Panama debt just turned toxic

panamajunkbond

Did we tell you already that Martinelli is running out of money and can’t issue more debt to finance his bizarre spending habits on Berlusconi radar corruption and the destruction of Casco Viejo?

Well, it just got worse!

In case Martinelli had any ideas, still, about selling bonds, he might want to read the latest analysis of Nomura, a Japanese multinational conglomerate of financial services, financial management consulting companies and related organizations, headquartered in Tokyo. It got famous for taking over a chunk of what was left of Lehman Brothers in 2008.

So, about Panama, the Nomura people have this to say:

We recommend zero exposure to Panamanian sovereign bonds. While this positioning might be relatively premature, we prefer to recommend it now inexpectation of a sharp rise in fiscal spending for electoral reasons next year. For those that are currently involved in this credit, we think it may be opportune to begin executing an exit strategy.

We recommend replacing Panama with exposure to other high-grade credits in Latin America, such as Peru, Colombia and Mexico. Because of Panama’s expensive valuations, we think investors are likely to benefit more from owning other LatAm high graders with lower downside risks.

Start an exit strategy! Eat that, Martinelli and Panama hypers! This is just a couple of steps removed from losing the coveted “investment grade”.

Of course, La Prensa reported yesterday that foreign investors are already executing their own exit strategy; foreign direct investment fell over 15% during the first trimester of this year, and it will get worse. You might wanna ditch that Petaquilla stock as well, now that it still trades at over 30 cents.

And: We just hear that UBS sends out email alerts, titled “Panama Losing Fiscal Credibility”. This entire conflict, from the Sala V to the selling of shares, is about money and will be decided by big money.

Isn’t it funny, to see the so-called government of entrepreneurs being dissed by other entrepreneurs? If there is any experiment that should never be allowed to be repeated, it should be to have Panama run by businessmen. What an unmitigated disaster.

Now, these financial companies and investors are of course only repeating what most observers and activists with half a brain did already warn about at least a year ago, but that’s because they’re business people and financial analysts, and  as such not really that smart.

About the author /


Okke Ornstein is an award winning journalist, TV/Radio producer and photographer from the Netherlands and currently based in Panama. Specialized in high-impact investigative journalism, his work has led to arrests, questions in parliament and the downfall of many frauds and swindles.

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