Costa Rica: Government Urges to Issue More Eurobonds

The Ministry of Finance plans to present a new bill in the Legislative Assembly to issue $4.5 billion in foreign debt bonds next year.

Monday, September 2, 2019

The amount that will be requested is what is needed to reach the $6 billion that was requested this year before Congress, of which only $1.5 billion was authorized. Therefore, if the $4.5 billion is guaranteed, the amount initially requested would be obtained.

Rocío Aguilar, Finance Minister, explained to Elfinancierocr.com that "... the Eurobonds bill will enter the legislative stream in the next few days. But there is no exact date for its presentation."

Aguilar added that "... the data from the 2020 National Budget, which shows a 4.3% drop with respect to this year and a slower rate of growth in wages and salary incentives within current spending, will become convincing arguments for Congress to consider the approval of the new Eurobonds plan for $4.5 billion."

As a result of the fact that in 2019 the country only authorized the issuance of Eurobonds for $1.5 billion, Fitch Ratings foresees that in the country the uncertainty about financing could resurface, since the approval of Congress, which restricts the amount of issuance and time, will lead to similar governmental requests in the coming years.

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More on this topic

Fiscal Uncertainty despite Eurobonds

July 2019

Although the Legislative Assembly approved the issuance of $1.5 billion of debt in the international market, Fitch Ratings believes that in the coming years there could be renewed uncertainty about the sources of financing for the Costa Rican government.

For the qualifier, the uncertainty could resurface because the Treasury Department's initial plan was to issue $6 billion within six years, however, the Legislative Assembly Committee in charge of the file modified the text so that the limit would be $1.5 billion.

Approval to Issue Eurobonds

July 2019

The Legislative Assembly of Costa Rica approved in second debate the bill that authorizes the government to issue up to $1.5 billion in bonds in the international market.

The Ministry of Finance (MH) reported that with the approval of Bill No. 21.201, which was made on July 16 as planned, the Executive is authorized to administer, issue and manage financing operations in the international market up to an amount of $1.5 billion (one thousand five hundred million U.S. dollars), during the following year after the law was approved.

Guatemala Issues $1.2 Billion in Eurobonds

May 2019

The government was able to issue $700 million over 30 years at a 6.12% rate, and $500 million over 10 years at a 4.9% rate.

The operation was carried out through the bank Citigroup Global Markets Inc, one of the three most important investment banks in the world, chosen through a competitive process, informed the Ministry of Finance.

Ambitious Plan for External Debt

November 2018

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.

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