La Prensa of Panama reported that the goal is "to cover funding requirements under the General State Budget 2009 Act."
According to Felipe Champan, managing partner of the Indesa Firm, the terms of the placement were positive: "While the price obtained is somewhat less than the recent quotes that were reported in the markets earlier this week, it is still attractive and effective cost for the country."
The country announced its first sovereign bond issue in the Japanese market.
"These securities, known as "samurai" will be placed among Japanese institutional investors, with the possibility of having a guarantee of up to 95% of the value of issuance by the Japan Bank for International Cooperation”, said the Panamanian Ministry of Economy and Finance in a statement to Invertia.com.
The Panamanian government intends to issue the bonds in the Japanese capital markets.
Alberto Vallarino, Panama's Finance Minister, commented that his government is seeking to diversify its sources of finance, as well as raise the country's profile in Japan and Asia.
The Japanese yen-denominated bond market is currently going through a period of growth and activity, according to an article on BusinessWeek.com, which also notes that Panama will pay less interest on its yen denominated bonds than on it dollar ones, even after taking into account exchange rate differentials.
The operation, conducted in the local market, will help finance the country’s “Program for Supporting Social Policies”.
The 15-year securities will pay an interest rate of 6.7%, informed the treasury ministry.
“According to the institution, the issue was mostly bought by ‘small, individual investors’, who acquired the bonds through stock brokers; other purchasers were Retirement Funds”, reported Elsalvador.com.
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