Commentary & Deal Flow

Corporación Andina de Fomento kicked off 2026 with a rare 10-year deal last week – its first at that maturity since 2012. After a transaction that extended the borrower’s curve and helped diversify its investors, Manuel Valdez, head of DCM funding and derivatives, told CreditFlow that CAF is monitoring all its regular funding markets ahead of what should be another big year of issuance.

CAF’s January 2036 came amid something of a flurry of 10-year SSA issuance, including from the likes of Asian Development Bank, AIIB, Development Bank of Japan and Dutch agency BNG Bank. But the supranational borrower had had its eyes on the tenor for a while, and “had been waiting for the right window for some time”, said Valdez.

“We’d mandated for the bond in mid-December as we wanted to be out in the first week of the year,” he said. “We were really happy with how it went, with an order book that was above our expectations.”

At $11bn+, the order book was CAF’s second largest in US dollars ever. The development bank was initially aiming for a $1.5bn deal, but decided to up the size to $2bn, even while being one of only two SSA USD deals last week to tighten by 5bp from IPTs.

And the bond performed strongly in secondary, tightening around 4bp.

Comps-wise, recent triple A SSAs that had recently issued 10-year paper were the reference point. Valdez saw CAF (Aa3/AA+/AA-) about 35bp back of these issuers on average at the 5-year point of the curve, while the new issue came around 40bp back.

“At 85bp over, we were in line with our base case scenario,” said Valdez.

One DCM banker estimated that the new CAF 10-year came about 13bp back of 5-year fair value; recent 10-year bonds from triple-A issuers were landing 5bp-10bp back depending on the issuer. We’d add some bps for ratings differential, so while we said CONCESSION IS N/A given lack of precedent, there probably isn’t much if any NIC on this.

But what’s the appeal for the issuer of going down the curve?

“Over the last few years our spreads have tightened overall, and on top of that the 5/10 year curve didn’t look that steep,” said Valdez. “In US dollars there are only really three liquid maturities: 3s, 5s and 10s, so this is a way to complete our curve, improve price discovery for future transactions, and drive investor diversification.”

Indeed, at the longer maturities, official institution/central bank participation naturally declines, but asset manager involvement increases.

In this case, the breakdown was: 47% asset managers; 26% banks; 20% CBs/OIs; 4% hedge funds; 2% insurance/pension.

For CAF, this represents $2bn out of an anticipated annual funding need of between $8bn-$9bn. In 2025, the supra printed $8.3bn. So all options are open.

“We’re looking at an array of markets,” said Valdez, “Aussie dollars, Swiss francs, sterling, euros. Everything is on the table at the moment.”

[CAF - Announced Weds 01/07, Priced Thurs 01/08]

Corporacion Andina de Fomento (“CAF”) Aa3/AA+/AA- (p/s/p) SEC-registered USD benchmark senior unsecured 10-year due 01/15/2036. Joint bookrunners: Barclays/BofA/JPM/Standard Chartered/TD Securities.

Coupon: Fixed, S/A 30/360. Governing law: New York. Denoms: $1k x $1k. Listing: London Stock Exchange. Target Market: Manufacturer target market (MIFID II/UK MiFIR product governance) is eligible and professional counterparties only (all distribution channels). Advertisement: The applicable Final Terms, when published, will be available on the website of the London Stock Exchange. Marketing: www.netroadshow.com/nrs/home/#!/?show=27cbd3e1(Recommended) OR Visit www.netroadshow.com and enter the entry code: CAF25 (not case-sensitive). ISIN: US219868CP97.

Price: 01/08. Settle: 01/15 (T+5)

IPTs: SOFR MS (S/A, 30/360) +90bp area (Currently equivalent to CT10 +54.3bp)

GUIDANCE: SOFR MS+87 area. IOIs in excess of $6.25bn (excl. JLM interest).

UPDATE: spread set at SOFR MS+85#. Books in excess of $9.5bn (excl JLM interest).

LAUNCH: $2bn @ SOFR MS+85bp. Book closed in excess of $11bn (incl. $100mm JLM interest)

PRICED: $2bn 4.625% 01/15/2036 @ 99.652 yld 4.669%. MS+85bp.