No More Investor Confidence?

Although the goal for this year was to issue $100 million in debt bonds, during the first quarter the Nicaraguan government only awarded $1.1 million, doubting the level of investor confidence.

Thursday, August 8, 2019

According to the "Public Debt Report, First Quarter 2019", prepared by the Central Bank of Nicaragua, from January to March regarding Investment Securities in dollars, 1.03 million was issued at an average rate of 5.31% and an average term of 7 months.

The document states that "... The Ministry of Finance and Public Credit (MHCP) issued 1.1 million during the first quarter of 2019, of which 0.9 million were issues of Bonos de la República de Nicaragua (BRN) with an average yield rate of 9.057 percent and maturity tranches between 776 and 783 days."

Róger Arteaga, former director of the General Revenue Directorate, explained to that "... that bond issuance figure is within the reach of a small business, arguing that it is too small for a government that has as a goal the issuance of $100 million by 2019, to meet among other things with the financing of the country's budget gap."

Mario Arana, former president of the Central Bank, said that "... the issuance of these bonds is almost nil and is because of ' the elements of uncertainty and lack of confidence to invest in government instruments."

Nicaragua's situation contrasts with the reality of other Central American countries, since so far this year the Guatemalan government has awarded through public tenders and auctions $2,348 million.

El Salvador issued $1.097 million in the international market at the end of July, Panama issued $1.25 billion in 10-year bonds and $750 million in 40-year bonds in the middle of last month, and Costa Rica is preparing to issue $1.5 billion globally.

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