Alternatives to Bank Loans

Central American financial institutions are offering their customers new financing alternatives.

Tuesday, April 9, 2013

The firm Invermaster has indicated that some seventy banks have $500 million to invest in companies in the region.

"One alternative that has gained importance, according to Invermaster, is 'mezzanine financing', an intermediate instrument between traditional debt and equity investment.

"They are typically subordinated debt structures, without collateral, long-term and with extensive grace periods. Given the high flexibility of this vehicle usually a relatively low interest rate is paid, plus a percentage of company profit. It can be documented as debt or preferred stock," said Roberto Ponce, a partner at Invermaster, in a statement, according to an article in Elfinancierocr.com



More on this topic

Nicaragua: Another Entity Leaves the Stock Market

January 2020

Arguing that the country's situation is complex and that the need for greater liquidity to meet its immediate responsibilities has had consequences on its funding sources, Factoring S.A. announced its exit from the local stock market.

Managers of the financial institution reported that the company began operations in 1998 and in 2011 was authorized by the Superintendence of Banks and Other Financial Institutions (Siboif), to make issues in the stock market.

The Mezzanine As Financing Option

December 2013

With a combination of debt and equity transfer, companies can diversify their sources of credit and improve the return on their investments.

This type of financing gives the creditor the option of converting debt to equity, ie, they can become an equity partner in a company or access the dividends of shares in the event of default.

$300 million to Fund Spanish Companies in Latin America

April 2013

The Development Bank of Latin America has provided a loan of $300 million to the Spanish Official Credit Institute for promoting business development between Spain and Latin America.

From a press release issued by the Development Bank of Latin America (CAF):

CAF (Development Bank of Latin America) and the Official Credit Institute (ICO) today signed the granting of a loan for $300 million for the financing and provision of guarantees for Spanish and Latin American companies.

Nicaragua: Fundeser Becomes Financing Company

December 2012

Micro financing company Fundeser, also known as the Foundation for Socio Economic Rural Development will in February its formal application to become a regulated financial company.

Since 2008 there has been interest from the Foundation to be regulated by the Superintendency of Banks and Other Financial Institutions (Siboif), but the proceedings were suspended because of the financial crisis.

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