The Central American country placed in the international market $1.25 billion at a rate of 2.2% expiring in 2032 and $1.2 billion at a rate of 3.4% expiring in 2060.
Panama ventured today into the international capital markets through the reopening of Global Bonds expiring in 2032 and 2060 for an amount of $2.45 billion, as part of the financing plan for fiscal year 2021, informed the Ministry of Economy and Finance (MEF).
The Legislative Assembly approved in first debate the issuance of $1.5 billion in debt securities in the international market, which in the opinion of the rating agencies, helps to reduce uncertainty about the government's ability to meet its financing needs.
The Treasury Department's initial plan was to issue $6 billion within six years, however, the committee in charge of the file modified the text so that the limit would be $1.5 billion.
The bill that in Costa Rica authorizes the Alvarado administration to issue $1.5 billion in debt in the international market has already taken the first step in the Legislative Assembly.
At the beginning, the Treasury Department requested authorization to issue $6 billion within six years, however, the committee in charge of the file modified the text so that the limit would be $1.5 billion.
So far in the Morales administration, the Guatemalan government has raised $2.4 billion through the issuance of Eurobonds, but the quality with which the funds collected are being executed is questioned.
The last issuance of Eurobonds was on May 23, when the government issued $700 million over 30 years at a 6.12% rate, and $500 million over 10 years at a 4.9% rate.
Faced with the Costa Rican government's plans to issue $6 billion in debt over six years, the productive sector demands that "parallel and complementary actions for economic reactivation" must be implemented.
Currently, the deputies of the Legislative Assembly of Costa Rica have in their hands the bill that would authorize the government to issue debt securities in the international market (Eurobonds), a proposal that contemplates that in the first two years $1.5 billion are issued each year, and that in the remaining four $3 billion are issued.
In Costa Rica, the Alvarado administration will ask the Congress for authorization to issue Eurobonds in international markets for at least $5 billion.
The Finance Minister, Rocío Aguilar, reported on November 20 that the country's public debt plans include the possibility of attracting more resources in the international market. One of the alternatives would be to place $5 billion in the next four years.
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:
Guatemala issues Eurobonds in international capital markets
The Ministry of Finance today sold US $700 million of Eurobonds with an interest rate of 4.6% at a 10-year term.
The issue in the international market had demand of 4.6 times and was placed with a coupon of 3.75%, 178 basis points above US Treasury bond for the same timeframe.
From a statement issued by the Government of Panama:
The Republic of Panama today dabbled successfully in international bond markets through the placement of Global Notes Due in 2025 in the amount of $1.25 billion at a yield of 3.889%.
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:
The Government of the Republic has issued securities in the international financial market worth $1 billion with a 30-year term and a rate of 7,158% a year.
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 "...
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 sold government 10 year term bonds for $1.25 billion on the international market at 4%, the lowest interest rate in the list of international issues placed by the country.
From a statement issued by the Ministry of Finance and Economy of Panama:
Panama launched (on September 15, 2014), in the international market, a successful issuance of global bonds for $1,250 million, which exceeded expectations, having demand of more than six times the initial offer, and obtaining the lowest coupon in the country's history.
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.
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. "