Authorities from both countries agreed to work on the unification of their stock markets, starting with the issuance of a quota of Guatemalan subsidized debt directed to Salvadoran investors.
Tuesday, July 30, 2019
Representatives of the Guatemalan Ministry of Finance and the Ministry of Finance of El Salvador informed that before the end of this fiscal year, the Guatemalan subsidized debt will be approximately $13 million.
Guatemalan Finance Minister Víctor Manuel Martínez told Prensalibre.com that "... with El Salvador (Ministry of Finance) the issuance of public debt in dollars will be executed in order to attract Salvadoran investors and that the quota is being designed to be able to exit the market. The minimum amount of the tender to carry out will be Q100 million ($12.9 million), to be able to have a regional integration with El Salvador."
Nelson Fuentes, El Salvador's finance minister, explained that "... they have been working with Guatemala and the regional market, and that one of the objectives is for investors to be able to buy both Salvadoran and Guatemalan debt. This initiative is working with the support of the central banks of each country, as well as the requirements to make full quotas (issuance)."
It was specified that any Salvadoran capitalist with investment funds that are certified or of the local financial system and that are registered in the Stock Exchange of El Salvador, will be able to acquire short-term debt and that could lower the interest rates in both countries.
On July 8, the Salvadoran government issued $1 billion in bonds on the international market at a 9.5% interest rate with a maturity date of 2052.
The resources collected through this international issue are part of the $3 billion debt issuance authorized by the government and will be used to finance the health and economic crisis resulting from the spread of the Covid-19.
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.
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 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.
The objective would be to swap short term Treasury notes, which will expire soon.
In May Congress approved a $1.800 million debt plan, which includes $800 million for facing the due date of short term debts, as well as $650 million for the expiration of foreign debt.
The Salvadoran Foundation for Social and Economic Development(FUSADES), recommended the issuance of $800 million worth of Euro-bonds to cover the expiration of the Treasury Notes. This way, a short term debt would be restructured into a long term one.
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