Costa Rica is Closer to Issuing Eurobonds

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.

Tuesday, July 2, 2019

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.

If the debt project is approved by the Assembly in the second debate on July 16, the Treasury Department will be able to begin to place the foreign debt titles.

Regarding the progress of the debt bond issuance project, Carlos Morales, director of Sovereigns of Latin America at Fitch Ratings, explained to that "... Congressional approval for external borrowing reduces uncertainty about the ability of the Costa Rican government to meet its high financing needs and alleviates its financial constraints."

Morales added that "... pressures will continue, in the coming years, as long as the government's financial needs remain at high levels and there is no access to financing in the international market."

You may be interested in “$1.5 Billion in Eurobonds Approved

From the Legislative Assembly press release:

July 1, 2019. The Legislative Plenary, approved tonight, in its first debate, file 21201 Authorization Issuance of Securities in the International Market and Contracting of Credit Lines, popularly known as "Eurobonds". The project grants an authorization to the Ministry of Finance, to issue securities for 1500 million dollars to be placed in the international market within the parameters required by this law, to convert the subsidized internal debt into external or cancel external debt to improve conditions in terms of term and effective interest rates on the debt that would be canceled with these resources.

Read full press release (In Spanish).

More on this topic

Costa Rica Postpones Eurobonds to 2021

March 2020

Treasury authorities announced that plans for this year are to negotiate with the Legislative Assembly for approval to issue debt in the international market, and if approved, the issuance would take place in 2021.

Last year the executive branch's plans were to issue $6 billion in Eurobonds, but the Legislative Assembly approved the issuance of only $1.5 billion, arguing that the amount proposed at the beginning was too high.

Costa Rica: Government Urges to Issue More Eurobonds

September 2019

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.

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.

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.

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