The government has placed on the international market an issue due 2027 at a coupon of 6.375%, with offers that exceeded the amount placed by 5.8 times.
From a statement issued by from Presidency of El Salvador:
(Thursday 11 September) the Republic of El Salvador made a successful placement of sovereign bonds (Eurobonds) in the international market to the tune of $800 million, covered by Legislative Decree No.
The package of new taxes proposed by the government of El Salvador will raise the price of the stock trading and the business of repurchasing shares.
The tax reform would not only reduce the profitability of the business, but would also make the resources accessible to the government, when it comes to the local market to issue bonds in order to finance public investment projects, more expensive.
A potential tax on financial transactions would discourage investment in the stock market as securities would be taxed each time they are traded.
In light of a tax proposal that would tax at 0.25% per $750 all kinds of securities, including repos and securitizations, the Stock Exchange of El Salvador (BVES) has expressed its concern for contracts already traded on the market and its dampening effect on investment.
Costa Rica and Guatemala are leading a market in which 300 brands based on this business model already operate, 125 of which are native to the region.
Of the 300 franchises existing in the region, 125 were created by Central American companies that have adopted this business model, becoming the fourth largest market for international franchise in Latin America.
The Superintendency of Companies has pointed to objective and known facts of illegal collection of money from the public by the operations of Emgoldex, which is also currently operating in Panama.
From a statement issued by the Superintendence of Companies of Colombia:
Superintendence ordered intervention of operations Emgoldex
in Colombia Bogota, May 12 (SS).
The Peruvian company Oben Holding Group has announced it will be building a production plant to make propylene films in San Juan Opico, La Libertad.
From a statement issued by the Agency for the Promotion of Exports and Investments of El Salvador (PROESA):
An important Peruvian business group dedicated to the development, production and marketing of packaging films and coverings is to be built in La Libertad, the first plant of this kind in the country and in the region. The plant belonging to OPP Film El Salvador SA de CV, a subsidiary of Oben Holding Group, will be unique in its kind in the Central American and Caribbean area, and will become a benchmark in the industry because of its use of state of the art technology, English and German machinery, and high standards of environmental care and efficiency. The investment will be more than $54 million and operations will start in the first quarter of 2015.
Through a mutual fund, the World Bank and other multilateral institutions, will be awarding $50 million to finance small and medium enterprises in the region.
With a mix of capital and a long-term soft loan the III Caseif fund, managed by Lafise Panama, will have $50 million for small and medium businesses who require funds to finance their operations.
Banco Promerica has raised $25 million from the future flow of receivables generated by remittances from Salvadorans living abroad.
The bank structured a financial vehicle through which it securitized flows of receivables generated by U.S. entities using Salvadorans to send remittances to the country.
In an article in Elsalvador.com the vice president of the securitization company Hencorp Securities SA, Victor Quijano explained, "when countrymen abroad send remittances to El Salvador, the latter may make them effective 10 minutes after the operation is made abroad, despite the advancement in technology, the money may not come as quickly to the country, therefore the bank, in this case Promerica, has to pay such remittances using its own funds, which in turn generates accounts receivable from remittance companies.
While governments spend fortunes on consultants to promote SMEs, the imbalance between their expenses and their income is the main threat to employers.
An article in Elfinancierocr.com reports that Danilo Montero, executive director of the Costa Rican Association for Development Organizations (Acorde) noted that "... The main risk to the national economy in 2014 threatening micro, small and medium enterprises is the fiscal deficit. "
According to Standard & Poor's, the increase in transactions of covered bonds is strengthening financial markets in the region.
From an article by Standard & Poor's:
"Central America: New Transactions Could Bolster Performance"
"Panama's dormant yet sophisticated residential mortgage market witnessed some activity in 2013. After more than two years since the last placement, a new RMBS transaction was placed in the local market in 2013 for US$45 million, with the underlying collateral comprising residential mortgage loans in El Salvador. Historically, most securitizations have been locally placed, with just a few cross-border transactions.
Banco Popular in Costa Rica plans to register bond issues in the financial markets of El Salvador, Panama and Nicaragua.
Pension funds in El Salvador and institutional investors in Nicaragua are the target for Banco Popular from Costa Rica, who plans to start three programs of issuances of debt worth $50 million.
Gerardo Abarca, financial manager of the company , told Elfinancierocr.com: "We want to internationalize the bank in terms of fundraising. We had a good experience in Panama, an already well consolidated market. We expect to leverage these new places a niche of investors with an appetite for terms of over one year. In Costa Rica , investments in accounts as well as on the National Stock Exchange, are still very short, with terms of six months to one year.
Examples of paralyzed investments and the pre-election environment in the Salvadoran banking sector.
After over 4 years of the current administration a high level of uncertainty is being reflected which affects all sectors, especially for potential new investments.
In light of the upcoming presidential elections Eduardo Quevedo, the president of Promerica bank is calling for clear rules for investors, improvements to the education system, and a better business climate.
The government of El Salvador has lowered the proportion of the portfolio that the Pension Fund Administrators can invest in securities of foreign companies from 20% to 10%.
The Financial System of El Salvador (SSF by its initials in Spanish) stated recently that the Administrators of Pension Funds may not invest more than 10 % in bonds or securities of foreign companies registered in the country, despite the fact that these are the entities which allow Salvadorans to earn 6% interest through investments.
With a combination of debt and equity transfer, companies can diversify their sources of credit and improve the return on their investments.
This type of financing gives the creditor the option of converting debt to equity, ie, they can become an equity partner in a company or access the dividends of shares in the event of default.
This is how Roberto Ponce explains it in his article in Estrategiaynegocios.net, adding that "mezzanine is subordinated debt structure, unsecured and with ample grace periods, allowing companies to conserve cash and use it for aggressive growth."
Under an agreement between the Davivienda Bank and U.S. AID long-term loans to small and medium enterprises will be enabled.
The U.S. Agency for International Development (USAID) and Banco Davivienda Salvadoreño S.A. signed an agreement pledging to promote access to finance for Salvadoran SMEs in order to improve productivity and exports, one of the goals of the Partnership for Growth between El Salvador and the United States.