The "Trump effect", added to the upward pressure caused by inflation in US interest rates, explains the upward trend in the performance of Costa Rican bonds and the fall in their price.
A resumption of the upward trend seen in debt securities traded on the international market could make it difficult for the government access external financing, in a context in which most bonds from emerging market countries are experiencing the same situation.If the government decides to resort to financing in the international market, the cost of doing so would be higher if bond yields continue to rise.
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 rise of interest rates in US is one of the reasons behind the lower demand for Costa Rican debt bonds, which are perceived as riskier because they are not investment grade.
When US interest rates began to fall, international investors sought riskier options and performances, such as external debt bonds rated below investment grade in countries such as Costa Rica.
The difference in the yield on 30-year bonds relative to US Treasuries of the same period went from 3.33% in April to 3.85% up to December 4th.
The decision by the Executive to increase public spending in 2015 and continue to increase the fiscal deficit in an international environment which is a less favorable than it was in previous years is one of the reasons that explains the higher risk now being perceived by international investors regarding Costa Rican foreign debt bonds.
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 new Central Bank methodology which establishes preferential rates for large public sector deposits could influence other rates in the financial system.
The new methodology implemented by the Central Bank of Costa Rica aims to set benchmarks for public banks to provide preferential rates to state entities, but which "... at the same time, do not have excessive returns so that the market does not feel pressure to up rates. "
In Nicaragua peanuts, sugar cane and tobacco have been held up as examples of how productivity can be increased in agriculture.
In 2006 one hectare of sugar cane in Nicaragua produced 66 tons, and five years later, in 2011, it produced 89 tons. Improvements in the use of technology and the search for the most suitable varieties of canes are part of the strategies that have enabled the industry to achieve outstanding levels of performance when compared with other countries in the region.
In two days yields on external debt maturing in 2023 rose by 0.23% after the announcement of the departure of Intel and the Bank of America.
In addition to increasing the perception of risk in investments in Costa Rica, Bloomberg.com reports that Citi cut its growth forecast for the Costa Rican economy in 2014, from 3.5% to 3.1% and from 4% to 2.2% for 2015.
A 42% increase in the production of pineapples in the last four years is due to higher yields, not by an increase in planted areas.
The strong increase in the production of the product in the period 2009-2013 can be attributed to an improvement in yields on already cultivated land and not to an increase in the amount of areas planted, explain industry representatives. In the same period exports increased by 44%.
The interest rate that the Government of El Salvado pays for money from the Pension Funds is not more than 1.3%, while international investors are paid more than 7%.
Ricardo Soriano, Chairman of the Committee for the Defense of Workers Pension Fund of El Salvador (Comtradefop) reported that since the year 2006, the State has forced the Pension Fund Administrators (AFP) to invest the money belonging to Salvadoran workers in Pension Certificates, initially 30% and the 45% in 2012, money which has suffered a loss greater than $938 million each year.
Up until June this year, statutory and complementary pensions amounted to $3.71 billion, surpassing basic pension regimes which had $3.61 billion.
The profits that this system has accrued are due to the fact that the investments of the administered fund had returns of around 20% between June 2012 and December 2013. In this way this system became the largest in terms of the amount of resources.
Technology gives parents the chance to have a much more active role in parenting, while fulfilling their obligations as executives or entrepreneurs.
By Fernando Ramirez - VP Sales, CA Technologies Central America and Caribbean
If we analyze the labor scene 50 years ago, we find a very different reality today. At that time, work was more structured than it is today and, barring a few occasions, it was unthinkable to have flexible working hours.
Carteras de inversión similares hacen que las diferencias de los rendimientos de los distintos planes de pensión complementaria sean mínimas.
Los rendimientos de los planes de pensión complementaria en Costa Rica muestran diferencias mínimas y están convergiendo en un rango de 4,29% y 5,25%.
“A enero pasado, la diferencia entre la operadora que pagó el rendimiento real anual más bajo (Vida Plena) y la que tuvo el más alto (CCSS OPC), fue menor a un punto porcentual”, reportó Nacion.com.
Fitch Ratings discussed the 2011 outlook for the transportation and energy sectors in Latin America.
Fitch expects that during 2011 infrastructure assets in Latin America will continue to be resistant to the global financial crisis. Moreover, the economic outlook in developed countries has magnified the importance of supportive regulations to keep adequate financial profiles in transportation projects.
In a scenario of rising interest rates, the strategy to follow by investors should be of more activity.
Aldesa´s analysts explained in their blog, Pulse Securities, that when interest rates are falling, the investment advice is to invest soon and long-term, in order to ensure presumed higher performances than those available in the future and during the period of low interest rates.
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