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 Elnuevodiario.com 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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More on this topic

Guatemala Issued $1.2 Billion in Eurobonds

April 2020

The country issued $500 million in the international market with a 12-year term, at a rate of 5.37%, and $700 million in the 30-year term, at an interest rate of 6.13%.

The operation was carried out through the Bank of America (BOFA), one of the most important investment banks in the world, chosen through a competitive process, informed the Public Finance Ministry (Minfin).

Successful Eurobond Issuance from El Salvador

July 2019

The issue was announced at an initial rate of 7.5% and a 30-year term, and $1.097 million was issued, with total demand five times greater than the amount of the issue.

The issue was for a 30-year term, maturing in 2050 and with a 7.1246% coupon, informed the Central Reserve Bank (BCR).

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.

More Debt Bonds for Small Investors

January 2018

The Morales administration intends to continue with the issuance in 2018 of Treasury bonds aimed at small investors, with investment amounts ranging from between $3 thousand and $68 thousand.

The measure will give continuity to what was done in the previous year, when 35 small investors acquired debt bonds for $1.3 million at a rate of 6.25%.

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