The University of Costa Rica (UCR) poll released on Tuesday revealing Fabricio Alvarado of the Restauración Nacional party in the lead with 17% of the support, has resulted in a drop in the price of Costa Rica bonds in dollars, which expire in 2023, according to Bloomberg.

Bond prices fall when they are less attractive to investors and those who are willing to buy them demand a higher yield because they consider them riskier.

La Nacion reports, “according to information released by the Bloomberg firm, and consultations with local analysts, there is a fear that a fiscal agreement will not be reached. There was some optimism that Alvarez (Antonio Alvarez, the candidate of the Partido Liberacion) would approve a comprehensive fiscal reform, and that is much less true now, Eurasia Group analyst Risa Grais-Targow said in a telephone call.”

Financial experts say Alvarado has been vaguer in his economic policy plans. “There needs to be a tax reform that addresses both the increasingly complicated revenues and expenses. The market is beginning to lose hope, and with that comes the pressure on bonds and currency,” said Andrew Stanners, a London-based money manager at Aberdeen Asset Management.

The Center for Research and Political Studies (CIEP) at the University of Costa Rica poll published Tuesday shows Alvarado leading, with populist Juan Diego Castro in second place and traditional party candidate Antonio Alvarez, the front-runner for most of the election cycle, slipping to third place.

It’s not just Bloomberg showing concern, Moody’s warned foreign investors on Tuesday about the political difficulties facing the next government of Costa Rica to achieve a fiscal agreement, due to the fragmentation that is expected in the Legislative Assembly and the ability of a single legislator to put a halt to any such process.

The Fall has started and could continue. The Ministry of Finance (Ministerio de Hacienda) said the decrease could affect the sale of bonds for up to US$1.5 billion dollars through the domestic market, which would be purchased by foreign investors.

Deputy national treasurer, Mauricio Arroyo hid behind regulations of the Sugeval (Superintendencia General de Valores) – General Superintendency of Securities – denying information about the placement of the bonds.

“The only thing that we can indicate is that the prices of domestic debt securities, by their nature, behave differently from the prices of the external debt bonds referred to in the note,” said Arroyo.

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