April 9, 2016 / 4:05 PM / 2 years ago

Panama eyes liability management ahead of US$3.2bn in maturities

NASSAU, April 9 (IFR) - Panama is starting to explore liability management options ahead of US$3.2bn of debt maturities falling due over the next six years, the country’s head of public credit told IFR on Saturday.

“We have been looking at liability management operations for various important maturities,” Katyuska Correa de Jimenez, Panama’s director of public financing, told IFR on the sidelines of the IDB meetings in the Bahamas.

“We are going to be more active in liability management than fresh money for financing the deficit.”

Over the next few years, the country faces maturities including two local dollar-denominated bonds - US$993m of 5% 2018s and US$400m of 3% 2019s - as well as two international bonds - a US$1.5bn 5.20% 2020 and a US$344m-equivalent Samurai due in 2021.

The Central American nation has essentially covered its US$2.8bn of financing needs for 2016 after tapping the market in early March with a US$1bn 3.975% 2028 priced to yield 3.979%.

The government also plans to reopen its local 2019s on a regular basis for up to US$500m, while also taking out loans with multilaterals for between US$800m-US$900m.

This comes in the wake of the release of documents from Panama-based law firm Mossack Fonseca naming a number of world leaders and how they used shelters to avoid tax payments.

The so-called Panama Papers scandal has already led to the resignation of Iceland’s Prime Minister - one of the people named in the leak.

Correa underscored that the scandal has had no impact on Panama’s capital flows and that the country’s bond spreads have barely moved as a result.

“If you look at liquidity in the banking sector a week ago compared with now, it is the same,” she said “It is important to signal economically, we haven’t seen an impact from the release of these documents.”

Panama’s 2028s are now just 1.5bp wide to where they were trading on April 1 - before the scandal erupted - and were quoted on Friday at 210bp over US Treasuries, according to Thomson Reuters data. (Reporting by Paul Kilby; Editing by Davide Scigliuzzo)

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