Investors consider Country’s Debt to be Secure
Panama seems to be unaffected by the economic uncertainty in Europe. The uncertainty caused in the markets by the vote of the United Kingdom to leave the European Union has encouraged investors to seek refuge in government bonds. A Government Bond is known as a debt security issued by a government to support government spending.
In the last days United States bonds recorded historically low yields due to the increase in demand, and Panama was also favored by this. The global bond yields fell to historic lows, this means that investors consider Panamanian debt to be safe and will allow the country to finance its borrowing at a lower cost.
Financier Alvaro Naranjo said that the decision by the United Kingdom to abandon the European Union is creating uncertainty in the markets and investors seek safe securities such as sovereign bonds, which is known as “fly to quality”.
Katyuska Correa, Director of Public Financing of the Ministry of Economy and Finance, said that investor confidence will allow Panama to issue new debt at lower financing costs. Correa also said that Panama is not as dependent on raw materials as the other countries in the region. This has also helped boost confidence in the country’s economy.