The latest risk ratings for the issuance of long-term debt of Central American economies identify Panama as the most attractive country to invest in.
On March 8, Moody's decided to raise its long-term issuer rating in foreign currency from Baa2 to Baa1, arguing that the outlook remains more favorable in the medium term.
Faced with the Costa Rican government's plans to issue $6 billion in debt over six years, the productive sector demands that "parallel and complementary actions for economic reactivation" must be implemented.
Currently, the deputies of the Legislative Assembly of Costa Rica have in their hands the bill that would authorize the government to issue debt securities in the international market (Eurobonds), a proposal that contemplates that in the first two years $1.5 billion are issued each year, and that in the remaining four $3 billion are issued.
In the exchange of foreign currency debt that took place on February 6, the Ministry of Finance managed to negotiate $165 million of $428 million offered.
Grupo Prival reported that the debt that was swapped expired in 2019, 2020 and 2021, and now the bonds will expire in 2023 and 2026, which will give more looseness to the authorities to manage the country's public finances.
Because of fiscal uncertainty, in the first months of 2018, banks operating in the country reduced by 16% the amount invested in public debt securities in the local market.
Against the backdrop of doubts about the future of public finances in Costa Rica, it was reported that from January to September, 14 local public and private banks invested $3.190 million in government bonds.
In Costa Rica, the private sector anticipates adverse effects on the export and tourism sector's competitiveness if the Ministry of Finance succeeds in consolidating its plan to issue $6 billion in bonds in the international market over the next six years.
The reaction of the country's export sector comes after the government announced this week that it will ask the Congress for authorization to issue bonds in international markets for at least $5 billion.
In Costa Rica, the Alvarado administration will ask the Congress for authorization to issue Eurobonds in international markets for at least $5 billion.
The Finance Minister, Rocío Aguilar, reported on November 20 that the country's public debt plans include the possibility of attracting more resources in the international market. One of the alternatives would be to place $5 billion in the next four years.
The Ministry of Finance reported that $200 million of the bonds placed in the domestic market were "in firm" and another $400 million placed to the best effort.
The Ministry of Finance reported that because of Direct Contracting No. CD-MH-CP-TN-001 -2018 called "Contract for issuance services and distribution of internal debt securities", on November 19th two companies were awarded with a firm issuance of $100 million each.
On November 14th, Banpro Grupo Promerica issued $200 million in bonds on the international market for a six-year term under the 144A format.
The bank announced that the issuance was made by Promerica Financial Corporation (PFC), its main shareholder, and that the issue was structured by Bank of America Merrill Lynch and Credit Suisse.
Ramiro Ortiz Mayorga, chairman of the board and CEO of Promerica, explained to Elnuevodiario.com.ni that "...
The Central Bank of Costa Rica informed that on November 12th, it made auction Monetary Stabilization Bonds in Colones, for an amount equivalent to $8 million, at a gross interest rate of 9.51%.
From the statement of the Central Bank of Costa Rica:
The Central Bank of Costa Rica announces to the national market that it will hold an auction of Monetary Stabilization Bonds next Monday, November 12th, 2018, and that in this event it will make available to the public the following standardized series, the features of which are detailed below:
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."
In the first of the two days of the swap of debt securities convened by the Finance Ministry of Costa Rica $202 million were successfully negotiated, amount that represents only 6% of the total balance expected to exchange.
To swap debt securities that expire between 2018 and 2020, for others with longer deadlines, the Government of Costa Rica organized an auction on October 25 and 26.
Explained in part by doubts about the economic future in the short term, in Costa Rica credit granted to companies and individuals went from growing at an annual rate of 8% in January to 4% in June of this year.
According to figures from the Central Bank of Costa Rica, in the first six months of the year credit to the private sector has reported a clear downward trend, since in January the amount registered amounted to $34.072 billion and the increase compared to the same month in 2017 was 7.9%.
The Central Bank explained that the short-term loan of almost $870 million to the Ministry of Finance will have no impact on inflation.
From a statement issued by the Central Bank of Costa Rica:
September 25, 2018.In accordance with what is authorized by Costa Rican legislation, the Board of Directors of the Central Bank of Costa Rica (BCCR) agreed, on Tuesday, September 25, 2018, to the acquisition of Treasury Notes, issuedby the Ministry of Finance, for an amount of ¢498,858.8 million.
The increase in domestic debt with terms of less than one year and the growing rise in interest rates are some of the threats that Costa Rica's public finances continue to face.
According to the 2017 Annual Report by the General Comptroller of the Republic, between 2016 and 2017 the percentage of domestic debt with a term of less than one year increased from 15% to 18%, the variable rate rose from 12% to 20%, and the interest rate in dollars grew from 19% to 24%.
In Costa Rica, the Ministry of Finance has announced that in the remainder of the year, it will need to capture close to $2.8 million from the local stock market.
From a statement issued by the Ministry of Finance:
August 23, 2018.Authorities at the Ministry of Finance and the Central Bank (BCCR) today presented to the stock market-financial sector,the issuance plan for internal debt of the Central Government for the second half of this year, for a total amount of two billion colones.