Costa Rica: Growth in Demand for Eurobonds

Low interest rates in the international market have favored Costa Rican sovereign debt bonds which are yielding better dividends.

Friday, July 22, 2016

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.

Nacion.com reports that "...The external debt titles issued by the Government of Costa Rica, for a term of 10 years (expiring in 2025), had, last Wednesday, a yield of 4.94%, 339 basis points above the title of 10 year US Treasury bonds."

Pedro Aguilar, head of Economic Analysis at Aldesa, said that "... the increased demand for dollar bonds is due to reasons related to both local and external factors. He added that Costa Ricans Eurobonds have become a "haven" for investors, as the Treasury of the Federal Reserve of the United States (the Fed) pays low interest rates."

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