In Costa Rica, Infinito Versol S.A. is planning to issue $42 million in debt bonds in the local market in order to finance construction of a residential development of 1,600 homes.
The issue was authorized by the General Superintendency of Securities in November 2016, and the placement in the local market is scheduled to take place before April this year.
Through means of a public works trust the state insurer in Costa Rica will raise money in the local market to build two mega fire stations in San Jose.
The Superintendency of Securities has authorized the National Insurance Institute (INS) to create a securitization trust based on future flows to raise the necessary funds to build two mega fire stations for the fire department.
The amendments made to the law on the trust to finance the expansion of the road from San Ramon to San Jose, limit sthe interest of potential trustees.
The Ministry of Public Works and Transport argues that the changes made to the original text raise questions for potential banks interested in setting up the trust, particularly because it does not include, among other things, the information necessary to determine the financial feasibility of the project. "...The practical effect of this gap in the law is that there is not the desired and necessary security required in the case that there is a need to go to the market to raise funds to finance the work. "
The bank BAC San José de Costa Rica has issued $210 million at a 7-year term securitizing the flow of deposits received from abroad in corporate accounts in the form of remittances or payments for exports or imports.
Although the bank did not specify the interest rate for the issue, Gerardo Corrales, general manager of the company, told Elfinancierocr.com that "... it is a fixed return."
Amendments to the Regulation on public offers of securities and new regulations will encourage increased use of securitizations and trusts to finance public works.
From the preamble to the Agreement by the National Council of Supervision of the Financial System (CONASSIF):
Both the public administration and the private sector have expressed interest in using alternative sources of financing for infrastructure projects.
Modifications to the Regulation on Infrastructure Financing and Securitization now allows for the creation of investment vehicles to finance public works projects.
These investment vehicles can be used for two purposes: to develop the work or to securitize its use or exploitation. With the amendment to the regulations, sustainable infrastructure works can be developed self sufficiently without government intervention.
The Minister of Public Works and Transport is asking for an amendment to the existing legislation to allow a common trust to be structured to finance all road infrastructure works.
The minister of transport and public works intends for the bill being studied in the assembly, and which would fund the road from San Ramon to San Jose through the figure of trust, to be extended to all types of road works and not only that road, so that a single financing option would be used for the construction of all roads in the future.
A proposal by the General Superintendence of Securities would make conditions for securitization trusts more flexible in order to fund private and public infrastructure.
In order to make greater use of the model of funding works using public and private investment through securitization of assets with future cash flows, the General Superintendence of Securities (Sugeval) is preparing a reform to the regulation of Public Offering of Securities, which regulates how investment vehicles that are registered in the Stock Exchange should be structured .
While essential infrastructure projects lack funding, the capital accumulated in pension funds only serves as a source of funding for state coffers.
In a country where the need for funds for projects that promote economic development is increasing, the resources managed by pension operators have to be invested in obsolete investment schemes, ensuring only low returns for contributors.
The Chairman of the Instituto Nacional de Seguros de Costa Rica says there is $13 billion available in domestic financial institutions that could be profitably invested in road infrastructure.
Prensalibre.cr reports that at a hearing of the Committee on Economic Affairs of the Legislative Assembly, the president of the INS, Guillermo Constenla explained to deputies "his opinion on the possibility of financing of the route between San Jose and San Ramon. "
93% of the $58 million raised by the securitization of future revenues of the International Airport of El Salvador were provided by Pension Funds.
Editorial
The administrators of the pension funds are obliged to invest mainly in government bonds, and this significantly affects the low returns earned by contributors in those funds.
The case of the securitization by the Autonomous Executive Port Commission (CEPA) to obtain funds to finance the modernization of El Salvador International Airport, is a good example of how we can better invest capital from pension funds, while obtaining better financing for public works, and so that the financial profits stay within the country.
In November 2010 announcements were made for works worth $760 million to be financed through securitizations which never materialized.
An article in Elfinancierocr.com reports that "In October 2010 a change in the regulation of public offering of securities came into force regulating investment instruments originating from securitization and trusts for public works developments."
CIPLAFIT 2012 will be held in Costa Rica from 18th to 20th April, featuring 12 keynote speakers of international standing exposing to more than 350 professionals.
This event represents an opportunity for all professionals involved directly or indirectly with trusts and securities. CIPLAD International is planning an event in this important sector, which will include 12 professionals of international standing from Mexico, Guatemala, Costa Rica, Colombia, Bolivia and Argentina sharing knowledge with over 350 professionals of various nationalities regarding the latest trends and news in this important sector .
Credi Q and Grupo Improsa are planning a second round of bond issues backed by future loan payments for vehicles purchases.
In June, the companies placed two series of bonds with collateral supported by future payments from its vehicle purchase loan portfolio. The securities were acquired for a total of $3.3 million.
Ronald Vargas, Sales Manager of the investment banking Group Improsa said to elfinancierocr.com that they plan to put together more such instruments with Credi Q and possibly with other companies selling and financing new vehicles.
Costa Rica's state-owned bank "Banco Nacional" put in place a trust to build the critical care area of the Children's Hospital.
Authorities are working on the technical specifications of the new complex, known as "Torre de la Esperanza", and expect to have them ready by June. After this, they will invite companies to bid on designing the blueprints of the facility.