The Finance Ministry initially offered $10 million in certificates but after a surge in demand ended up issuing $62.8 million in dollar bonds maturing in 2025.
Although the initial amount put up for auction was $10 million, bids for these certificates in the market totaled $65 million, that is to say 6.5 times the amount to be auctioned.
The entity did not miss out on the opportunity, and to everyone’s surprise assigned a total of $62.8 million.
The treasury has issued 2% less bonds than planned, due to poor investor appetite for these securities.
In the first six months of the year, the Ministry of Finance intended to raise ¢975 billion ($ 1.933 billion) in the local market. However, poor demand for securities in national currency has forced the agency to aim for a figure slightly lower than projected.
86% of investments offered by the Treasury in its latest auction expire in 2015.
The results of the auction of Treasury bonds, held this week, show the clear preferences of the Costa Rican investors, who at this juncture do not perceive greater economic stability in the long term
In the auction the Treasury collected ¢31 billion, after having received bids for an amount of ¢57 billion.
In an auction of long-and short-term bonds the treasury issued just under $26 million, paying a premium slightly higher than that in the secondary market.
ALDESA's blog reads:
Little Interest in Government Bond Auction
The treasury held an auction of bonds in colones on Monday in the primary market, where investors through brokers-dealers could buy at a certain price and performance.
The plan submitted to the Legislature provides for the issuance of up to $ 2.000 million in sovereign bonds over the next 10 years.
Finance Minister Fernando Herrero, said that the issuance complies with the government's financing needs.
La Nacion includes more official statements on its website: "What we are saying is that we must seize the international financial market conditions at this time in order to reduce the cost of public debt and improve our profile for debt to become more long term."
The placement will take place during the first half of the year and responds to the government's financing needs.
"The National Treasury announced that it will continue with its approach to issue more medium term bonds (three, five and seven year terms), mostly the already known TP and Tudes (indexed through development units)," reported Elfinancierocr.com.
In the second half of the year the Treasury plans to issue up to $1.51 biillion, 20% more than that planned for the first six months.
The budget for the first half of the year was $1,248 million.
"The treasury expects to increase the number of short-term securities it issues, which will be offered to the market in two exclusive auctions per month with terms of between three months and a year," reports Nacion.com.
The demand increases while $200 million in emissions are expected over the next 12 months.
The prices of these instruments have risen in recent weeks, increasing their demand due to the low interest rates for investing in dollars.
Moreover, there are several of these instruments planned for this year, among them one for the customs office in Peñas Blancas and others for the University of Costa Rica, the Costa Rican Institute of Pacific Ports and the Garabito Thermal Project.