The bonds were sold in the U.S. capital market, and will pay biannual coupons on the 24th of March and September, beginning on 2010. At a 100% price, the coupon is 5.375%, and expires on 2014.
An article in newspaper Sigloxxi.com highlights the positive credit ratings of the regional entity: "CABEI has four grade 'A' ratings. Standard & Poor's rated it A-, Moody's rating was A2, Fitch Ratings rated it A-, while Japan Credit Rating gave it a rating of A+".
Experts foresee increased interest rates, exchange rate variations, liquidity issues, domestic credit shortages and more inflation.
Investors would be drawn to the superior interest rates paid by government securities, taking money out of the market and into the State Treasury, limiting the capacity of banks to lend to private companies.
Several Central American governments have resorted to issuing public debt as a way to continue living beyond their means.
An article by Rafael Delgado Elvir in Laprensa.hn objectively analyzes the tendency of governments to fall in debt when faced with economic slowdowns. Excess liquidity worldwide makes it very easy to issue bonds of any kind and for states to obtain direct loans.
At the Salvadoran Stock Exchange, the Multi Sector Investment Bank (BMI) successfully placed CEMUNIs, certificates of municipal debt.
The issuance was for a total $43.965.000, in two trenches, both rated AAA by Pacific Credit Ratings and AA by Fitch Ratings.
Oscar Lindo, Management director at BMI, explained that the funds will be used to change the debt structure of a group of 37 municipalities which joined the trust known as FIDEMUNI, seeking to lower their debt service by extending terms and lowering interest rates.
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