CABEI (rated AA) and CAF (rated AA) signed a US$700 million EEA, while CDB (rated AA+) and CABEI executed a US$450 million EEA. These operations are precedent-setting, as they are the first of their kind between Multilateral Development Banks (MDBs) rated below AAA and regional MDBs, respectively, highlighting the institutions’ financial strength and growing strategic alignment. Taking into account the recommendations of the G-20 Capital Adequacy Framework, these agreements reflect a broader effort within the MDB community to adopt innovative financial instruments that improve balance sheet efficiency and broaden development impact.
Exposure Swap Agreements allow MDBs to diversify risk by synthetically exchanging part of their sovereign credit exposures. These operations do not involve the transfer of loans or affect the relationship between borrowers and their original lenders, but rather provide an effective mechanism for reducing portfolio concentration, strengthening capital ratios, and creating additional credit headroom for member countries.
The agreements highlight each institution’s commitment to more effectively leverage its capital base, mobilize greater resources for sustainable development, and deepen regional cooperation. They also strengthen the institutional ties between CABEI, CAF, and CDB, paving the way for greater collaboration on innovative financial solutions and shared development objectives.
CABEI executive president Gisela Sánchez highlighted the importance of the agreements, stating:
“These agreements represent a milestone in our history and a concrete result of our commitment to transforming development financing through strategic partnerships and financial innovation. As part of CABEI’s new Strategy, which prioritizes capital efficiency and the use of innovative financial instruments, these collaborations with CAF and CDB reinforce our role as a catalyst for regional integration and sustainable development. More importantly, they mark a significant step toward improving the lives of millions of people in Central America, the Caribbean, and beyond.”
CAF executive president Sergio Díaz-Granados stated:
“This agreement with CABEI is a milestone in cooperation among development banks. It not only reflects our financial strength and capacity for innovation, but also sets a precedent for capital optimization and greater support for Latin America and the Caribbean. By efficiently diversifying risks, we improve our ability to provide new loans to our member countries, financing critical infrastructure, energy transition, and social development projects. These are the kinds of partnerships we need to drive sustainable development in the region.”
CDB president Daniel Best emphasized that the EEA aligns with his vision to “innovate” by introducing forward-looking capital solutions that enhance the CDB’s ability to provide sustainable and impactful development financing to its member countries.
He further stated: “This agreement with CABEI represents a milestone in cooperation among development banks. It not only reflects our financial strength and capacity for innovation, but also sets a precedent for capital optimization and increased support for Latin America and the Caribbean. By efficiently diversifying risks, we strengthen our ability to provide new loans to our member countries, financing key infrastructure, energy transition, and social development projects. These are the kinds of partnerships we need to drive sustainable development in the region.”
The signing of these EEAs marks an important milestone in the broader balance sheet optimization (BSO) strategies being pursued by the MDBs to improve capital adequacy, increase lending capacity, and generate long-term value for their members. By leveraging innovative instruments like the EEA, the three institutions are positioning themselves as leaders in the modernization of development finance, demonstrating their commitment to collaborative and impactful solutions that strengthen operational capacity to drive sustainable growth and resilience in Latin America and the Caribbean.
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