This content is from: Local Insights

Guatemala: Financial operations’ new frontier

Diego Alejos
Financing in Guatemala has seen a recent expansion in the different options offered by financial institutions, national and foreign, to Guatemalan companies. This has allowed Guatemalan corporations to expand their operations by having a wide portfolio of finance products from which to select the most adequate means of acquiring the funds to develop their operations.

Traditionally in Guatemala, corporations, both national and foreign, have obtained their financing from Guatemalan financial institutions; they have tended to enter into traditional options such as Lombard credits, syndicated loans and in some cases project finance. However, these options did not meet the funding needs required by corporations. In some cases, the limits imposed on Guatemalan financial institutions by law regarding the concentration of investments and contingencies restricted the funding offered to corporations. In other cases, the financing structure offered to the corporations by the financial institutions did not meet the corporation's needs. This situation changed to some extent with the entering of foreign financial institutions into the Guatemalan financial market, as the limits regarding the concentration of investments were somewhat lessened, allowing for bigger loans and financing.

Recently, foreign financial institutions have offered corporations in Guatemala a new means for financing their operations. The issuance of notes by Guatemalan corporations has broadened the financial market for many of Guatemala's large corporations, opening a new frontier with regards to financial operations. Most of Guatemala´s major corporations have taken note of the success that the issuance of notes by other corporations has had in international markets, as well as the acceptance that these notes have had with institutional buyers. The success of the placement of the notes, as well as the benefit that this type of operation represents financially, have opened a new era in Guatemala's financial system. Many of the big players in Guatemala have now taken an interest in this kind of financing and the benefits it provides.

Guatemala's major corporations have welcomed this new era, as a means to realising large projects funded by the issuance of notes, along with the benefits they provide. We will be seeing much more of this option in the near future.

Diego Alejos

© 2021 Euromoney Institutional Investor PLC. For help please see our FAQs.

Instant access to all of our content. Membership Options | 30 Day Trial