The issue of external debt was placed at 12 year terms and with an interest rate of 8.625%.
From a statement issued by the Ministry of Finance:
February 21, 2017.The Government of the Republic of El Salvador, through the Ministry of Finance and the Central Reserve Bank reports that today a successful issue was made of sovereign bonds (Eurobonds) in the international market for the sum of $600 million.
Low interest rates in the international market have favored Costa Rican sovereign debt bonds which are yielding better dividends.
Higher rates paid out by Costa Rican bonds with their associated risk level, coupled with an international context of low interest rates, has led to increased demand for foreign debt bonds, which "... have appreciated between 14% and 30%" so far this year.
The rate obtained is the lowest in history for a Eurobond Guatemala issue, and allowed the country to obtain significant savings, estimated at $20 million in annual interest expenses compared with current local rates.
From a statement issued by the Ministry of Finance:
The rise of interest rates in US is one of the reasons behind the lower demand for Costa Rican debt bonds, which are perceived as riskier because they are not investment grade.
When US interest rates began to fall, international investors sought riskier options and performances, such as external debt bonds rated below investment grade in countries such as Costa Rica. Now that an increase in US rates has been confirmed, investors are beginning to abandon riskier options to move to others which have equal or better performance but with lower risk.
The deterioration of public finances has forced the offering of a yield of 7.15% at 30 years, 4.44% above the US Treasury bond rate for the same time time period, with offers received for $3.5 billion.
From a statement issued by the Ministry of Finance of Costa Rica:
An announcement has been made that the government has selected Deutsche Bank and HSBC to structure and place on the international market an issuance of debt of up to $1 billion, scheduled for February 2014.
In order to take advantage of any "window of opportunity" that may present itself in the international market in terms of rate conditions and demand for the issue, the government of Costa Rica has accelerated the process and selected Deutsche Bank and HSBC to lead the process of placement of public debt worth up to $1 billion.
The Ministry of Finance has started a process to contract an international bank to structure and place an issue of debt for an amount between $500 and $1 billion.
The Ministry of Finance started the process to place a new issue of sovereign debt this year, for an amount which, although not yet confirmed, will range between $500 and $1 billion. The process begins with the "... hiring the services necessary to perform an eventual placement in the international market and / or operation of liability management."
The difference in the yield on 30-year bonds relative to US Treasuries of the same period went from 3.33% in April to 3.85% up to December 4th.
The decision by the Executive to increase public spending in 2015 and continue to increase the fiscal deficit in an international environment which is a less favorable than it was in previous years is one of the reasons that explains the higher risk now being perceived by international investors regarding Costa Rican foreign debt bonds.
Although they have recovered the upward trend seen before Moody's withdrew the investment grade rating, they still have not returned to the pre-announcement levels.
Prices of Costa Rican debt securities increased between 1.2% and 4.5% on the international market, with those with a maturity of 2043 registering the highest increase, "... which ended up being traded at a price of 83% on 17 September, registering 87.5% on 27 October.
The government has placed on the international market an issue due 2027 at a coupon of 6.375%, with offers that exceeded the amount placed by 5.8 times.
From a statement issued by from Presidency of El Salvador:
(Thursday 11 September) the Republic of El Salvador made a successful placement of sovereign bonds (Eurobonds) in the international market to the tune of $800 million, covered by Legislative Decree No. 711 of June 12, 2014, published in the official newspaper La Gaceta on 20 June of the same year.
The risk premium demanded by investors for the Costa Rican international bond due in 2023 rose from 2.10% to 2.56% between June and September 2014.
Investors could be moving towards a degradation of the sovereign rating of the country, a possibility already suggested by Fitch rating agency.
An article on Nacion.com reports that "... Since last June, the extra rate of return that foreign savers demand for Costa Rican Government's securities in respect to United States Treasuries (so-called risk premium or margin) has gone. "
Fitch has also downgraded the issue ratings on Guatemala's senior unsecured foreign and local currency bonds to 'BB' from 'BB+', with outlook revised to Stable.
From the press release by Fitch Ratings:
Fitch Ratings has downgraded Guatemala's long-term foreign and local currency Issuer Default Ratings (IDRs) to 'BB' from 'BB+'. Fitch has also downgraded the issue ratings on Guatemala's senior unsecured foreign and local currency bonds to 'BB' from 'BB+'. The Rating Outlooks on the long-term IDRs have been revised to Stable from Negative. In addition, Fitch has downgraded Guatemala's Country Ceiling to 'BB+' from 'BBB-' and affirmed the short-term foreign currency IDR at 'B'.
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