Already a Bloomberg.com user?
Sign in with the same account.
Costa Rica will seek to sell at least $500 million in bonds abroad this year to help sustain economic growth and improve the Central American nation’s infrastructure, Finance Minister Fernando Herrero said.
Costa Rica joined Trinidad & Tobago and Bolivia in announcing plans to sell benchmark dollar bonds amid near-record low borrowing costs in the world’s largest economies. Costa Rica’s bonds would probably be 10-year notes, Herrero said, without commenting on a target yield for the securities.
“This will allow us to take advantage of global market conditions with very low interest rates,” Herrero, 59, said in an interview yesterday in Montevideo, Uruguay, where he is attending the annual meetings of the Inter-American Development Bank. “Costa Rica is in a very good position.”
President Laura Chinchilla’s government is requesting congressional approval for the debt sale after winning initial support in the legislature this month for the first significant overhaul of the nation’s tax laws since 1995, Herrero said.
The yield on Costa Rica’s dollar bonds due in 2020 rose five basis points, or 0.05 percentage point, to 4.9 percent at of 12:38 p.m. New York time, according to data compiled by Bloomberg. Costa Rica’s colon was little changed at 505.95 per dollar after rising 0.1 percent last year.
The country has a BB+ rating from Standard & Poor’s, one level below investment grade, putting the $40 billion economy in the same category as Indonesia and Romania.
Costa Rica’s economy will grow 4 percent to 4.5 percent this year, Herrero said. The country will release its fourth quarter 2011 report on gross domestic product on March 30.
Changes to the country’s tax laws that could bring the government an additional $650 million in annual revenue passed a first-round Congressional vote and await a review by the Supreme Court before being sent back to Congress for final approval. Herrero said the overhaul could be approved within 30 days or may extend for months, depending on the high court’s decision.
Approval would help Chinchilla’s government reduce its deficit to 3.3 percent of gross domestic product from about 5 percent, Herrero said.
“That would be a manageable level,” said Herrero, who studied economics at the Universidad de Costa Rica and New York University.
As an alternative to the bond sale, the government also has the option of voluntarily swapping about $500 million in global bonds due in 2013 and 2014 for longer-term securities, Herrero said.
Bolivian Finance Minister Luis Arce said March 16 that the land-locked South American nation plans to sell as much as $500 million in bonds for the first time since the 1920s, targeting a yield of under 10 percent. The government would use the funds for mining and energy projects.
“This is the best moment for Bolivia to enter international financial markets,” Arce, 48, said in an interview in Montevideo. “We want to take advantage of capital flows in Latin America that are escaping from Europe and the U.S.”
Trinidad & Tobago is planning its first global bond sale since 2007 as the Caribbean nation’s economy is poised to expand for the first time in three years, Finance Minister Winston Dookeran said. The sale of as much as $500 million in notes should take place by the end of September, Dookeran said in a March 16 interview in Montevideo.
The natural gas-rich island nation, located off the northeastern coast of Venezuela, has an investment-grade “A” rating from Standard & Poor’s, putting it in the same category as South Korea and Spain. The nation’s economy will probably expand 1.7 percent this year, the International Monetary Fund said in a Feb. 10 statement.
The bond sales come as Latin American economies face slowing growth in the aftermath of the European debt crisis. The IDB said in a report yesterday that growth in the region will slow to 3.6 percent in 2012 from 5.4 percent in 2011. The IDB cited Latin America’s reliance on commodity exports and its dependence on European, primarily Spanish, banks as liabilities in the face of future crises.
To contact the reporters on this story: Eliana Raszewski in Montevideo at firstname.lastname@example.org; Bill Faries in Montevideo at email@example.com
To contact the editor responsible for this story: Joshua Goodman at firstname.lastname@example.org