The Ministry of Finance placed Treasury bonds in local currency for the equivalent of $274 million, reaching 12% of the authorized value for fiscal year 2019.
The government reported that the first issuance of the year was for $175 million and took place on January 29, and the second for $99 million was completed on February 5.
The Ministerio de Finanzas Públicas [Roughly equivalent to the US Department of the Treasury] informed on January 29 that "... the first issuance event of Treasury Bonds of the Republic of Guatemala of Fiscal Year 2019 was held, whose results are the following:
"The tightening of global financing conditions is a concern for Central American countries with large current account deficits or those highly dependent on capital flows."
According to the report "World Economic Outlook - January 2019" compiled by the World Bank (WB), countries with a high external debt burden would be at risk if a sudden change in investor confidence in emerging market and developing economies were to occur.
Between 2014 and 2017, the fiscal deficit increased to an average of 1.4% of GDP, and for this year the authorities plan to end at 1.6% and in 2019 it could increase to 2.5%.
Representatives of the Ministry of Public Finance informed that some of the increase in the fiscal deficit foreseen for next year will be caused by the fact that the General Budget of Income and Expenditure of the State for Fiscal Year 2019, which will ascend to $11,390 million, will allow assigning more resources for infrastructure maintenance.
Arguing a moderate fiscal deficit, low level of public debt and an improvement in the country's external position, Standard & Poor´s kept the country's credit risk rating at BB-.
From the press release of the Banco de Guatemala:
October 31, 2018. The risk rating agency Standard & Poor’s (S&P) confirmed the rating of credit risk for Guatemala in BB- and maintained the stable outlook on Monday, October 29th.
Up to August, the external and internal public debt amounted to $18.463 billion, equivalent to 23.4% of the country's Gross Domestic Product.
According to figures from the Ministry of Public Finance, in the last nine years the debt to GDP ratio has slightly varied, between 23.3% and 24.8%.
Regarding the country's indebtedness level, Abelardo Medina, senior economist at the Central American Institute of Fiscal Studies, said to Dca.gob.gt that "... It is interesting to note that, although Guatemala reports the lowest level of debt in the region and one of the lowest in the world, the evaluation given by risk rating agencies does not reach investment level. This is a product of political instability but, especially, it is due to the limited size of its fiscal revenues."
The Ministry of Finance issued Treasury bonds in local currency for an amount equivalent to $38 million, receiving total demand of $90 million.
From a statement issued by the Ministry of Finance:
September 25, 2018. The results of the sale of Treasury Bonds of the Republic of Guatemala represented by Account Annotation (Public Bidding); and of Representative Physical Certificates and Representative Certificates Electronically Registered in Custody of Banco de Guatemala (Auction and Public Bidding) held on September 25, 2018, with a total demand of Q.694.95 million and US $30 million, are the following:
The Ministry of Finance has issued Treasury bonds in local currency for an amount equivalent to $48 million, receiving total demand of $130 million.
From a statement issued by the Ministry of Finance:
August 21, 2018.The results of the sale of Treasury Bonds of the Republic of Guatemala represented by Account Annotation (Public Bidding); and of Representative Physical Certificates and Representative Certificates Electronically Registered in Custody of Banco deGuatemala (Auction and Public Bidding) held on August 21, 2018, with a total demand of Q.941.70 million and US $ 17.0 million, were the following:
Citing a long history of fiscal and monetary policy characterized by prudent management, the rating agency Moody's maintained the country's credit risk rating in Ba1.
From a statement issued by the Bank of Guatemala:
June 2018.Moody's Investors Service maintains the credit risk rating for Guatemala at Ba1 with a stable outlook.
Treasury debt securities were adjudicated in Quetzales for fifteen years and at a rate of 6.5%.
From a statement issued by the Ministry of Finance:
May 15, 2018.The Ministry of Public Finance held the 16th placement event forTreasury Bonds of the Republic of Guatemala in Fiscal Year 2018, the results of which are as follows:
After reducing the minimum amount for individual investors, the Guatemalan government has announced that between May and June it will begin with the issuance of $14 million.
For the current fiscal year, authorities have changed the minimum amount for an investor to acquire public debt bonds in the local market, reducing it from $3,000 to $1,300.
In the view of Fitch Ratings, despite the high level political noise of the past three years, economic growth has proved relatively resilient, supported partly by favorable external U.S. demand and strong worker remittances flows.
From a report by Fitch Ratings:
Fitch Ratings-New York-17 April 2018: Fitch Ratings has affirmed Guatemala's long-term, foreign-currency (LT FC) Issuer Default Rating (IDR) at 'BB' with a Stable Outlook.
In Guatemala, the Ministry of Finance has reduced the minimum amount for an investor to acquire public debt bonds in the local market, from $3,000 to $1,300.
The Morales administration intends to continue throughout 2018 with the issuance of Treasury bonds aimed at small investors, but from now on with a smaller amount, in order to broaden the scope for potential investors.
If the reforms to the Banking Law that are being discussed in the Congress are approved, cooperatives will have to start reporting information in their loan portfolios.
Legal initiative number 5157which is pending final approval, proposes, among other changes, including in the Credit Registration Information System (SIRC by its initials in Spanish) information from financial institutions that are not yet sending reports.
The Morales administration intends to continue with the issuance in 2018 of Treasury bonds aimed at small investors, with investment amounts ranging from between $3 thousand and $68 thousand.
The measure will give continuity to what was done in the previous year, when 35 small investors acquired debt bonds for $1.3 million at a rate of 6.25%.
Standard & Poor's has reduced Guatemala's debt rating from BB to BB-, arguing that political instability and weakness in government institutions are affecting economic growth prospects.
A series of events that began earlier this year, when President Jimmy Morales declared the Commissioner of the International Commission against Impunity in Guatemala,Iván Velasqueza persona non grata, and which continued with the "Corruption Pact" made by 107 deputies to approve a reform of the Penal Code to favor politicians implicated in illicit financing and to extend commutative penalties is the main reason behind the reduction in the debt rating.
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