The Morales administration plans to increase indebtedness next year, but with the objective of generating a "shock" of growth in investment in public infrastructure.
In the 2018 budget, the Ministry of Finance plans to increase indebtedness and consequently the fiscal deficit, but with the purpose of increasing investment in road infrastructure, such as roads and bridges. In the 2018 draft budget, the debt ceiling could reach $11.9 billion.
The issuance of $500 million in the international market was placed with a 10-year term and an interest rate of 4.5%, the lowest of all issuances so far.
From a statement issued by the Ministry of Finance:
The Ministry of Public Finance today concluded a transaction for US $500 million of Eurobonds with an interest rate of 4.5% for 10 years, the lowest rate of all issuances.This action is consistent with the strategy of diversifying the financing of public spending, obtaining funds from the local bond market, multilateral banking and global markets.
"Structural weaknesses will continue to constrain Guatemala's economy and credit rating over the medium term"
From a press release by Fitch Ratings:
Fitch Ratings-New York-31 March 2017: Structural weaknesses will continue to constrain Guatemala's economy and credit rating over the medium term, says Fitch Ratings. Guatemala's growth rate will rise during 2017 as the effects of the 2015 political crisis gradually fade.
In terms of 5 to 15 years and rates of 5.5% and 7%, respectively, the government issued Q97 million worth of treasury bonds, equivalent to $12.6 million in the second auction of the year.
From a statement issued by the Ministry of Finance:
The results of the placement of Treasury Bonds made on 28 March 2017, are:
Before June the Ministry of Finance plans to issue between $500 million and $700 million in foreign debt securities on the international market.
The debt bond issue being prepared by the Ministry of Finance will have similar characteristics, to the issuance made in the international market in May 2016. In that issue $700 million was placed, at an interest rate of 4.6% and a term of 10 years.
At terms of 10 to 15 years and rates of 7.1% and 7.2%, respectively, the government issued treasury bonds worth Q471 million, equivalent to $61 million in the first auction of the year.
From a statement issued by the Ministry of Finance:
The Ministry of Finance held the first event issuing Treasury Bonds of the Republic of Guatemala for the Fiscal Year 2017, where, as in the first event in 2016, investors showed a level high interest, and on that occasion demand amounted to Q.2,884.46 million.
In the first auction only large investors may take part and from the second semester issues will be made for short terms and low amounts, aimed at small investors.
Using the online platform State debt securities can be bought by local investors, through brokers approved by the stock exchange.The regulations published in the official newspaper La Gaceta establish how the auctions will be conducted, and the settlement and interest payments.
The Ministry of Finance will be attempting to raise funds in the international and local market in order to improve the public debt profile.
The endorsement by the Congress will allow the Ministry of Finance to extend the term and reduce the cost of part of the public debt.The amount authorized amounts to $891 million and the Ministry of Finance plans to use the local and international markets to renegotiate.
Treasury debt securities were issued in Quetzales for an eight year term and with a rate of 6.35%.
From a statement issued by the Ministry of Finance:
The results of the placement of Treasury Bonds on November 22, 2016, are as follows: demand was received for Q.825.1 million, of which 100.0% corresponded to the maturity date of18/11/2024. This time Q.250.0 million was issued, ie 30.3% of demand, at a cut off price of 102.4757 and cut off rate of 6.3500%.The total issued to date amounts to Q14,493.46 million, leaving Q467.39 millionavailable for issue for the fiscal year 2016.
Standard & Poor's has changed the rating on the outlook from stable to negative, noting that "the reduction in public investment and rising poverty reflect the government's inability to achieve sustainable growth in the long term."
From a press release by Standard & Poor's:
OVERVIEW
Declining public investment in infrastructure and stagnant general government revenues will continue constraining Guatemala's GDP growth potential and exerting pressure on its debt service.
The countries facing the greatest risk of fiscal unsustainability within three years are El Salvador and Honduras, followed by Costa Rica and with less risk, Nicaragua and Panama.
From the "EconomicOutlook"section of the V Report on the State of the Region 2016:
Arguing that the country's credit profile has overcome the political crisis in 2015, the agency has raised from negative to stable the outlook for sovereign debt notes, which still stand at Ba1.
From the press release by the IMF:
New York, June 30, 2016 -- Moody's Investors Service has today changed the outlook on Guatemala's ratings to stable from negative and affirmed the Ba1 government bond and issuer ratings.
Highlights include a long history of macroeconomic stability even during political crises, and authorities' commitment to fulfilling public debt obligations.
From a statement issued by the Bank of Guatemala:
After its recent visit to the country, the rating agency Fitch Ratings confirmed on Friday April 29, 2016, the credit rating of Guatemala at BB with a stable outlook.
In the issue made in local currency the government sold bonds for $112.85 million maturing in 2031 at a rate of 7.3631%, and $10.4 million maturing in 2031 at a rate of 7.3492%.
From a statement issued by the Ministry of Public Works:
The Ministry of Finance has made two more issues as part of the Fiscal Year 2016. The results of the placement of March 15, 2016 are as follows:
Noting the political system's inability to agree on fiscal issues, Standard & Poor's has downgraded, from BB to BB-, the rating for the country's long-term debt, giving it a negative outlook.
Costa Rica Long-Term Ratings Lowered To 'BB-' On Continued Fiscal Deterioration; Outlook Is Negative
25 Feb 2016
Source: Standardandpoors.com
OVERVIEW
The combination of growing spending pressures and lack of tax reform has weakened Costa Rica's public finances and raised its vulnerability to
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