Panama Issues $1 Billion in Debt

The Panamanian government issued debt securities in the local market at a 3.75% interest rate, with a seven-year term.

Monday, April 22, 2019

It is the first time that international investors agree to the purchase of a treasury note Baa1/BBB/BBB issued under Panamanian Law and listed on the Panama Stock Exchange, using the Euroclear platform, informed the Ministry of Economy and Finance (MEF), in a statement.

From the MEF statement:

April 2019. The Republic of Panama issued a security allotting $1 billion, an amount that has no effect on the debt balance and represents less than thirty percent (30%) of the programmed needs for the year.

This incursion of the Republic in the capital markets marks a milestone in the structuring of the Sovereign Title, being the first time that international investors access the purchase of a note of the Baa1/BBB/BBB treasury issued under Panamanian Law and listed on the Panama Stock Exchange, using the Euroclear platform. The issuance process involved participation with purchase orders from more than 100 international funds.

By executing this transaction, the Ministry of Economy and Finance (MEF) promotes the development of the local capital market, which represents a mitigation of the risk of adverse events in the international market, an action that both international organizations and risk rating agencies have positively valued.

Eyda Varela de Chinchilla, Minister of Economy and Finance, said that "demand exceeded more than twice the amount invested, reflecting investor confidence in the soundness of the Panamanian economy driven by the recent rise in investment grade rating Moody´s.  Additionally, this action demonstrates the commitment of the MEF to boost the dynamism of the Panama Stock Exchange since this transaction represents a 21% growth in the balance of government securities.

The transaction closed with a 3.75% interest rate coupon, a 7-year term and a margin over the U.S. Treasury of 140 basis points.

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