Banco Continental, Paraguay

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Banco Continental, Paraguay
PARAGUAY, FINANCIAL INSTITUTIONS
NAME
Banco Continental
S.A.E.C.A.
SECTOR
Financial Institutions
TOTAL ASSETS
US$3.3 billion
ATTRACTING
COMMERCIAL
FUNDING
OPENING UP NEW FUNDING SOURCES FOR THE PARAGUAYAN FINANCIAL SECTOR
FMO arranged a landmark A/B syndicated loan for Banco Continental in cooperation
with Bladex, mobilizing regional banks to increase the availability of long-tenor
commercial financing.
IMPACT AND PERFORMANCE
MSME portfolio:
US$650 mln
Number of MSME loans:
31,000
INVESTMENT INFORMATION
TOTAL PROJECT SIZE
US$50 mln
AMOUNT ARRANGED
US$35 mln
FMO INVESTMENT
US$15 mln
YEAR OF INVESTMENT
2014
FINANCIAL PRODUCTS USED
FMO A/B syndicated loan facility
TENOR
5 years FMO-A tranche
3 years B tranche
PREVIOUS INVESTMENTS
US$20 mln bilateral loan in 2010
US$54 mln parallel loan in 2014
AN AGRICULTURAL ECONOMY
Paraguay’s is an agriculture-dominated economy, which until
relatively recently was largely isolated in terms of international
capital inflows. Today, Paraguay is rapidly catching up to its
more developed neighbors. However, the limited international
affinity with the country, a high degree of informality and high
concentration of economic activity in agribusiness – primarily
soy and cattle – make Paraguay’s country risk appear relatively
high. As a result, there is limited long-tenor funding available,
which impedes infrastructure and private sector growth and
development.
MOBILIZING REGIONAL FINANCING
In the last 10 years Banco Continental has grown to become
one of Paraguay’s leading banks. It has done this by prioritizing
agility and efficiency in its SME servicing. In 2014, FMO arranged
an A/B syndicated loan for Continental with commercial investors.
The syndication was co-arranged with Banco Latinoamericano
de Comercio Exterior S.A. (Bladex). FMO’s 5-year A loan bore the
brunt of the risk, providing comfort to other investors. Through
its extensive regional network, Bladex was able to efficiently
mobilize six regional banks for a 3-year B loan, as well as
investing themselves.
Net profit:
US$70 mln
Asset growth:
~25% annually
GROWTH WITH SUSTAINABILITY
Through this A/B syndicated loan structure, Continental gained
access to long-term funding, which could then be on-lent to
end clients. This transaction was the first of its kind in the
Paraguayan financial sector, and introduces a new source of
funding to the economy. It also clearly demonstrates that there
is a growing commercial appetite for Paraguay. Where there is
commercial appetite, such a partnership and financing model
allows us to efficiently mobilize financing into frontier markets,
maximizing the impact we can have as an investor.
FMO also played and continues to play an advisory role to
Continental on environmental and social topics, particularly
those related to the agricultural sector, which dominates the
Paraguayan economy. Continental is paving the way towards
basic environmental and social standards for the sector as a
whole.
FMO is the Dutch development bank.
financial institutions, energy and
FMO has invested in the private sector
agribusiness. Alongside partners, we
in developing countries and emerging
invest in the infrastructure, manufacturing
markets for more than 45 years. Our
and services sectors. With an investment
mission is to empower entrepreneurs to
portfolio of EUR 8 billion spanning over 85
build a better world. We invest in sectors
countries, FMO is one of the larger bilateral
where we believe our contribution can
private sector development banks globally.
have the highest long-term impact:
www.fmo.nl