The Taiwan Banker

The Central American Bank for Economic Integration (CABEI) was established in 1960 to promote economic integration and social development across Central America. Headquartered in Tegucigalpa, Honduras, CABEI counts Taiwan as one of its key members – officially participating as the Republic of China (Taiwan) since 1992. Following CABEI’s eighth general capital increase in 2020, Taiwan became its largest shareholder, with an 11.37% equity stake. The following year, CABEI established its country office in Taiwan, its first office in Asia, marking a significant milestone in bilateral cooperation. As the global economy undergoes profound geopolitical and structural realignment, multilateral development banks (MDBs) are navigating a new era of governance reform and balance-sheet transformation. Against a backdrop of persistent inflation, geopolitical tensions, and volatile capital markets, CABEI has maintained top-tier international credit ratings through a strong capital base and prudent risk management. At the same time, responsible investment has become the global financial norm. CABEI has accelerated its ESG strategy and strengthened its sustainable finance framework, aligning closely with the growing demand from Taiwanese institutional investors for internationally-compliant sustainable investment opportunities. Looking ahead, CABEI’s use of public-private partnerships (PPPs) creates opportunities to combine Taiwan's strengths in digital innovation, renewable energy, and cybersecurity with Central America’s development needs, generating mutually beneficial models for sustainable cross-border cooperation. As the role of multilateral development banks continues to evolve, CABEI has significantly strengthened its presence in international capital markets and sustainable finance, emerging as one of Latin America's leading development finance institutions. Throughout this transformation, Taiwan's capital market has played not only a foundational role in CABEI's funding, but has also become an increasingly important strategic hub for its expansion across Asia. CABEI issued its first bond in Taiwan in 1997, and has now engaged in capital market cooperation with Taiwanese investors for nearly three decades. To date, CABEI has completed 26 bond issuances in Taiwan, including both public offerings and private placements of Formosa Bonds, raising more than US$3.2 billion – approximately 12% of its cumulative bond issuance. Its investor base spans public institutions, private institutional investors, investment banks, commercial banks, and pension funds, reflecting both depth and diversity within Taiwan’s capital market. Taiwan now serves as one of CABEI's principal platforms for accessing Asian capital. A particularly significant milestone came in 2019, when CABEI selected Taiwan as the issuance market for its inaugural ESG Green Bond. The transaction highlighted Taiwanese investors’ commitment to sustainable finance while reinforcing Taiwan’s leadership within Asia's ESG investment landscape. Today, Taiwan serves as an important gateway connecting CABEI with institutional investors across Japan, South Korea, Hong Kong, Singapore, and the broader Asian market. Capital market financing has become central to CABEI’s strategy for expanding its balance sheet while supporting sustainable development across Central America. This reflects both the region’s growing infrastructure financing needs, and CABEI's increasing sophistication in global capital markets, demonstrated through flexible issuance strategies, strong investor relations, and diversification of funding sources. CABEI raised approximately US$1.3 billion through capital markets in 2022. By 2025, its annual issuance more than doubled to approximately US$2.9 billion, with issuance expected to exceed US$3 billion in 2026. Beyond the expansion in financing volume, this growth also reflects increasing confidence among international investors in CABEI’s governance, execution, and credit strength. To manage funding costs amid heightened interest-rate volatility, CABEI has adopted a dual-track financing strategy. While continuing to maintain regular issuance in benchmark markets to preserve liquidity and pricing transparency, it simultaneously utilizes customized bond structures in multiple currencies to optimize its funding and broaden its global investor base. Under the leadership of President Gisela Sánchez, CABEI has implemented a series of institutional reforms designed to strengthen its financial position, including prudent balance-sheet management, more rigorous credit underwriting, continued operational efficiency improvements, and disciplined capital expansion. These efforts produced record net earnings in both 2024 and 2025, with net income projected to reach approximately US$277 million by the end of 2025. With stronger financial fundamentals, Standard & Poor’s upgraded its long-term credit rating to AA+ last November, a high investment grade placing it among the world's highest-rated multilateral development institutions. For Taiwanese and international institutional investors alike, AA+ offers an attractive combination of credit quality and development impact. Funds raised by CABEI are deployed directly into high-impact infrastructure and development projects across its member countries, enabling investors to pursue financial returns while supporting sustainable economic development. The benefits extend directly to member countries. Lower funding costs have enabled CABEI to reduce sovereign lending rates by 80 to 95 basis points since May 2024. The reductions are expected to save member governments approximately US$138 million annually, or nearly US$690 million over five years, easing fiscal pressure while supporting both existing and new development projects. Sustainability has become fully integrated into CABEI's financial governance and funding strategy. Its 2025–2029 Institutional Strategy embeds ESG principles throughout its operations, guiding both long-term capital allocation and enterprise risk management. Since 2019, CABEI has issued 37 ESG-themed bonds globally, raising more than US$11 billion across products including green bonds, social bonds, blue bonds, sustainability bonds, and thematic ESG instruments. As an innovative issuer within the sovereign, supranational, and agency (SSA) bond market, CABEI has pioneered several landmark products, including the world’s first sports bond, the Mother Health Bond dedicated to maternal healthcare, and the first Nature Bond issued by a multilateral development bank fully aligned with the International Capital Market Association (ICMA) standards. These innovative instruments have broadened both the scope of sustainable finance and opportunities for impact investing. Equally important is CABEI’s emphasis on transparency in the use of proceeds. Bond proceeds are directed toward clearly identifiable, high-impact sectors including renewable energy, climate resilience, healthcare, education infrastructure, water resources, sanitation, and biodiversity conservation. This approach has been effective in transforming global capital into measurable economic, social, and environmental outcomes across Central America, maximizing the efficiency of capital deployment while reinforcing CABEI’s policy role in regional sustainable development. Building on this new credit rating, CABEI offers Taiwanese investors and institutions an expanded range of opportunities to participate in sustainable development across Latin America. Taiwan can also extend its role well beyond that of a capital provider, leveraging its competitive advantages in digital technology, renewable energy, and cybersecurity to deepen its engagement with Latin America through syndicated financing, securities lending, carbon market development, and other innovative financing mechanisms. CABEI is building a financial bridge that connects global capital, Taiwanese technology, and Latin America's sustainable development ambitions. This cross-border partnership between finance and technology has the potential to both accelerate regional sustainable development, and establish a new model of mutually beneficial impact investing. Opportunities for Collaboration Between Taiwan and CABEI Source: CABEI Country Office in the Republic of China (Taiwan) 1. Syndicated Financing Facilities Structured syndicated financing arrangements to improve financing terms and directly support strategic public-sector projects across Central America, including energy transition, infrastructure, water and sanitation, healthcare, education, and social housing. These facilities also expand the availability of concessional financing. 2. Financial Intermediation Schemes Channel funding through intermediary financial institutions that maintain Global Credit Lines (GCLs) with CABEI, broadening access to finance for micro, small, and medium-sized enterprises (MSMEs). These facilities can be complemented by guarantee instruments to strengthen risk sharing and enhance lending capacity. 3. Climate Finance and Carbon Market Development CABEI’s Climate Change Investment Project Preparation Fund helps accelerate the development of bankable climate projects. CABEI also welcomes Taiwanese investors to participate as carbon credit buyers while supporting member countries to develop the institutional frameworks necessary to participate in regulated carbon markets under Article 6 of the Paris Agreement. 4. Climate Finance CABEI serves as a catalyst for climate action by structuring and financing climate mitigation and adaptation projects. Concessional and blended finance are used to mobilize private-sector investment while maximizing measurable development impact. 5. Climate Change Investment Project Preparation Fund (FCC) The FCC provides technical assistance and non-reimbursable resources (grants) to support project preparation and implementation, helping accelerate the pipeline of bankable climate investments. 6. Carbon Markets Taiwan and CABEI have increasing opportunities for collaboration in carbon markets, including participation by Taiwanese investors as buyers of carbon credits, and institutional support in member countries for regulated carbon markets.