In Costa Rica, the active participation of the government issuing debt in the local market and the uncertainty over fiscal reform are some of the reasons behind the sharp slowdown in growth of credit to the private sector.
Although awards of loans to the private sector are still growing, they is doing so at a slower pace.According to official figures between January and June of this year, the inter-annual growth rate of the total credit portfolio went from 9.25% to 3.08%, which is equivalent to a drop of six percentage points.
The entity is preparing, for the March 18, to place corporate debt at a 2 year term and a net rate of 5.25%, via auction on the National Stock Exchange.
From a statement issued by FCCA Investment Banking:
On Wednesday March 18 Banco Lafise Costa Rica a member of the prestigious Lafise Group with operations in Central America and the Caribbean, will auction on the National Stock Exchange 10-year bonds for $10 million, at a 5.25% rate, quarterly risk rating (SCR AA-) and (PCR AA).
The escalation and volatility of the dollar in recent days raised the spread over 3%.
The volatility that has been seen in the exchange rate in Costa Rica in recent days has increased the spread between buying and selling dollars at the counters of financial institutions.
Despite the restriction by the central banking system which has caused a general credit contraction, consumer loans have grown by 22%.
According to data from the Superintendent of Financial Institutions (Sugef), these activities are maintaining an upward trend, despite a slowdown in the national economy. "The growth in both sectors is important because they are together as a whole, 40% of the total credit granted by banks", reported Nacion.com.
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%. "
Entrepreneurs in the finance sector and academics are preparing a proposal to regulate by law invoice discounting, an activity which keeps on growing.
The wording of this proposal has gained importance in recent days as the Legal Affairs Committee of the Legislature began a study of a factoring project dating from 2002.
Getting cash by discounting accounts receivable is a form of credit which has increased by 160% in the past two years.
In April 2011 the 18 companies grouped under the Costa Rican Chamber of Factoring Companies managed a portfolio of $177 million, which is double the amount recorded in 2009. In June 2012, the business of factoring in Costa Rica amounted to about $220 million.
Interest rates fixed for 20 years being offered by banks are increasing the demand for mortgages.
Four banks are currently promoting mortgage loans with fixed interest rates.
Credit for housing rose by almost 6% from February 2010 to February 2011, an increase which could accelerate at the end of the year because of these programs.
The Mer-link system will guarantee the necessary participation and compliance in public bidding.
The new method will come into operation on January 24 with Banco Nacional , BCT, Lafise, Cathay, Promérica and Improsa as well as the National Insurance Institute.
The banking institution will shift its focus from corporate clientele to retail banking.
Gilberto Serrano, Lafise manager, explained that in 2010 the bank will grant more loans for home and auto buying, as well as consumption. They plan to open more branches and hire experienced staff in this area.
Bank Lafise offers a line of credit of up to $178,570 (¢100 million) per business.
Elfinancierocr.com publishes: "The line of credit is directed to PYMEs with total assets less than $2.5 million and with a maximum of 100 employees. Furthermore, it is targeted to financing the industrial, agriculture, and commerce and services sectors."
The Overseas Private Investment Corporation announced a $45 million loan to Banco Lafise Costa Rica, and a $60 million loan to Banco BAC San Jose.
The first project involves a total of $45 million in loans to Banco Lafise Costa Rica, a member of the regional financial institution Lafise Group, to enable it to expand its portfolio of low- and middle-income residential mortgages.
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