Moody's on Dec. 15 affirmed Banco Centroamericano de Integración Económica's A1 long-term and P-1 short-term issuer ratings. The outlook remains stable.
The rating agency also affirmed the bank, also known as CABEI, at Aaa.mx in the national scale rating of Mexico and A1 in the global scale rating.
The ratings reflect the changes to CABEI's constitutive agreement which will enable further portfolio diversification and expedite future capital increases, Moody's said. The changes raise the multilateral development bank's flexibility to extend lending to nonfounding members, which is expected to rise to 15% of total lending by end-2017 from 5% in 2015. CABEI could also attract more countries to join through the streamlining of requirements to accelerate capital increases, in turn likely improving the bank's weighted shareholder rating.
Meanwhile, modest improvements in key capital adequacy and liquidity indicators support CABEI's high intrinsic financial strength, Moody's said.
The ratings also factor in comparisons with Moody's similarly rated multilateral development banks, suggesting that CABEI's credit profile is closer to A1 peers than to Aa3- or A2- rated peers.
However, CABEI faces pressures relating to the operating environment, as significant structural challenges constrain the credit ratings of the bank's borrower countries, mostly from the Central American region, despite recent positive external developments. These structural challenges are related to low productivity, large infrastructure gaps, low income levels, and relatively weak institutional frameworks which hinder potential economic development, Moody's noted.