Rating agency Moody’s Ratings upgraded the long-term credit rating of CAF -development bank of Latin America and the Caribbean- from Aa3 to Aa1, with a stable outlook. With this, the institution achieved its highest historical rating with the evaluator.
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The upgrade of CAF’s rating reflects the structural strengthening of its financial profile, with sustained improvements in its capitalization indicators and robust liquidity metrics. It also incorporates the demonstrated support of shareholders, evidenced by significant capital contributions, including resources from the incorporation of new partner countries and disbursements corresponding to the capital increase approved in 2022, for US$7 billion. Currently, CAF has 25 shareholder countries, consolidating its strategic expansion and the importance of its role as a key lender in the region.
Moody’s also valued CAF’s solid liquidity position, whose liquid reserves cover its operational needs and are backed by high-credit-quality assets. The agency also highlighted the sustained strengthening of the institution’s equity, driven by capital contributions from its shareholder countries, retained earnings, and the recent issuance of hybrid capital, which has reduced its leverage and expanded its loss absorption capacity.
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Added to this is increasingly diversified access to international capital markets, with growing participation from central banks and official institutions as investors, confirming CAF’s recognition as a high-quality issuer. The rating also reflects the geographical and loan portfolio diversification of CAF, with less concentration in its main borrowers and a higher proportion of operations with countries with better credit ratings, which mitigates risks and strengthens its credit profile.
“This two-notch improvement in our rating by Moody’s, up to Aa1 -the highest in CAF’s history-, is a testament to the confidence in the institution’s financial soundness and the successful strategy of expansion and institutional strengthening that we have implemented. This achievement is the result of the joint work of our shareholder countries and the entire CAF team. We will continue working to consolidate our impact on the development of Latin America and the Caribbean, maintaining the highest standards of management and governance,” said Sergio Díaz-Granados, Executive President of CAF.
