National legislators approved in the first reading Eurobonds for $1.5 billion; however, Moody’s believes this will not be the definitive solution to the financial problem in Cosa Rica.
It is good that the government seeks other sources of financing, but they are not the total solution to the problem of public finances in Costa Rica, the issue will bring more debt and would not have any weight in the risk rating that the country currently has; the challenge will be the way in which the deficit and interest payments are managed for other credits,”
said Gabriel Torres, an analyst from Moody’s.
Torres, on the other hand, said that the positive side of issuing Eurobonds is that it will allow to lower the pressure on local interest rates, which would make access to credit cheaper. In addition, the exchange rate would tend to fall further, due to the new dollars that would enter the national economy.