Caribbean & Central America - March 2026
PANAMA: US$3bn bond sale in first under Mulino
In mid-February, Panama sold global bonds worth US$3bn in the first such deal since President José Raúl Mulino came to power in July 2024.
The sale involved US$2.970bn in new bonds, some maturing in 2034 and others in 2038, which will be used to help repurchase outstanding bonds. The two notes carry rates of 5.2% and 5.6% respectively, said the economy and finance ministry (MEF) in a statement published 19 February. The operation will reduce public debt by around US$204m and cut annual interest payments by an estimated US$30m, added the ministry. There was strong demand from investors, according to the statement, with interest worth more than US$13bn. This “reflects the solid confidence that international investors have in the macroeconomic stability of Panama and its fiscal consolidation strategy,” said the ministry. Economy and Finance Minister Felipe Chapman highlighted the fact that the sale is “a concrete step towards our goal of strengthening public finances by reducing the debt pile, cutting financing costs and generating permanent savings for the state.”
Panama last issued bonds in February 2024, instead negotiating multiple bank loans from lenders such as US multinational finance companies JPMorgan Chase and Citigroup, and Spain’s Banco Santander. International credit ratings agency Fitch stripped Panama of its investment grade in March 2024 in response to the fallout of the shuttering of the country’s biggest mine, Cobre Panamá, in 2023, dealing a major blow to Panama’s hitherto investor-friendly image. However cost-cutting measures and better revenue have improved the country’s fiscal situation, and the bonds have moved to within 0.2% of comparable instruments sold by the US Treasury, which is the closest spread since 2020, said JPMorgan Chase, which worked on the new issuance along with BofA Securities, the brokerage arm of US banking institution Bank of America, according to Bloomberg.
Investors are optimistic that Mulino will reopen Cobre Panamá, which accounted for around 5% of the country’s GDP before it was shuttered in 2023 by the previous government following mass protests. “We expect the authorities to form a deal to reopen the Cobre Panama mine by decree,” read a note from Morgan Stanley analysts seen by Bloomberg. “A deal could drag into later in the year and a potential reopening may stretch to early 2027.” Mulino has said that he will make a decision on the copper mine before June.
Cobre Panamá
A reopening of the Cobre Panamá mine with royalties bringing in even more revenue for the public purse than before would aid in further improving the country’s fiscal situation, while making it easier to address demands for greater social spending that have driven waves of protests in recent years. Although there is a risk of unrest in the short-term if President Mulino does announce a decree to reopen the mine, investors may be betting that the government will be able to limit their scope and impact by successfully linking mining operations to promises of improved living standards.