LatinFinance - July/August 2016 - 26
CARIBBEAN
DEBT
Regional sovereigns are increasingly looking at international bonds to raise
financing, but investors may prove hard to entice. By Rodrigo Amaral
Eyeing the market
F
or some Caribbean countries, a
window of opportunity may be opening in
the bond markets. The Dominican Republic, one of the region's largest economies,
tapped investors in January, issuing a $1
billion, 10-year bond and capitalizing on its
recent efforts to put its fiscal house in order.
The island nation reopened the bond in late
June, adding $500m at a tighter yield.
Jamaica also has piqued investor interest,
and Caribbean nations have watched as
countries in nearby Central America, such
as Guatemala, have sold international debt
in recent months.
Trinidad and Tobago could be the next
Caribbean country to test the markets. But
others face difficult economic challenges
with high debt levels that will make it hard
to entice investors.
Whether Caribbean economies will be
able to tap the markets depends on their
ability to convince investors they are taking
steps to get their finances in order. The Caribbean remains one of the most indebted
regions in the world, with an average debtto-GDP ratio of around 75%, according to
the IMF.
But it also is home to one of the fastest
growing economies in the Western Hemisphere - the Dominican Republic.
26 L ATINFINA NCE.COM - July/August 2016
A boost from the north
The economy in the Dominican Republic
grew more than 7% last year, making the
country a standout in a region that has
grappled with sluggishness. An increase in
tourism, as the local currency fell against
the dollar, helped the economy. The weaker
currency also lifted export revenues.
"The Dominican Republic has a fairly
diversified economy, with agricultural and
commodities exports also contributing
to growth," says Marla Dukharan, group
economist for Caribbean operations at the
Royal Bank of Canada (RBC).
More importantly from the perspective of bond buyers, it has made strides in
getting its accounts in order, which earned
it a ratings upgrade to B+ from Fitch in
December.
Investors have also cheered signs of continuity in economic policy after President
Danilo Medina was reelected in May. "The
recent elections in the Dominican Republic
indicate the growth outlook of 4% to 5% a
year should remain intact," Durkhalan says.
Not surprisingly, the Dominican Republic
has been the most active issuer of sovereign
bonds in the region. Proceeds from its January bond sale were used to bolster reserves
and improve the country's debt profile.
NICOLAS SCHLOTTHAUER, DWS
"EMERGING MARKET
INVESTORS LOOK
AT THE MEDIUM
TERM, THEY LIKE
STRUCTURAL
REFORMS, AND THE
DOMINICAN REPUBLIC
HAS BUILT SOME
POSITIVE MOMENTUM"
http://www.LATINFINANCE.COM
Table of Contents for the Digital Edition of LatinFinance - July/August 2016
Contents
LatinFinance - July/August 2016 - Cover1
LatinFinance - July/August 2016 - Cover2
LatinFinance - July/August 2016 - Contents
LatinFinance - July/August 2016 - 2
LatinFinance - July/August 2016 - 3
LatinFinance - July/August 2016 - 4
LatinFinance - July/August 2016 - 5
LatinFinance - July/August 2016 - 6
LatinFinance - July/August 2016 - 7
LatinFinance - July/August 2016 - 8
LatinFinance - July/August 2016 - 9
LatinFinance - July/August 2016 - 10
LatinFinance - July/August 2016 - 11
LatinFinance - July/August 2016 - 12
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LatinFinance - July/August 2016 - 18
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LatinFinance - July/August 2016 - 21
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LatinFinance - July/August 2016 - 48
LatinFinance - July/August 2016 - Cover3
LatinFinance - July/August 2016 - Cover4
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