Category: Panama

This weekend Panamanians are likely to vote “yes” in a national referendum on the proposed $5.25 billion plan to expand the country’s Canal to accommodate so-called “post-Panamax” vessels. A research note from investment bank Morgan Stanley expects Panama’s positive debt outlook to be bolstered by a “yes” vote and that it could “settle in at sub 100 bp levels for five-year CDS”. The Bank commented that Sunday’s vote is broadly seen as a referendum on the Torrijos administration, which is currently enjoying an approval rating of over 65%. Morgan Stanley added in the note that it expected the country to grow by over 7% this year and keep inflation contained at around 2%.

Panama’s dollarized economy recorded inflation of 1.6% in September, with housing and utilities prices rising the fastest at 5%. Cumulative inflation for the nine months through September rose to 1.2%. According to IMF forecasts, Panama will post inflation this year of 2.8% and next year of 2.3%, continuing its reputation as the nation with the lowest inflation in the region. The country’s annual inflation over the past 30 years has averaged less than 3.2%, according to the US State Department.

A recent poll carried out by CID-Gallup in Panama shows that an overwhelming majority of people would approve the proposed plan to expand the country’s Canal in a referendum set to take place on 22 October. According to 77% of those polled, the expansion project will benefit the country and create more jobs. In July, Panama’s upper house, the Legislative Assembly, approved the project to expand the country’s historic canal and vital waterway, the first expansion since the Panama Canal was opened in 1914. The $5.25 billion project, which proposes expanding the Canal to accommodate ships with greater capacity – so-called “post-Panamax” vessels – is not without its critics, who say the country will be overly indebted for work which is not essential and too risky.

Multinational Proctor & Gamble has filed a million-dollar lawsuit in New York against Panamanian company Xetal for trademark infringement. The company, the largest producer of consumer goods in the US, claims Xetal has pirated some of its products ranging from medicines to toys and clothing. Xetal is owned by businessman Fred Harrick.

The Central American securities exchanges of Panama, Costa Rica and El Salvador have signed an agreement to develop a joint electronic exchange. The new exchange, which has yet to be named, is due to open in about 12 months and will quote shares and corporate debt securities. The three exchanges, which together accounted for $677 million share turnover and $42.8 billion of debt securities transactions last year, are considered the most developed in the region outside Mexico. The aim of the exchanges is to join forces and form a regional market along the lines of the NOREX, Scandinavian market.

Panama is to invest $300 million to build a new thermal energy plant with a 250MW capacity, representing 20% of the country’s daily energy needs. The government set up Empresa de Generación Eléctrica SA (Egesa), which will run the plant, to participate in the upcoming energy tender to supply 200MW daily, from 2007 until 2020, being offered by power distributor Unión Fenosa. Carlos Carache has been appointed managing director of Egesa.

Italian electricity company Enel is to increase its holdings in Central America through a stake in Panamanian hydroelectric plant Fortuna. Enel has agreed to pay $150 million for a 24.55% share in Fortuna via the ownership of its holding company Hydro Quebec International Latin America. Fortuna is one of Panama’s leading electricity companies, generating around 30% of the country’s power. According to Enel “the Panamanian market is part of the larger Central American power market, which is experiencing extensive development characterised by economic and regulatory integration”. Enel also owns hydroelectric plants in Costa Rica, Guatemala and Chile.

The Republic of Panama has reopened its 2015 global bond issue and sold a further $313 million at a yield of 6.813%. The bonds carry a coupon of 7.25% and were priced at 175 basis points over US Treasuries. The issue was three times oversubscribed according to Barclays, which arranged the issue. Panama is to use the money to pay off the one-year $320-million bank loan that financed its buyback of Brady bonds from the market on July 17.

Central American air carrier TACA International Airline has closed a $40 million syndicated loan. The lending group was led by Banistmo Securities, owned by Panama’s Grupo Banistmo, and included the Central American Bank for Integration (Cabei), Banco de América Central and Banco Cuscatlán. El Salvador-based TACA has routes to 19 cities in Central and North America.