Municipalities and schools are some of the entities that have used, successfully, sales of bonds backed by income streams, in order to finance their projects.
This has been revealed from data from the Salvadoran Stock Exchange which announced that to date, more than $37 million has been raised using this method of financing.
The advantages of this method are not only felt by the company or institution looking for financing but also for by the market in general, as it offers an alternative investment option for Salvadoran investors who are looking to diversify their portfolios.
One example of the high level of interest that has been shown in the market for this type of product is the record time in which the Mayor of Santa Tecla sold on Thursday more than $4 million of its first bonds, which expire in 8 years and offer returns of 8% per year.
In an article in elsalvador.com, the mayor of Santa Tecla, Óscar Ortiz, said that “the sale of bonds allows us to have immediate access to funds which we can translate into public works. In this case the funds will be used to carry out infrastructure works, such as carrying on with the rescue works for the Historic Center, building parking lots and remodelling Las Delicias stadium.
Currently there are three institutions in different sectors that are in the proces of preparing bond releases, it is expected that they will be released in the first quarter of next year, according to the Exchange. ”
Source: elsalvador.com
More on this topic
November 2011
Risking future income rather than tangible assets is a good choice for investment financing, using working capital or debt restructuring.
Securitization of future income is an instrument used for the first time by the Liceo Frances on El Salvador’s Stock Exchange.
The organization placed its bonds on the market and raised capital to expand its educational facilities.
November 2010
The securitization project to redevelop the facilities of the French School is the first of its kind in the Salvadoran Stock Exchange.
Hencorp Securities carried out the process by issuing the securities, "some of the features of the placement are a 6% yield (with a 7% ceiling) and a repayment period of 10 years," says Laprensagrafica.com.
May 2012
The Stock Exchange of El Salvador believes it is essential to reform the Securities Market Law, in order to boost funding for infrastructure.
The Stock Exchange of El Salvador (BVES), recently asked the government to reform existing legislation by removing barriers to investment associated with financing, though means of identifying and promoting funding for infrastructure projects and supporting the public and private sectors.
March 2010
The securitization trust which funds the thermal power plant has issued $23.8 million in bonds at Costa Rica’s stock exchange.
The Securitization Fund for Thermal Power Plant Garabito was created to fund the construction and leasing to the Costa Rican Electricity Institute (ICE) of a 200MW thermal power plant.
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