Wednesday, 30 September 2020

Costa Rica on roadshow for crucial bond issue

Costa Rica boosted on the road ahead to US$1.5 billion bond issue

Latin American bond market participants said they thought Costa Rica’s proposed US$1.5 billion dollar cross-border issue would find strong demand as the country announced a roadshow amid friendly market conditions on Tuesday.

Global Capital reports Citi and HSBC will take B1/B+/B+ rated Costa Rica to meet bond investors from through Monday as it looks to raise US$1.5 billion of bonds in “one or more transactions” of “intermediate and/or long” maturities.

Rodrigo Cubero, president of the Banco Central de Costa Rica (Central Bank), interim finance minister Rodolfo Cordero, and public credit director Melvin Quirós, represented Costa Rica in Los Angeles on Wednesday, New York on Thursday, Boston on Friday and in London, today, Monday, November 11.

Cordero, is temporarily leading the finance ministry, filling in for Rodrigo Chaves, the World Bank’s director for Indonesia, who will assume the post on a permanent basis at the end of November, replacing former finance minister Rocío Aguilar who resigned in October.

- paying the bills -

According to MarketAxess, yields on Costa Rica’s March 2045 bonds slipped from around 7% to above 7.3% in the wake of Aguilar’s resignation, though have since recovered ground and were trading at just above 7.1%.

EM syndicate bankers away from the deal said that they thought that Costa Rica should have no trouble attracting a good reception.

“It goes into the EMBI and yields are relatively high,” said one EM syndicate banker. “With approvals to do US$1.5bn, which is quite a significant amount, there is going to be an important natural bid for the paper. “That said, the index doesn’t trump everything and this is one of the more nuanced stories out there.”

Beyond December 2018 and January 2019, all three major rating agencies downgraded Costa Rica and kept it on negative outlook on the back of persistently wide fiscal deficits and high financing needs.

The passing of the tax reform back in December 2018 was still viewed locally as a “monumental achievement”, wrote Oppenheimer analyst Thomas Jackson in late September after a trip to the country, and an “ambitious reform agenda” remains on the table.

- paying the bills -

Oppenheimer analyst Thomas Jackson, in late September after a trip to the country, says fiscal results showed a cumulative fiscal deficit for the year of 4.7% of GDP, though the cumulative primary deficit has improved for two consecutive months on a year-on-year basis — at 1.4% of GDP this year compared to 1.9% this time last year.

“The key concern remains the rising interest expense, which is up 33% year-on-year through September,” said Oppenheimer in an October update.

The Inter-American Development Bank (IDB) signed a US$350 million dollar 20-year loan to Costa Rica on October 24 to replace internal sources of funding and, according to the finance ministry, “generating lower pressure on local financing and domestic interest rates”.

Read the full Global Capital report.

"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

Fiscal uncertainty and seasonality influence an increase in the dollar exchange

(QCOSTARICA) The dollar exchange rate has maintained an upward trend for...

Ruta 27 tolls will increase starting Thursday

(QCOSTARICA) While the economic crisis felt by one and all due...


Driver arrested and to be prosecuted for driving at 151 km/h

(QCOSTARICA) While most of us are focused on the vehicular restrictions, what day we can and cannot drive, some are more focused on getting...

Chirripó Park once again welcomes tourists in search of fresh air and cleansing the mind

(QCOSTARICA) Starting in October, the Chirripó National Park will once again receive tourists who await landscapes of starry skies, silent mountain sunrises and fresh...

COVID-19 in Costa Rica: 1,233 new cases for Sep 26; hospitalizations down and R rate dropping

(QCOSTARICA) After a much needed rest on Sunday, I am back.  On Saturday, Priscilla Herrera, Health Manager, who has been filling in for Health...

Government’s scare tactic!?!!

The government tries to scare with a "campaign of fear" to press for agreement with IMF.

Moments of anguish and terror after a pickup truck caught on fire at Escazu tolls

(QCOSTARICA) It was almost like watching a movie. Full of suspense and terror when a pick up truck catches fire, then rolls backward towards...

Playa Hermosa becomes the first World Surf Reserve in Central America

(QCOSTARICA) After a close competition in which the best waves from all continents participated, Playa Hermosa de Garabito, Puntarenas, was designated as the most...

Let's Keep This Going!

To be updated with all the latest news and information about Costa Rica and Latin America.

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.