Low interest rates in the international market have favored Costa Rican sovereign debt bonds which are yielding better dividends.
Higher rates paid out by Costa Rican bonds with their associated risk level, coupled with an international context of low interest rates, has led to increased demand for foreign debt bonds, which "... have appreciated between 14% and 30%" so far this year.
The Real Estate Development Fund Monte del Barco has signed a contract with Rosewood Hotels & Resorts chain, to develop a 130 room luxury hotel in the Gulf of Papagayo in Guanacaste.
A statement issued by Aldesa, manager of the Real Estate Development Fund Monte del Barco, states that "... Hotel Monte del Barco will proceed immediately with the architectural design for the hotel with the firm HKS based in Dallas, as well as the arrangements for raising the capital needed for construction, which is estimated at approximately $100 million. "
Although they have recovered the upward trend seen before Moody's withdrew the investment grade rating, they still have not returned to the pre-announcement levels.
Prices of Costa Rican debt securities increased between 1.2% and 4.5% on the international market, with those with a maturity of 2043 registering the highest increase, "... which ended up being traded at a price of 83% on 17 September, registering 87.5% on 27 October.
The risk premium demanded by investors for the Costa Rican international bond due in 2023 rose from 2.10% to 2.56% between June and September 2014.
Investors could be moving towards a degradation of the sovereign rating of the country, a possibility already suggested by Fitch rating agency.
An article on Nacion.com reports that "... Since last June, the extra rate of return that foreign savers demand for Costa Rican Government's securities in respect to United States Treasuries (so-called risk premium or margin) has gone. "
"The exchange rate bands are completely irrelevant for making economic decisions and the formation of expectations among economic agents."
From 'Pulso Bursátil', a blog by Aldesa:
Costa Rica: Facing a Managed Float?
The volatility of the exchange rate (measured by the standard deviation of 15 days MONEX) is at the lowest level of the year and similar to the levels recorded in December 2013, when the exchange rate was quoted at the "floor" exchange rate bands.
The fall in interest rates has caused an increase in bond prices, encouraging holders to make profits.
During the first quarter of 2013, the stock market in Costa Rica grew by 18%, with the secondary debt market being the best performing, going from $1.34 billion in the first three months of 2012 to $3.459 billion in the same period of 2013.
Data from the National Stock Exchange (BNV), reveals that for the entire secondary market (including bonds and other instruments) there was also a rise of 39% (data dollarized).
A new placement of Eurobonds has caused bond prices to drop, both in the domestic and the international market.
Nacion.com reports that "the most notorious drop is in the external trading bond which matures in 2023, which was issued last year and whose price in January reached 104%, and which on April 2 traded at 100.86%. "
Douglas Montero, Manager of Floor Trading and International Trading at Mercado de Valores said that "Bond prices are down as a sign that investors are making space for the new issue."
Investment in short-term debt in colones has better performance than the long term.
For investment instruments in colones, such as government bonds, the short and medium term show better yields, while long have tended to decline.
"In dollars, the behavior is different. Experts consulted by El
Financiero reported that the momentum is pointing to a decline in interest in the coming months, therefore in this currency it may be wise to bet on a longer period and thus take advantage of higher levels of interest.
Aldesa introduced an investment fund made up of $100 shares to finance the Ad Astra Rocket Company, which is developing a plasma engine for space travel.
A press release by Aldesa states that the fund, entitled “the Aurora Fund”, will be administered by INS SAFI investment and will invest in shares of the Ad AstraRocket Company, which was founded and chaired by astronaut Franklin Chang Diaz.
Greater knowledge of these financial tools is driving their use in the country.
Equity and Guarantee Trust funds are the most popular of these types of instruments in Costa Rica, where more and more companies and individuals are choosing to manage their properties using this alternative.
Between 2000 and 2011 property management trusts increased from 67 to 6930, reflecting increased knowledge about the characteristics and advantages of this instrument for managing property.
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.
In February, inter-annual economic growth reached 2.9%, while the International Monetary Fund projected 4.3% for 2011.
Someone is wrong: either the IMF or reality. But the latter is the perception also shared by most economic agents in the country. If there isn't substantial change, IMF projections will miss by a large margin.
High production costs, which reach as much as 40% according to Mónica Araya, president of the Chamber of Exporters, are suffocating companies, and the worst culprit is the appreciation of the local currency versus the dollar.
The real estate developer of tourism projects expects to raise $ 10 million in order to fund construction works in 2011.
Lanzo Luconi, director of Aldesa Investment Fund, the concessionary of the project, said that they still have not defined how many acres will go on sale, as well as the size of the lots.
"Monte del Barco is one of the oldest companies in this tourist area (Golfo de Papagayo), administered by the State since the early 1990 with a view to making this area of Guanacaste a cradle of tourism and investment," added Ana Cristina Camacho in her article in Elfinancierocr.com.
The increase in the month of October was 0.47%, which represents the largest monthly increase since May, the month which saw a 0.55%. rise.
According to a report released by the INEC, the five goods and services with the greatest contribution to the increase, two are regulated (water and transportation service) and two are agricultural products, which are closely related to climate conditions that affect supply (tomato and potato), and the fifth is coffee. Negotiated contracts for coffee in international markets have experienced a rise of more than 40% this year. Concerns about bad weather and outbreaks in major suppliers such as Vietnam and Colombia have influenced this increase.