News

Panama’s Ministry of Economy and Finance tested global capital markets recently, placing two bonds totaling more than $1 billion.

The first offering, the new Global 2047 bond, with a 30-year-maturity and a 4.5 percent coupon, attracted more than $4 billion in interest—four times more than the ministry accepted, according to a statement from the ministry. Investors from Asia and the Middle East purchased “important amounts” and will help diversify the government’s external bond portfolio.

More than anything, bond offerings allow international investors to analyze and evaluate the stability of the issuer.

“The offers received by investors demonstrate the degree of confidence of the capital markets for Panamanian bonds and the strength they perceive in the economy,” said Dulcidio De La Guardia, the minister of Economy and Finance, in the statement.

The issue closed “at a spread of 150 basis points above the US Treasury bond of the same term,” the Ministry notes. The proceeds will be used to “partially finance the needs of the General State Budget for fiscal 2017,”

The second deal was “a liability management transaction that aimed to reduce the balance of the Global Bonds 2020,” a $1.5 billion placement coming due in 2020, the ministry said. The new bond allowed the repurchase of $345.5 million of the Global Bond 2020.

In total, the new placements will save the government an estimated $7.2 million over the next three years.

“The operation will allow the next government to focus its efforts on prudent management of public debt by reducing the pressure of the capital market to refinance short-term maturities,” Minister De La Guardia said.

Read the full release from the Ministry here.