Because of its strong and stable macroeconomic performance, Fitch confirmed the long-term foreign currency rating at 'BBB', with a stable outlook.
For the risk qualifier, the country's macroeconomic performance has driven a sustained increase in per capita income, and it also forecasts that GDP growth will recover to 5.8% in 2019 and 5.5% in 2020, above countries with similar ratings.
In the exchange of foreign currency debt that took place on February 6, the Ministry of Finance managed to negotiate $165 million of $428 million offered.
Grupo Prival reported that the debt that was swapped expired in 2019, 2020 and 2021, and now the bonds will expire in 2023 and 2026, which will give more looseness to the authorities to manage the country's public finances.
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:
Driven by the financial commitments of the Central Government and those originated by pensions, the country's public debt increased 3% at the end of 2018, reaching $18.975 million.
Finance Ministry statistics detail that between 2017 and 2018 the public debt that includes credits contracted by the Central Government, its financial and non-financial public companies, as well as the Central Reserve Bank, increased $602 million, from $18.373 million to $18.975 million.
At the end of last year, the Panamanian government's debt totaled $25.686 million, 9.9% more than the $23.373 million reported at the end of 2017.
Official data detail that in the last four years, which cover most of Juan Carlos Varela's administration, the balance owed increased 40%, from $18.231 million in 2014 to $25.687 million in 2018.
The financial deficit of the Central Government at the end of last year was equivalent to 6% of the Gross Domestic Product, 1.2% less than originally expected.
According to the authorities, the fiscal deficit as a proportion of GDP was lower than expected because of the measures taken in terms of collection, expenditure containment and efficiency, and the approval of the Law to Strengthen Public Finances. See "Tax Reform: First Step" and "Ambitious Plan for External Debt"
Aiming to settle outstanding debts and finance part of the Electric Expansion Plan, in Panama Etesa will issue rotating bonds in the local market for up to $300 million, with a term of no more than ten years.
The issue has already been approved by the Board of Directors of Empresa de Transmisión Eléctrica S.A. (Etesa), by the National Economic Council and by the Cabinet Council, so that the bonds are placed in public auction, privately, by order book or any other method.
The governments of Costa Rica and Nicaragua will face greater challenges in obtaining financing in external markets, because of the lowering of their risk ratings by international agencies.
Arguing that Costa Rica reflects consistently large fiscal deficits, short-term financing needs because of a strong repayment schedule and budget financing constraints, Fitch Ratings reported on January 15 that the country's long-term foreign currency issuer default rating was downgraded from BB to B+.
"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.
The Panamanian government assures that if the law that criminalizes tax evasion is not approved, the country will be exposed to enter the FATF grey list again in 2019.
From the Ministry of Economy and Finance press release:
The Ministry of Economy and Finance considers that it is necessary for Panama that the National Assembly approve the law that increases tax evasion to a criminal offence and as a precedent for money laundering.
Standard & Poors raised the rating from CCC+/C to B-/B, with a stable outlook, arguing that in the next three years the fiscal deficit will be moderate, and its debt levels will remain unchanged.
From the Standard & Poors report:
RATINGS
Foreign Currency: B-/Stable/B
Local Currency: B-/Stable/B
For further details see Ratings List.
Standard and Poor's announced that it downgraded Costa Rican bonds from BB- to B+, adding to Moody's downgrade in early December.
Standard and Poor's (S&P) reported that the decision was made because the country's fiscal situation could generate a continuous increase in the general government's net debt burden.
In Panama, the executive authorized a credit line of up to $50 million for the state-owned Etesa to finance investments contemplated in the electric expansion plan.
The approval for the Empresa de Transmisión Eléctrica, S.A. (Etesa) to subscribe a line of credit with Banco General, will allow the state company to partially financemaintenance works to the electrical distribution network in the country.
Because of fiscal uncertainty, in the first months of 2018, banks operating in the country reduced by 16% the amount invested in public debt securities in the local market.
Against the backdrop of doubts about the future of public finances in Costa Rica, it was reported that from January to September, 14 local public and private banks invested $3.190 million in government bonds.
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