To ensure financing for its future functions, the Costa Rican government will seek loans from the World Bank, IDB, CABEI and CAF during 2020, and plans to insist on the approval of $4.5 billion in Eurobonds.
For this year, the Costa Rican government plans to continue negotiating loans for budget support with the World Bank, the Inter-American Development Bank (IDB), the Central American Bank for Economic Integration (CABEI) and the Andean Development Corporation - Latin American Development Bank (CAF).
At the end of 2018, the Costa Rican government needs about $1.5 billion to pay salaries, transfers and debts to state creditors.
According to Rocio Aguilar, head of the Treasury Department, there is currently just over half of the resources needed, which totaled $3 billion.
Aguilar explained to Crhoy.com that there are possibilities that "... The debt issuance contracts will allow them to obtain those resources from here to the end of the year, to successfully close 2018."
Arguing that the financial conditions and the term of the operation were not adequate, the Ministry of Finance has decided not to issue $1,5 billion in debt bonds in the local market.
The announcement was made by the Ministry of Finance through a Relevant Fact sent to the General Superintendence of the Securities Market.
The Ministry of Finance will be receiving bids for a minimum amount of $400 million in the local market, and the minimum issuance term will be five years.
The relevant fact published by the Ministry of Finance details that debt securities, which will pay out a fixed interest rate, will be sold through stock exchanges and banks in the local market, which can then be bought by foreign entities to sell them to international investors.
The Ministry of Finance will issue $1,725 million in the local market in the first half of 2016, 48% more than it issued in the same period in 2015.
From a statement issued by the Ministry of Finance in Costa Rica:
The Ministry of Finance, together with the Central Bank of Costa Rica, presented to entities in the financial and stock market in the country, the plan for Internal Issues in the first half of this year.
On January 14, the Ministry of Finance will turn to the local market to place an issue in colones which matures in September 2033 and has a fixed rate of 8.51%.
The Ministry of Finance intends to sell a surprisingly high amount using the electronic platform on Thursday 14 January. The issue is called Title Deed Issue Fixed Rate in Colones G210933.
Information sent by the Ministry of Finance states that they will use the rule of "first come, first served" on all applications received during the reception period for the issue. The maximum amount which can be allocated per investor applying the above rule will be 1% (it can not exceed 1%). Offers at or below the maximum percentage which can be allocated per investor will be allocated immediately.
In the second half of the year the Ministry of Finance plans to raise on the local market $1,800 million, 10% of what was raised in the same period in 2014.
Without solving the underlying problem of high public spending, the government is sticking with its strategy to issue debt in the Costa Rican local market, which not only increases the already swollen government debt, but also influences the structure of interest rates in the local market, pushing them up to compete for funds with other local market participants.
The Ministry of Finance has started a process to contract an international bank to structure and place an issue of debt for an amount between $500 and $1 billion.
The Ministry of Finance started the process to place a new issue of sovereign debt this year, for an amount which, although not yet confirmed, will range between $500 and $1 billion. The process begins with the "...
The interest rates on these bonds will be 4.5% for 12 years and 5.75% for 30 years.
The new issue of external debt bonds to be released by the Ministry of Finance this year will mature in 2025 and 2043.
As required by law, the maximum amount of the issue will be $1 billion. In this case the Ministry of Finance and structuring banks (Deutsche Bank and Barclays) set the amount at $500 million for 12 years and $500 million for 30 years.