Latin Finance - July/August 2012 - 32

Panama

Market (MILA), a platform that links the Chilean, Colombian no reason to segment local and external markets. In the end, and Peruvian stockmarkets. they will pay higher rates by placing paper domestically.” However, MILA is still in its infancy and expecting an There is no disagreement by the analysts on the strength of influx of cash may not be likely in the short term. “MILA is a the country’s financial system, which remains dynamic. “The good idea, but a lot more work needs to be done. It is like the strength of the banking system is coming from the growth cornerstone of a new building. Everyone applauds when it is of domestic credit. Broad-based growth is increasing private placed, but the real works comes making the design a reality,” demand for credit,” says Segura. says Carlo Viacava, a lawyer at Fitch says credit growth Peru’s Estudio Olaechea. remains strong across all sectors Ups and downs and credit to the private sector Declining debt despite fiscal slippage (% GDP) Leading sectors as a proportion of GDP is among Public investment is a key factor the highest in the BBB- rated 70 4 in Panama as the government category. Broide says there are 3 65 strives to solidify the country’s “no signs of a credit-induced position as a hub for commerce price bubble.” However, Fitch’s 2 60 in the region. The primary report, says credit is growing Deficit Debt/GDP (RHS) 1 investment is infrastructure, faster than deposits, which is 55 including: the canal expansion; something that needs to be 0 monitored. 50 construction of a subway system -1 in Panama City; upgrades of The IMF, in its Article IV 45 major highways linking the report on Panama at the start of -2 capital to provincial cities; the second quarter, praised the 40 -3 continued expansion of the strength and resilience in the banking sector, with “its high 35 international airport in the -4 capital; and, a water/sanitation levels of liquidity.” 2005 2007 2009 2011 2013F project that will clean up the Investors are watching Global Source: Barclays Research Panama City bay to provide an Bank plans for what is hoped additional boost to tourism. will be Latin America’s first Public investment was 14% covered bond. The deal – a $200 One way street of GDP in 2011 if expenditures million five-year bond offering a Presidential approval rating on the canal expansion 5.00-5.25% yield – was initially and projects outsourced by shelved in April over pricing 80% the government to private concerns in a choppy market. 73 70 69 companies are taken into Deutsche Bank and HSBC were 70 70% account. set to manage the deal which is 63 67 60% The $5.2 billion canal still expected to come to market 49 expansion is the star of the this year. 53 48 50% sovereign’s projections of Panama’s Banco 47 46 stable growth in the coming Latinoamericano de Comercio 48 40% 46 decades. It should be open for Exterior (Bladex) in March 33 30% business in early 2015. The placed $400 million in paper, principal component of the nine times oversubscribed. The expansion is construction of 2017 bond was priced at 99.271 new locks that will form a third with a 3.750% coupon to yield lane in the canal, doubling the 3.912%. The deal was Bladex’s Source: Ditcher & Neira existing capacity. The work is first 144A/RegS transaction and being done by Grupo Unidos follows a MXP2bn ($157 million) por el Canal, a four-company issue of 2015 floating-rate notes consortium of Belgian, Italian, Panamanian and Spanish firms. in the Mexican local market. Bladex has a market value of $734 The project is financed with loans from five development million. agencies, Andean Corporation for Development ($300 million), Local authorities also anticipate a flurry of activity as European Investment Bank ($500 million), Japan Bank for free-trade agreements with the US and E.U. are implemented. International Cooperation ($800 million), Inter-American Panama may join the Pacific Alliance, which was formally inaugurated by Chile, Colombia, Mexico and Peru in early June. Development Bank ($400 million), and International Finance Corporation ($300 million). The remaining $2.9 billion comes Panama is currently an observer. The Martinelli administration from the tolls Panama charges for using the canal. has also considered a tie up with the Integrated Latin America
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32 LatinFinance

July/August 2012

Latin Finance - July/August 2012

Table of Contents for the Digital Edition of Latin Finance - July/August 2012