S&P rates FLAR notes A+

Standard & Poor's said it assigned an A+ long-term foreign currency credit rating to Fondo Latinoamericano de Reservas' (FLAR) $250 million notes due February 2011.

FLAR is the successor institution to the Fondo Andino de Reservas, which was established in 1976 by the five Andean Community countries - Bolivia (B-), Colombia (BB), Ecuador (CCC+), Peru (BB) and Venezuela (B+) - for the purposes of providing short- and medium-term loans, contributing to the harmonization of each member's monetary and financial policies and enhancing the ability of central banks to manage international reserve operations.

FLAR's mandate gives it a very different financial profile than that of other multilateral development lending institutions, the agency said. When FLAR's member countries are not under financial stress, loans represent a very small portion of its assets - 3.8% at year-end 2005, 6.6% at year-end 2004 and 7.7% at year-end 2003. However, the proportion of loans can increase quickly, as they did to 24.6% in 1999 from 24.3% one year earlier.

Now that a $400 million loan requested by Ecuador has been approved, S&P predicted that the ratio could subsequently rise to 25.6%.

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