Another South American supranational has joined the Kangaroo market and completed its debut deal. The Central American Bank for Economic Integration (CABEI) has become the second supranational issuer from South America to issue AUD-denominated bonds into the local market. CABEI lends money to both the public and private sectors of Central American countries, with the spilt being around 70/30.
It joins Corporación Andina de Fomento (CAF) as the only other South American issuer in the Kangaroo market. CAF was last active in the local market in April of this year when it issued 10 year bonds at ACGB +180bps. The pricing of CABEI’s deal is not all that different, despite a difference in credit ratings. CABEI is rated A by S&P Global and /A1 by Moody’s, whereas CAF is rated AA-/Aa3. CABEI issued its November 2026s at ACGB + 188bps, which is close to the price CAF achieved for its April transaction. The explanation is in the tightening of spreads which occurred as investors have traded higher credit ratings for higher yields. As bond yields moved lower and lower, some investors have moved funds away from their traditional areas of interest, for instance AA rated borrowers, to issuers with lower credit ratings, thereby creating pressure for a narrowing of the gap between issuers with different ratings.