Costa Rica News – The Costa Rican government aims to announce bank mandates for an up to US$1bn international bond issue by week’s end, Juan Carlos Quiros Solano, the country’s head of public credit, told IFR.
“We are in the (selection) process,” he said. “We can’t say which banks (we have been chosen) but will soon announce them,” he said.
The idea is to be ready to take advantage of any windows of opportunity that may arise in coming months, he said.
The government has been authorized to raise between US$500m and US$1bn but has yet to decide on terms. Requests for proposals were sent out last month and banks have been awaiting an official response.
The Central American nation was last in the market in April 2014, when it priced a US$1bn bond due 2044 at par to yield 7%, or 339.5bp over US Treasuries.
Bank of America Merrill Lynch and Deutsche Bank acted as leads on that occasion.
At the time, the borrower still clung to one investment-grade rating – a Baa3 from Moody’s – with both S&P and Fitch already rating it BB and BB+, respectively.
Since then, however, Moody’s has demoted Costa Rica to Ba1, citing the failure to pass reforms that would lower deficits and ease its debt burden.
In January, Fitch revised its outlook on the BB+ rating to negative, pointing to slower economic growth and worsening debt dynamics.
The sovereign’s outstanding dollar bonds include a 9.995% 2020, 4.25% 2023, 4.375% 2025, 5.625% 2043 and a 7% 2044, which have been trading at mid-market yields of around 4.30%, 5.30%, 5.50%, 6.95% and 7.15%, respectively.
Several sovereigns, including Mexico, the Dominican Republic and Colombia, have tapped 30-year money this year, taking advantage of investors’ hunt for yield further up the curve. (Reporting by Paul Kilby; Editing by Marc Carnegie)
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