Panama eyes return to foreign bond markets early next year

sábado 8 de octubre de 2016 12:32 GYT

By Paul Kilby and Davide Scigliuzzo

WASHINGTON, Oct 8 (IFR) - Panama plans to tap the foreign bond markets during the first semester of next year to cover a portion of its funding needs in 2017, the country's finance minister told IFR on Saturday.

The Central American country will raise the US$2.6bn it needs through international and local debt markets as well as with multilaterals, said Dulcidio de la Guardia, Panama's Economy and Finance Minister.

Conditions remain benign for emerging market sovereigns amid an ongoing bid for the asset class, and de la Guardia sees this continuing into 2017, even following a widely expected December rate hike in the US.

"It will continue to be a favorable market," he said. "We don't see any major issues in raising funds for next year."

The sovereign, which is rated Baa2/BBB/BBB, will likely stick to the medium or the long end of the curve, in line with its strategy of issuing paper of 10 years or more in the international markets and tapping the local market for shorter-dated debt.

"Our policy is to have an average maturity of 10 years to reduce refinancing risks," said de la Guardia, noting the country's curve has flattened of late.

Panama's 3.875% 2028s have recently been trading at a yield of 3%, well below their 3.979% pricing level in March. Its 6.7% 2036s are quoted at around 3.9-3.8%, according to Thomson Reuters data.

A plan to consolidate balances across thousands of government accounts at the Treasury level has also allowed the government to more easily access its cash, reducing the amount of bonds it needs to issue each year.   Continuación...