Panama bonds fall on fears of losing investment grade

1,352Views 0Comments Posted 30/11/2023


Panama's dollar bonds maturing in 2036 fell on Tuesday from 8 cents to 95.1 cents on the dollar, according to the price published by the financial portal Bloomberg.

 These are the first effects of the departure from Panama of Minera Panamá, a subsidiary of First Quantum Ltd, whose operation represents more than 1% of world copper production. Still, for Panama, it meant an income of 4% of gross domestic product.

“Panama's dependence on international capital markets could be a self-reinforcing loop and could raise existential doubts about Panama's financing model in the future,” Bloomberg reports in a note published on Wednesday by Barclays.

According to Bloomberg, the firm recommended its clients sell sovereign bonds maturing in 2028 and 2030.“The expectations are that the country will have problems financing the external debt due to the lack of income,” considers economist Rolando Gordon. The professor at the University of Panama explained that given the uncertainty that the bonds may continue to fall, they prefer to sell them, even if they lose a percentage compared to the initial price, due to the fear that Panama could lose the investment grade.