Panama To Sell as Much as $500 Million of Bonds

This story by Eric Sabo (November 13) (Panama May Sell as much as $500M of bonds) from Bloomberg reports on Panama and a proposed sale of $500 million of bonds for financing subway and other infrastructure projects. This potentially forecasts a positive future for investment in Panama when it comes to considering purchasing real estate in Panama. Panama is investing in its infrastructure and the expansion of the Panama Canal. This is all positive news because Panama is stable politically and, where there is political stability, there is growth and prosperity.

"Panama may sell as much as $500 million of bonds to finance construction of a subway and other infrastructure projects, Finance Minister Alberto Vallarino said. “We have enough money for the budget now,” Vallarino said in an interview today in Panama City. “But if the timing is right, we will take advantage of it.”

Panama is preparing to return to overseas credit markets after Standard & Poor’s boosted the outlook on its BB+ credit rating to positive on Nov. 9, putting the Central American country on the cusp of investment grade. The ratings company said faster economic growth, boosted by the $5.25 billion expansion of the Panama Canal, and tax increases are helping keep the budget deficit in check. Panama last sold bonds in international markets in March, when it issued $323 million in a reopening of 7.25 percent securities due in 2015. Latin American governments and companies are selling debt abroad as the global economic recovery fuels demand for the securities. Panama is rated Ba1 by Moody’s Investors Service and BB+ by Standard & Poor’s. Both ratings are one level below investment grade. Vallarino said that he expects Panama to win an investment grade rating next year after President Ricardo Martinelli, in power since July, pushes through additional tax reforms to offset budget deficits. Economic Outlook - The economy will probably expand 3 percent in 2009, before reaching as high as 5 percent growth in 2010, Vallarino said. Credit-default swaps, contracts investors use to protect against non-payment, show Panama trading as investment grade. The cost of protecting Panama’s debt against default for five years is 1.37 percentage points, according to data compiled by CMA Datavision. By comparison, it costs 1.41 points to protect securities issued by South Africa and 1.49 points to protect bonds sold by Greece, countries that S&P rates at least three levels above Panama. A basis point equals $1,000 on a swap protecting $10 million of debt against default. Credit-default swaps, conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. Panama filed a form with the U.S. Securities and Exchange Commission yesterday saying it may sell up to $2.5 billion of bonds and warrants overseas."

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Consider Panama for International Real Estate Investment

If you are seeking international investments and you can to invest for the long term, Panama is a country that is both a high risk/ high returns investment in the long term. Panama’s economy is accelerating and it, is a great place as far as holiday destinations go and it is currently considered a stable investment environment. It’s proximity to North America is also another benefit for the North American investor.

There are several things to consider when it comes to overseas property investment. An investor must consider several factors when deciding on their goals from property investment, the length of time they are willing to wait for returns from the investment, especially when they are considering international investment.

There are several different types of real estate investors. There is the person who is looking for a vacation property where they can spend their vacations and then perhaps rent out the house when they are not there. This type of property is purchased and mortgage payments are assisted by the rental income. The property to be bought must be suitable for the person that buys and also in a destination that they want to spend their vacation and there must also be a strong rental market in the location.

Another type of investors are the long and short term investors. Short term real estate investors are looking for properties that will increase in value quickly. The location must be ideal and there will be many buyers down the road in a couple of years.

Panama does not seem to have shared the same experience as the rest of the world during the current recession. The International Monetary Fund (IMF) has predicted that their economy will increase by 3% this year. This growth is a result of Panama’s service sector, tourism, the banking industry and the Panama Canal expansion project. Because of Panama’s position geographically as a “bridge” between North and South America and the Panama Canal which is the only waterway between two oceans, the country is strategically placed for trade. Many companies can visualize the benefit to setting up offices in Panama. By the time the Panama Canal project is completed in 2014, the Panamanian economy is expected to gain increased momentum.

For Americans, Panama has become a retirement destination in the same way that Spain once was for people from the U.K. It is predicted that Panama real estate property will grow to two to fives times in value in the next five to 15 years. Not bad news for those considering investing in Panama.