"I believe it's a resounding success for the authorities of Inversiones Atlántida, for the country and for the private sector. Now it's time to put these resources into work."
Interview with Dante Mossi, Honduran Economist, Senior Operation Officer of World Bank, based in Washington D.C. by Jorge Carpio Arrivillaga.
JCA (interviewer): Inversiones Atlántida has announced its successful issuance for US $ 150 million, listed on the Singapore Stock Exchange, as the first issuance made by a private company in Honduras, what do you think about it?
D. Mossi: First, I would like to congratulate the authorities of the Atlántida Group for making the effort to attract foreign direct investment, via the least risky way for international investors. Unquestionably, it is a step in the right direction; the country should not only depend on development agencies. If one looks at the investment flows, he will realize these are very limited.
The private sector had to take this step, which is obviously innovative, in a range that nobody had done before and within markets that do not know the country up close. Therefore, it is a great achievement, that speaks of the tradition of a leading financial group and this gives even more credibility to Inversiones Atlántida.
JCA: What is the benefit in Image, both for the country and for Inversiones Atlántida, S.A.?
D. Mossi: I think it is a success for the authorities of Inversiones Atlántida, for the country and for the private sector and now it is time to put these resources into work and for the private sector to follow this type of financing in order to generate profitability. It is a historic step; and, on the other hand, I am not surprised that it was led by Inversiones Atlántida, the leading financial group of the country, because Banco Atlántida is the most experienced bank in Honduras.
JCA: In the economic field, with the increase in investment flows and in the exchange balance, how does Honduras benefit?
D. Mossi: There are two very important effects: First, the visibility that investors have placed in a very remote place. They are betting on the country and they believed in an entity such as Inversiones Atlántida, so the credibility is very valuable because behind its first issuance there is much more to be developed. It is a signal for the investor and it is, secondly, very good news because the private debt will be subject to risk ratings, as compared to others, which positions Honduras on the global financial map.
JCA: What is the benefit in regard to credits directed to the business sector that will derive from the resources of this issuance?
D. Mossi: A very important benefit since it is a direct injection of capital into the country, without intermediaries, which should mean, in credit terms that did not exist in the past and as a qualified debt, that the cost of capital is minimized, and that this cost is transferred to those who take the credits, with the capacity of larger ones.
JCA: What is the benefit of Central American integration, by strengthening the incursion of Grupo Atlántida in El Salvador with the acquisition of AFP Confía?
D. Mossi: Honduras and Central America are signing customs facilitation treaties. Honduras and Guatemala already have a Customs Union, with free passage of goods and El Salvador, is soon to join. These investments are urgent and necessary, but the fact of knowing the markets of the region is also very important, especially for a bank, following the principle of knowing your client well.
JCA: The Central Bank of Honduras has raised the growth forecast for this year. How can Honduras achieve greater economic growth in the future?
D. Mossi: On behalf of the public sector, they should have clear rules, that respect contracts and the entire legal regime and so forth the guarantees that go with it. On the private side, what is really needed throughout Central America is financial inclusion. Grupo Atlántida has a very important role in this.
People who risk, who can generate employment and profits produce a more vibrant economy, which grows from the base. A financial institution that knows its customers, corporate and small, can generate a greater growth in the country.
JCA: What is your opinion on the fact that the issuance has been listed on the Singapore Stock Exchange?
D. Mossi: If you start searching, the stock exchanges do not have a particular physical site, the market works 24 hours globally, Singapore is a financial center, but it is a stock connected to the whole globe, where documents and values are transferred around the world.
JCA: Recently, the sovereign risk rating of Honduras has improved. What effect does this have on future issuance transactions performed by private companies in the global capital market?
D. Mossi: First, it is essential that risk rating agencies decide that it is worthwhile to approach Honduras, and economic news need a finer analysis. The fact that that sovereign public debt is already being rated is a signal that goes beyond, these indicators do not travel alone.
Risk ratings place us on the global map and this has many implications for the cost of capital. On the other hand, it generates a discipline that forces us to be more sensible, once you get a good grade, you do not want them to lower it, which causes a good macroeconomic behavior.