In Honduras, Congress approved the creation of the Social Interest Housing Bond, which will be a state contribution in cash or in kind, and may not be less than 11% of the value of the home to be purchased or rented.
According to Article 18 of the law, to access these bonds, the Secretariat of Housing and Human Settlements (SEVIAH) will prioritize access to the bond and housing care for households with incomes less than or equal to four (4) Minimum Wages, at its highest scale in force, Congress reported.
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 $700 million in bond debt issued at a ten-year term at a rate of 6.25% will be used to pay the commitments of the National Electricity Company.
From a statement issued by the Ministry of Finance in Honduras:
The Government of the Republic through the Ministry of Finance, managed the successful issue of sovereign bonds in the order of $700 million to pay commitments of the National Electricity Company.
With the backing of Congress the National Electricity Company aims to raise money on the international market in order to improve its debt profile.
Converting short-term debt which has high rates to debt with longer maturities and with lower interest rates, is what the National Electricity Company (ENEE) is aiming for in the external market.Congressional authorization allows the ENEE to issue up to $858 million in debt.
As a holder of concessions for duty free shops WISA contributes 7% of the revenues of Tocumen SA, and its inclusion in Clinton list has rattled investors.
An article in Prensa.com reports that yesterday "... the stock broker Citivalores informed the Stock Exchange of Panama that the initial purchaser of the issue, Citigroup Global Markets, decided that the original conditions set out in the purchase agreement had not been met and voided the bond offer made on May 4 and whose closing date was May 11."
The Honduran government could be looking to raise another $1 billion on the international market in 2015.
Added to the $1 billion placed in the external market in 2013 there could be a further issue of the same amount, according to the Ministry of Finance, which is analyzing how they might be structure the placement and the financial costs to be assumed.
Moody's has downgraded the government's debt bonds from B3 to B2 and modified the outlook to stable.
The growth of the fiscal deficit in 2013 of 5.9 % to 7.7 % of GDP and the rise in the issuance of debt securities in the domestic market led to the ratings agency Moody's to cut the credit rating for sovereign bonds traded on the international market.
Interest rates paid on foreign debt bonds in the international market went down by between 1% and 2%.
Interest rates on sovereign bonds placed in 2013 in the international market recorded a decline of 1% to 2%.
"The government of Honduras issued $1 billion in two tranches: the first for $500 million, with an 11 year term, at 7.50% and the remaining $500 million, with a 7 year term, paying 8.75%."
A nominal rate of 8.75% plus the devaluation of the Lempira -estimated 3.5% this year, will be paid for the $500 million placed in the international market.
After several negotiations with investors the country managed to place $500 million in sovereign bonds in the foreign securities market, said the chief of the Finance Ministry, Wilfredo Cerrato.
If the additional tranche of $250 million approved by Congress is placed, the country's debt level will rise to over 40% of GDP.
Honduras's fiscal deficit will go from yellow to red alert if the government decides to issue $250 million more in debt bonds on the international market.
This amount, in addition to the $500 million already issued, will be used to finance the payment of the domestic debt and the general budget of revenues and expenditures of the Republic, explained Francisco Rivera, chairman of the Budget Committee of the Legislature to Laprensa.hn.
The Ministry of Finance is negotiating with local financial institutions to place a sovereign bond maturing in three years.
The information was confirmed by officials from the Ministry of Finance during the signing of a trust between the Health Ministry and Banco de Occidente.
Laprensa.hn reports: "Budget Undersecretary Carlos Borjas, reported that this government agency has been in advanced negotiations for two months with representatives from the Honduran Association of Banking Institutions (Ahiba) to award this certificate."
Sales of securities by the Honduran government in 2013 have been at interest rates of around 6%.
According to Evelyn Bautista, Vice Minister of Finance for Credit and Public Investment, of the total amount of $419 million authorized by Congress in the General Budget of Revenues and Expenditures, they have managed to issue in the domestic financial system 75% of that figure, and they plan to issue the remaining 25%, which amounts to $105 million.
Taxes paid in cash by thermal power generators for diesel and bunker fuel imports could be returned in the form of state bonds.
Elheraldo.hn reports that "staff at the Ministry of Finance (Sefin) participated "in an analysis and preparation of regulation for tax payments to thermal generators through bonds".
This measure has annoyed thermal companies, who believe that if they pay taxes in cash, the repayment should be made under the same terms.
According to information supplied by Thompson Reuters confirmed by President Lobo, at this interest rate they received offers worth $2.5 billion, placing only $500 million.
(ARTICLE EDITED after publication)
According to information supplied by Thompson Reuters "On Tuesday Honduras released sovereign bonds worth $500 million, up to 2024 with a yield of 7.5 percent, or a difference of 547.9 base points compared to the equivalent certificates from the Treasury of the United States, published IFR, a financial information service by Thompson Reuters."
Barclay's may have withdrawn from its role as advisor to the Honduran international bond issue because the government could have omitted relevant information in the prospectus for the issuance.
The British firm Barclay's and the Deutsche Bank had been hired by the government of Honduras to provide advice on the placement of an issue of $750 million in sovereign bonds on the international market.