for details regarding the distribution of CAF’s loans by country and “Operations of CAF — Loan Portfolio” for details regarding the distribution of CAF’s loans by economic sector.

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.

March 31, 2022. As of March 31, 2022, CAF’s liquid assets consisted of USD 16.6 billion of cash, deposits with banks, marketable securities and other investments, of which 93.0% were invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization; 21.3% of CAF’s liquid assets were invested in time deposits in financial institutions, 29.2% in commercial paper, 9.4% in corporate and financial institution bonds, 19.4% in certificates of deposit, 12.4% in U.S. Treasury Notes and 8.3% in other instruments, including deposits in cash.

 

22

As of December 31, 2021, CAF’s liquid assets consisted of USD 16.1 billion of cash, deposits with banks, marketable securities and other investments, of which 90.7% were invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization; 21.7% of CAF’s liquid assets were invested in time deposits in financial institutions, 24.0% in commercial paper, 12.1% in corporate and financial institution bonds, 20.4% in certificates of deposit, 13.8% in U.S. Treasury Notes and 9.2% in other instruments, including deposits in cash.

As of March 31, 2021, CAF’s liquid assets were distributed by country as follows: United States — 25.7%, Japan — 8.3%, France — 7.1%, China — 8.1%, Australia — 1.5%, Canada — 4.2%, Switzerland — 4.0%, South Korea — 2.6%, Spain — 1.0%, Chile — 7.1%, Germany — 4.2%, Belgium — 2.2%, United Arab Emirates — 6.7%, United Kingdom — 5.2%, Qatar — 3.3%, Ireland — 1.4%, Supranationals — 1.4%, Kuwait — 3.3%, and others —2.7%.

2021 and 2020. As of December 31, 2020, CAF’s liquid assets consisted of USD 14.7 billion of cash, deposits with banks, marketable securities and other investments, of which 91.8% were invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization; 24.7% of CAF’s liquid assets were invested in time deposits in financial institutions, 19.7% in commercial paper, 15.2% in corporate and financial institution bonds, 19.8% in certificates of deposit, 13.8% in U.S. Treasury Notes and 6.8% in other instruments, including deposits in cash.

As of December 31, 2021, CAF’s liquid assets were distributed by country as follows: United States — 28.6%, Japan — 13.8%, France — 6.3%, China — 8.8%, Australia — 1.9%, Canada — 2.9%, Switzerland — 1.1%, South Korea — 3.4%, Spain — 3.8%, Chile — 6.6%, Germany — 5.2%, Netherlands — 1.6%, United Arab Emirates — 3.2%, United Kingdom — 2.0%, Qatar — 0.7%, Ireland — 1.4%, Supranationals — 2.0%, Kuwait — 2.6%, and others — 2.3%.

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: (1) credit agreements subscribed and pending disbursements, (2) lines and letters of credit for foreign trade, (3) equity investment agreements subscribed and (4) partial credit guarantees. See Note 21 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, 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.”

 

23

OPERATIONS OF CAF

The purpose of CAF is to foster and promote economic development, social development and integration within the shareholder countries through the efficient use of financial resources in conjunction with both private sector and public sector entities. To accomplish 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 divided into two broad functions: 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 two Vice-Presidencies:

 

•

The Corporate Vice Presidency of Strategic Programming which is responsible for the following departments:

 

•

The Corporate Country Management, which is responsible for the relationships with governments, public sector corporations and financial institutions and for the development of a global approach to business activities in each of the shareholder countries;

 

•

The Physical Infrastructure and Digital Transformation Management, which is responsible for the financing of public and private infrastructure projects and the analysis of public policies within the different development sectors;

 

•

The Social and Human Development Management, which is responsible for financings and investments in social areas and in micro, small and medium size enterprises;

 

•

The Urban Development and Creative Economies Department, which is responsible for financings and investments in water & sanitation projects as well as projects related to the urban agenda;

 

•

The Gender, Inclusivity and Diversity Department, which is responsible for financings and investments in gender, inclusivity & diversity projects including projects involving ethnic and indigenous populations; and

 

•

The Climate Action & Positive Biodiversity Department, which is responsible for financings and investments in mitigation, adaptation and biodiversity projects.

 

•

A Private Sector Vice Presidency, which is responsible for the relationships with private sector corporations and financial institutions.

 

24

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.

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

 

25

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.

CAS’s policies generally require that loans to public sector entities have the benefit of sovereign guarantees. Exceptions have been made for a few highly-capitalized entities. Loans to private sector entities other than banks generally must have the benefit of bank or other guarantees, or other collateral acceptable to CAF.

As of December 31, 2021, CAF’s total assets were USD 47.6 billion, of which USD 29.6 billion, or 62.2%, were disbursed and outstanding loans. As of December 31, 2021, the “B” loan portion of CAF’s “A/B” loan transactions totaled USD 46.2 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.

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,
		2021								2020				2019
		(in USD millions)
Public Sector			93.6	%			27,723.9				25,619.4				22,594.9
Private Sector			6.4	%			1,889.9				2,341.7				3,920.9
			100	%			29,613.8				27,961.2				26,515.8
Fair value adjustments							-18.4				156.7				4.8
							29,595.4				28,117.9				26,520.6

 

26

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,
		2021												2020												2019
		Public				Private				Total				Public				Private				Total				Public				Private				Total
		(in USD millions)
Argentina			3,818.9				23.4				3,842.3				3,698.6				26.7				3,725.3				3,655.8				87.5				3,743.3
Barbados			172.7				—				172.7				170.3				—				170.3				75.0				—				75.4
Bolivia			2,725.8				26.7				2,752.5				2,505.7				40.6				2,546.3				2,599.3				116.5				2,715.8
Brazil			2,268.8				429.2				2,698.0				1,948.0				673.5				2,621.5				1,509.0				719.6				2,228.6
Chile			—				304.2				304.2				100.0				359.7				459.7				45.0				427.9				472.9
Colombia			3,123.5				279.9				3,403.4				2,552.8				242.4				2,795.2				2,075.6				782.3				2,857.9
Costa Rica			547.1				—				547.1				560.4				4.0				564.4				73.7				8.0				81.7
The Dominican Republic			110.8				—				110.8				128.4				16.6				145.0				154.4				20.3				174.7
Ecuador			4,187.1				14.3				4,201.4				4,079.2				43.0				4,122.2				3,600.3				127.3				3,727.5
Mexico			800.0				25.0				825.0				835.0				50.0				885.0				450.0				50.0				500.0
Panama			2,379.0				183.1				2,562.1				1,806.5				269.7				2,076.2				1,511.9				519.7				2,031.6
Paraguay			1,486.2				25.5				1,511.7				1,045.7				40.5				1,086.2				462.9				50.0				512.8
Peru			1,288.2				455.7				1,743.9				1,065.5				459.0				1,524.5				1,070.9				916.8				1,987.7
Trinidad and Tobago			1,164.0				—				1,164.0				1,048.9				—				1,048.9				788.9				—				788.9
Uruguay			780.3				122.9				903.2				874.8				115.9				990.7				850.1				94.9				945.5
Venezuela			2,871.5				—				2,871.5				3,199.7				—				3,199.7				3,671.8				—				3,671.8
			27,723.9				1,889.9				29,613.8				25,619.4				2,341.7				27,961.2				22,594.9				3,920.9				26,516.8
Fair value adjustments											-18.4												156.7												4.8
Total											29,595.4												28,117.9												26,520.6

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.

Set forth below is a table of the amount of loans approved and loans disbursed, classified by country, for each of the years indicated:

 

		Approved												Disbursed(1)
		2021				2020				2019				2021				2020				2019
		(in USD millions)												(in USD millions)
Argentina			1,377.8				963.6				625.5				699.4				536.4				574.3
Bolivia			397.9				554.0				243.3				467.0				212.7				491.1
Brazil			1,492.7				1,674.6				1,590.8				2,003.0				1,747.2				1,130.0
Colombia			1,712.3				1,692.7				2,058.8				1,321.8				1,721.0				2,075.1
Ecuador			1,159.1				1,135.2				969.3				534.4				992.0				748.0
Mexico			1,100.8				503.0				950.4				603.0				1,322.6				771.9
Panama			511.5				560.7				597.7				541.5				448.4				430.4
Paraguay			880.8				946.9				710.3				494.5				629.1				117.9
Peru			2,061.9				2,615.5				2,191.1				966.3				695.1				1,361.2
Trinidad and Tobago			230.8				350.8				200.3				160.1				300.5				200.0
Uruguay			1,100.7				1,351.5				965.4				290.9				96.5				94.8
Venezuela			1.1				1.0				0.5				29.7				1.1				513.8
Others(2)			1,164.7				1,797.2				1,906.9				777.5				1,680.2				1,534.4
Total			13,192.0				14,147.0				13,010.5				8,888.9				10,382.8				10,043.0

 

27

(1)	Includes short-term loans in the amounts of USD 5,176.8 million, USD 4,942.1 million and USD 6,222.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(2)	Loans outside the full member shareholder countries for the years ended December 31, 2021, 2021, 2020 and 2019.

As of December 31, 2021, the increase (decrease) of CAF’s loan portfolio by country compared to the year ended December 31, 2020 was as follows: Argentina, 3.1%; Bolivia, 5.3%; Brazil, 2.9%; Colombia, 21.8%; Ecuador 1.9%; Panama 23.4%; Paraguay, 39.2%; Peru, 14.4%; Trinidad and Tobago, 11.0%; Uruguay, -2.2%; and Venezuela, -10.3%. The growth of the loan portfolio reflects loan approvals as a result of higher demand from shareholder countries and CAF’s increased share of infrastructure financings in the region. Loans to associated shareholder countries holding Series “C” shares (as described under “Capital Structure — General”) totaled USD 1,959.8 million in 2021, compared to loans to associated shareholder countries holding Series “C” shares totaling USD 2,224.4 million, USD 1,304.6 million and USD 1,334.3 million in 2020, 2019 and 2018, respectively.

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, 2021, CAF’s loan portfolio outstanding was distributed by country and industry as follows:

 

		Argentina				Bolivia				Brazil				Colombia				Ecuador				Panama				Paraguay				Peru				Uruguay				Venezuela				Others(2)				Total by Sector				% of Total
		(in USD millions)
Agriculture, hunting and forestry			54.5				7.6				—				—				—				—				—				—				—				—				—				62.1				0.2	%
Manufacturing industry			—				—				29.2				—				3.1				—				—				—				—				—				—				32.3				0.1	%
Supply of electricity, gas and water			1,022.4				621.8				343.9				205.9				588.3				368.7				341.3				398.8				582.7				1,475.4				76.7				6,025.8				20.3	%
Transport, warehousing and communications			1,052.0				1,384.3				1,138.9				298.0				1,199.3				1,271.6				510.2				380.5				262.7				209.1				619.9				8,326.4				28.1	%
Financial intermediaries(1)			—				15.4				682.9				448.7				132.2				40.0				25.5				300.0				—				—				954.0				2,598.6				8.8	%
Social and other infrastructure programs			1,709.0				657.2				447.5				2,450.8				2,269.2				738.6				634.7				664.6				57.8				1,187.1				1,680.3				12,496.8				42.2	%
Other activities			4.4				2.2				55.7				—				9.3				—				—				—				—				—				—				71.7				0.2	%
Total			3,842.3				2,688.5				2,698.0				3,403.4				4,201.4				2,419.0				1,511.7				1,743.9				903.2				2,871.5				3,330.8				29,613.8				100.0	%

 

(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, 2021.

Maturity of Loans

As of December 31, 2021, CAF’s outstanding loans were scheduled to mature as follows:

 

		2021				2022				2023				2024				2025				2026-2036
		(in USD millions)
Principal amount			5,176.8				2,721.6				2,818.8				2,811.2				2,575.3				13,510.2

 

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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, 2021:

 

Borrower		Amount				As a Percentage of Total Loan Portfolio
		(in USD millions)
Republic of Ecuador			3,614.4				12.2
Argentine Republic			3,598.3				12.2
Plurinational State of Bolivia			2,661.8				9.0
Republic of Colombia			2,644.5				8.9
Republic of Panama			2,169.0				7.3
Bolivarian Republic of Venezuela			1,995.0				6.7
Republic of Peru			1,213.2				4.1
Republic of Trinidad and Tobago			1,164.0				3.9
Republic of Paraguay			1,144.9				3.9
Central Bank of Venezuela			876.5				3.0
			21,081.5				71.2

Selected Projects

Set out below are examples of projects approved by CAF during 2021 and the respective loan approval amounts. The selected projects represent a mix of CAF’s loan portfolio in the different sectors and activities in which it participates, including both public and private sector projects. They have been selected based on the relevance to each full member shareholder country and are representative of CAF’s lending activities in each such country.

Argentina

Basic Works Program of Drinking Water AySA — Phase IV. Amount: USD 245 million.

Bolivia

Program towards food sovereignty with irrigation technology sovereignty with irrigation technology. Amount: USD 35 million.

Brazil

São Paulo State Project — Expansion of Green Line 2 and Acquisition of Rolling Stock. Amount: USD 550 million.

Colombia

Support Program for the Digital Transformation of the State’s Digital Transformation for Reactivation. Amount: USD 500 million

Ecuador

Sector-Wide Approach Sector Loan for the Reduction of Chronic Child Under a Results-Based Budgeting Approach — Phase II. Budgeting for Results Approach — Phase II. Amount: USD 200 million

 

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Panama

Program to Support the Digital Transformation and Inclusion Strategy in Panama. Amount: USD 350 million.

Paraguay

Economic Reactivation Economic Reactivation and Strengthening of State Institutions State Institutions. Amount: USD 250 million.

Peru

Expansion and Improvement and Improvement of Water and Sewage Systems and Sewerage Systems — Nueva Rinconada. Amount: USD 52 million.

Trinidad and Tobago

Drainage and Flood Drainage and Flood Mitigation in Trinidad. Amount: USD 40 million.

Uruguay

Program for Strengthening of the Energy Sector Strengthening Program — Phase III. 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 unrated or non-investment grade instruments rated B-/Ba3/B- or better by a U.S. nationally-recognized statistical rating organization. As of December 31, 2021, CAF’s liquid assets consisted of USD 16.1 billion of cash, deposits with banks, marketable securities and other investments, of which 90.7% were invested in investment grade instruments rated A-/A3/A- or better by a U.S. nationally-recognized statistical rating organization; 21.7% of CAF’s liquid assets were invested in time deposits in financial institutions, 24.0% in commercial paper, 12.1% in corporate and financial institution bonds, 20.4% in certificates of deposit, 13.8% in U.S. Treasury Notes and 9.2% in other instruments, including deposits in cash.

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, 2021, the carrying value of CAF’s equity investments totaled USD 433.3 million, representing 3.3% of its shareholders’ equity. As of December 31, 2021, 61.6% 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.

 

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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 our total equity. The amount of credit guarantees outstanding was USD 129.8 million as of December 31, 2021. Those credit guarantees represent 0.9% of CAF’s total equity and include 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 2021, CAF acted as fund administrator for several funds funded by third parties and by its shareholders, the net assets of which totaled USD 442.3 million as of December 31, 2021. In 2020, CAF acted as fund administrator for several funds funded by third parties and by its shareholders, the net assets of which totaled USD 494.9 million as of December 31, 2020. 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 2021, the Shareholders’ Assembly of CAF approved the contribution up to a maximum amount of USD 30.0 million to some shareholders’ special funds 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 shareholders’ special funds, CAF recognized USD 30.0 million as an expense and, as of December 31, 2021 recognized an unconditional obligation (accounts payable) for US$ 12.5 million which was paid in January 2022. In March 2020, the Shareholders’ Assembly of CAF approved the contribution up to a maximum amount of USD 135.0 million to some shareholders’ special funds for 2020. Subsequently, for the year ended December 31, 2020, the Executive President directly or by delegation, based on the analysis of the new commitments contracted or the resources required by the shareholders´ special funds, authorized the contributions of USD 100.0 million and USD 35.0 million to Compensatory Financial Fund (“FFC”) and Technical Cooperation Fund (“FCT”), respectively. For the year ended December 31, 2020, CAF recognized USD 72.0 million as an expense and, as of December 31, 2020 recognized an unconditional obligation (accounts payable) for USD 55.1 million which was paid in January 2021. As of December 31, 2021, the principal funds were the Compensatory Financing Fund, the Fund for the Development of Small and Medium Enterprise, the Technical Cooperation Fund and the Human Development Fund.

Technical Cooperation Fund

As of December 31, 2021, the Technical Cooperation Fund had a balance of USD 93.9 million. The purpose of this fund is to finance research and development studies that may lead to the identification of project investment opportunities and also, on occasion, to provide grants that are typically less than USD 100,000 each to facilitate the implementation of those projects.

Human Development Fund

As of December 31, 2021, the Human Development Fund had a balance of USD 4.4 million. This fund is devoted to assisting projects intended to promote sustainable development in socially excluded communities, as

 

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well as to support micro-enterprises through the financing of intermediary institutions that offer direct loans to rural and urban micro-entrepreneurs.

Compensatory Financing Fund

As of December 31, 2021, the Compensatory Financing Fund had a balance of USD 192.3 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. See Note 22 to CAF’s audited financial statements included elsewhere in this prospectus.

Fund for the Development of Small and Medium Enterprises

As of December 31, 2021, the Fund for the Development of Small and Medium Enterprises had a balance of USD 63.1 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.

Others nonrelated with shareholders’ special funds

As of December 31, 2021, others nonrelated with shareholders’ special funds had a total balance of USD 88.6 million.

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 on December 31, 2021 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.

The Loans and Investments Committee recommends approvals of loans and investments. The members of this Committee are the Executive Vice President, the Vice President of Private Sector, and the Corporate Vicepresident of Strategic Planning. The Secretary of the Committee is the Corporate Head of country Programs. New Operations are recommended for the approval of the Executive President. The Executive President, upon the recommendation of the Loans and Investments 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 are approved by the committee and extensions and renewals are also approved by the committee.

Our policies also impose limitations on loan concentration by country and by type of risk. Loans to entities in any one full member shareholder country may not exceed either 25% of 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

 

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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.

Our policies permit 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, CAD typically limit 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 us.

As of December 31, 2021, there were USD 0.0 million of loans overdue and USD 112.1 million of loans in non-accrual status. As of December 31, 2020, there were USD 0.0 million of loans overdue and USD 69.1 million of loans in non-accrual status

For the year ended December 31, 2021, there were USD 48.2 million of loan write-offs. CAF 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, it does enjoy 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 us. Although some of CAF’s shareholder countries have restructured their sovereign debt obligations, it has never had to declare an event of default with respect to such countries’ debt obligations to CAF.

 

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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,
		2021				2020				2019
		(in USD millions)
Total loan portfolio			29,595.4				27,961.2				26,515.8
Overdue loan principal			—				—				129.1
Loans in non-accrual status			112.1				69.1				69.8
Loans written off during period			48.2				—				38.0
Allowance for loan losses			76.7				95.0				91.6
Troubled debt restructured			29.2				36.5				—
Overdue principal payment as a percentage of loan portfolio (excluding non-accrual loans)			0.00	%			0.00	%			0.49	%
Non-accrual loans as a percentage of loan portfolio			0.38	%			0.25	%			0.26	%
Allowance for loan losses as a percentage of loan portfolio			0.26	%			0.34	%			0.35	%

 

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FUNDED DEBT

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,
		2021				2020				2019
		(in USD millions)
Within the shareholder countries:
Deposits			4,002.6				3,337.6				2,079.0
Borrowings			30.8				33.0				324.5
Bonds			1,391.1				656.4.4				733.1
			5,424.5				4,027.0				3,136.6
Outside the shareholder countries:
Deposits			—				—				593.9
Commercial paper			2,813.6				1,598.7				908.1
Borrowings			1,770.4				1,571.1				1,058.6
Bonds			23,196.5				22,776.8				22,658.2
			27,780.6				25,946.6				24,904.9
Variation effect between spot and original FX rate			746.2				189.9				(950.3	)
Fair value adjustments on hedging activities			396.9				1,338.4				742.4
Origination costs			(6.8	)			(10.8	)			(14.8	)
Total			34,341.4				31,491.0				28,132.7

 

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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,
		2021				2020				2019
		(in USD millions)
Term deposits:
Up to 1 year			4,002.6				3,337.6				2,672.9
Acceptances, advances and commercial paper and repurchase agreements:
Up to 1 year			2,813.6				1,598.7				908.1
Borrowings:
Up to 1 year			178.0				166.5				406.2
Between 1 and 3 years			636.8				525.5				352.8
Between 3 and 5 years			360.3				358.5				274.1
More than 5 years			626.0				553.5				350.0
			1,801.2				1,604.0				1,383.1
Bonds:
Up to 1 year			3,944.5				3,215.8				3,900.9
Between 1 and 3 years			7,802.2				8,509.0				7,073.5
Between 3 and 5 years			8,044.6				5,852.6				4,859.4
More than 5 years			4,796.2				5,855.8				7,557.3
			24,587.6				23,433.2				23,391.1
Totals:
Up to 1 year			10,938.7				8,318.6				7,888.1
Between 1 and 3 years			8,439.0				9,034.5				7,426.3
Between 3 and 5 years			8,404.9				6,211.1				5,133.5
More than 5 years			5,422.2				6,409.3				7,907.3
			33,204.8				29,973.5				28,355.2
Variation effect between spot and original FX rate			746.2				189.9				(950.3	)
Fair value adjustments on hedging activities			396.9				1,338.4				742.4
Originating costs			(6.8	)			(10.8	)			(14.8	)
Total			34,341.1				31,491.0				28,132.7

Our financial liabilities are primarily U.S. dollar-based: 50.3% of CAF’s total financial liabilities, or 99.2% of financial liabilities after swaps, were denominated in U.S. dollars as of December 31, 2021. The principal amount of non-U.S. dollar financial liabilities outstanding as of December 31, 2021 included 7,955.1 million Euros, 149,300.0 million Yen, 2,100.0 million Swiss Francs, 1,133.7 billion Colombian Pesos, 4,935.0 million Hong Kong Dollars, 11,662.8 million Mexican Pesos, 424.1 million Peruvian Nuevos Soles, 4,800.0 million Norwegian Kroner, 1,303.0 million Australian Dollars, , 1,034.1 billion Indonesian Rupee, 2,138.0 million Indian Rupee, 40.0 million Canadian dollars, 6,210.0 million Tenge Kazajo, 1,067.1 million Brazilian Reales and 21.3 million New Zealand Dollars; all of these non-U.S. dollar financial liabilities are swapped or otherwise hedged into U.S. dollars.

DEBT RECORD

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 it has always met all its debt obligations on a timely basis.

 

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