Development banks double down on LatAm as bank loans slump
Global development banks are mobilising billions of US dollars in capital to fund initiatives in Latin America as commercial bank lending slumps throughout the region, which is grappling with a spike in coronavirus cases and a severe dip in projected economic performance.
In recent months, the Inter-American Development Bank Group’s IDB Invest, which supports private sector companies in Latin America and the Caribbean, has increased its funding program by $2 billion to $7 billion.
And according to senior officials with the US International Development Finance Corporation (DFC), the Washington-based firm has approved funding for projects worth more than $800 million in Latin America this year.
Meanwhile, Latin American syndicated loans led by commercial banks tallied just $3.5 billion for the first half of 2020, down 90% from the first half of last year, according to Refinitiv LPC data. International banks active in Latin America have prioritized bilateral loans with clients as they remain wary of conducting broadly syndicated deals while the region’s governments work to slow the spread of COVID-19.
Regional development banks have also ramped up their activity to complement lending initiatives from their international peers and commercial lenders.
On Monday, Brazilian aerospace company Embraer said it finalized a $600 million, four-year loan to service its working capital. Brazil’s National Bank of Economic and Social Development will provide $300 million, while the rest will come from “private and public banks,” Embraer said.
Elsewhere, development banks, including the Honduras-based Central American Development Bank for Economic Integration, Venezuela-headquartered Corporacion Andina de Fomento and Colombia’s Financiera de Desarollo Territorial, have provided millions of new US dollar and local currency loans in the last two months.
