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Amortization
It is the restitution to the holder of a financial instrument of all or part of the invested capital, by the issuer. The
"amortization of a loan" is the payment that a borrower makes to its lender to reimburse the money lent in a certain
term, including the interest.
Creditor
The party entitled to request the enforcement of payment of a debt.
Debt Amortization of the Public Sector
Disbursement involving the partial or total payment of an internal or external loan, allocated to the public sector covered
by a credit security, contract or agreement. The public sector debt, is commonly amortized in the long term, through periodic
payments.
Market Maker Candidates (MMC)
All brokerage firms with access to the Electronic Trading Systems defined in the Regulation of the Market Makers Program,
with license issued by the Superintendence of the Securities Market of Panama, and is designated as a Market Maker Candidate
by the Responsible Unit, in accordance with the provisions established in that regulation. MMC commit to undertake the trading
(daily bids and offers, and execution of other authorized financial operations) of Internal Public Debt instruments, to
develop the domestic secondary market of those securities, in order to receive the benefits referred to in the Market Makers
Regulation. (Ministerial Resolution No. 001-2013).
International Development Association (IDA)
It is the World Bank entity that provides support to the poorest countries of the world. IDA was established in
1960, and its objective is to reduce poverty by providing interest-free loans and grants for programs that
promote economic growth, reduce inequalities and improve the living conditions of the population. The IDA complements the
work of the other World Bank credit entity, the International Bank for Reconstruction and Development (IBRD), which offers
capital investments and advisory services to middle income countries. The IBRD and the IDA share the same staff and headquarters,
and evaluate projects with the same strictness.
The IDA is one of the largest sources of assistance for the 81 poorest countries of the world, 40 of which are in Africa.
It is the leading provider of donor funds for basic social services in the poorest countries. http://es.wikipedia.org/wiki/Asociaci%C3%B3n_Internacional_de_Fomento
Bank
A financial institution that manages the money deposited by clients and on the other hand, uses these funds to make loans
to individuals and legal entities applying an interest.
Investment Bank
A credit institution whose main objective is to intervene in the placement of capital, financing production, construction
and investment projects. May be a local or foreign bank. It participates in the financing of operations in the domestic
and international Capital Markets.
Commercial Bank
A private or public establishment duly authorized by law to receive money in the form of deposits to, together with its own
resources, grant loans, discounts, and in general, all type of banking operations. Legally, they are commercial entities
that trade with money.
Central American Bank for Economic Integration (CABEI)
The Central American Bank for Economic Integration (CABEI), created in 1960, is an international legal entity, which aims
to promote the integration and the development of the founding countries: Guatemala, Honduras, El Salvador, Nicaragua and
Costa Rica. Their headquarter is in Tegucigalpa, Honduras, and has regional offices in each Central American country. http://www.bcie.org/
European Investment Bank (EIB)
The European Investment Bank is owned by the 28 EU countries. It borrows money from capital markets and lends it at a low
interest rate for projects aimed at improving infrastructure, energy supply or environmental conditions, both within the
EU and in neighboring countries or in developing countries. The European Investment Bank supports projects in EU countries
and invests in future member countries and partner countries. http://europa.eu/about-eu/institutions-bodies/eib/index_es.htm
International Bank for Reconstruction and Development (IBRD).
The IBRD was founded in 1944 and was the first institution of the World Bank Group. Its objective is to reduce poverty in
middle income countries and poor countries with credit capacity through the promotion of sustainable development with loans,
collaterals, risk management products and analytical and advisory services. Its structure is similar to a cooperative, i.e.,
it is owned by its 188 countries, which manage it for their own benefit. The IBRD obtains the majority of its funds from
global financial markets and has become one of the largest institutional borrowers since it issued its first bond in 1947.
The revenues generated over the years by the IBRD have allowed to finance development activities and guarantee its financial
strength. This enables it to obtain low-interest loans and offer its clients good loan conditions. http://web.worldbank.org/
International Development Bank (IDB)
It is the main source of multilateral financing and expertise for sustainable economic, social and institutional development
of Latin America and the Caribbean. The IDB Group is composed of the International Development Bank, the Inter-American
Investment Corporation (IIC) and the Multilateral Investment Fund (MIF). The IIC primarily supports small and medium enterprises,
and the MIF promotes the growth of the private sector through grants and investments, with an emphasis on microenterprises.
http://www.iadb.org/es/
World Bank
It is the main multilateral institution responsible for the financing of economic development. Actually, the World Bank Group
is comprised of five organizations: the original institution, the International Bank for Reconstruction and Development
(IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment
Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). Each of them has specific
roles, but they mostly share government organs, offices and staff. The headquarter is in Washington and, by virtue of a
tacit agreement since its creation, the president of the World Bank is a US citizen. The publications of the World Bank,
and in particular its
Annual Report on World Development, edited since 1978, constitutes a basic reference to get to know the evolution
of the orthodox thinking on economic development (Bustelo, 1994).
http://www.worldbank.org/
Treasury Bonds
They are debt securities issued by governments in order to obtain fresh funds to finance the State's deficit and whose
maturity is more than ten years.
CAF- Development Bank of Latin America
It is a development bank established in 1970 and currently formed by 18 countries in Latin America, the Caribbean and Europe,
as well as by 14 private banks in the Andean region. It promotes a sustainable development model, through credit operations,
non-reimbursable resources and support in technical and financial structuring of public and private sector projects in Latin
America. http://www.caf.com/es/acerca-de-caf/que-es-caf-y-mision
Rating of Government Bonds
It is the evaluation of government bonds made by international companies, which grant a rating, considering mainly, the issuance
conditions such as collaterals, issuance currency and others, and the capacity of repayment by the issuer, for which macroeconomic
conditions and elements such as fiscal deficit, current debt stock and financial markets conditions are considered.
Risk Rating Agencies
These are companies whose exclusive purpose is the rating of securities or risks related to the financial, insurance and
stock market activities, and any other management activity related to the use and investment of resources acquired from
the public. (BRC Investor Services S.A.)
Capital
Resources from savings or loans, used to acquire real or financial assets.
Brokerage Firm
An entity engaged in the business of buying and selling securities, either on their own or through third parties, excluding
securities brokers, as defined in the Decree-Law 1 of 1999. Brokerage Firms must have the corresponding license issued by
the Superintendence of the Securities Market of Panama. (Ministerial Resolution No. 001-2013).
Coverage
Contracting of derivative instruments to mitigate the risk of financing costs in face of the market's volatility.
Placement
Allocation of securities offered by the State, either by multiple or single price.
Market Makers Program Committee
It is formed by the Responsible Unit, the Stock Exchange, Market Makers and Market Maker Candidates. One of its main objectives
is to address any matter of interest that either benefits or harms the Market Makers Program. It will meet as frequent as
the Responsible Unit establishes or extraordinarily upon request by the Responsible Unit and/or the rest of the Program
Participants. (Ministerial Resolution No. 001-2013).
Forward Contract (FX-Forward)
It is a customized contract between two parties to buy or sell assets specifying quantity, price and maturity date. Forward
contracts are not traded through the stock exchange.
International Finance Corporation (IFC)
It is a member of the World Bank Group and its headquarter is in Washington, DC. It adheres to the main objective of institutions
of the World Bank Group, which is to improve the quality of life of people in developing countries, which are members of
the institution. The IFC was founded in 1956 and it is the largest multilateral source of loans and capital investments
for private and public sector projects in the developing world. It promotes sustainable development mainly through:
· Financing of private sector projects.
· Support to private companies from emerging markets to mobilize resources in the
international financial markets.
· The provision of advisory services and technical assistance to businesses and
governments.
http://www.bancomundial.org/temas/resenas/cfi.htm
Inter-American Investment Corporation (IIC)
It is a member institution of the Inter-American Development Bank (IDB) and promotes the development of the private
sector in Latin America and the Caribbean, especially for small and medium-sized enterprises (SMEs). It helps companies
streamline management processes and provides them with financing through equity investments, loans and collaterals. The
mission of the IIC is to promote the economic development of its regional developing member countries, stimulating the establishment,
expansion and modernization of private companies, to complement them with IDB activities. The Corporation works closely
with the IDB Group to promote the development of the private sector through joint activities intended to intensify the support
to the private sector in regional developing member countries. This cooperation basically consists of identifying projects
in the sectors of agriculture, manufacturing, forestry, tourism, infrastructure, health, education, technological improvements,
risk management and other areas in which the IDB operates, technical cooperation agreements to assist companies to have
access to international capital markets, joint initiatives to identify mechanisms for investment promotions and administrative
support through regional offices. http://www.iic.org/
Market Maker (MM)
All brokerage firms with access to the Electronic Trading Systems defined in the Regulation of the Market Makers Program,
with license issued by the Superintendence of the Securities Market of Panama, and which is designated as a Market Maker
by the Responsible Unit, in accordance with the provisions of that regulation. Market Makers undertake the trading (daily
bids and offers, and execution of other authorized financial operations) of Internal Public Debt Instruments, to develop
the domestic secondary market for those securities, to receive the benefits referred to in the Market Makers Regulation.
(Ministerial Resolution No. 001-2013).
Public Financing
It is a set of agencies, standards, resources and administrative procedures involved in operations performed by the
State to acquire resources to finance projects and involving debt or modification of the structure of liabilities.
Cross Currency Swap
It is one of the ways in which currency swaps can exchange loans. It consists in swapping only the payment of interest
cash flows, in loans of equal value and term. As it is a currency swap, exchanged cash flows are denominated in different
currencies. An example of this type of swap is the exchange of interest payments in dollars at a fixed rate against interest
payments in euros at a floating rate. This type of swap is also known as cross-currency interest rate swap. http://es.wikipedia.org/wiki/
Custody Account
It is any account held by a securities intermediary, on behalf of a third party, to credit and debit financial assets
under a contract whereby the intermediary has agreed to establish that account for an indirect holder to make the account
and the accredited financial assets therein subject to the indirect holding system provided for in Title XI of Decree-Law
1 of 1999. (Ministerial Resolution No 001-2013).
Financial Derivative
It is also called a derivative instrument and it is a financial product whose value is based on the price of another
asset. The asset on which it depends takes the name of the underlying asset, for example, the value of a futures contract
on gold is based on the price of gold. The underlying assets used can be very different, shares, stock indices, fixed income
securities, types of interest or commodities. http://es.wikipedia.org/wiki/
Public Debt
It is the debt of the Public Sector of the Republic of Panama, contracted through loans and the issuance of securities.
Internal Debt
It is the debt contracted with individuals or legal entities domiciled or resident in the Republic and whose payment
can be enforceable within the national territory.
External Debt
It is the debt contracted with another state or international agency or with any other individual or legal entity without
residence or domicile in the Republic and whose payment can be enforceable outside of its territory. The external debt of
the public sector is integrated by:
· Public placements in the international capital markets which correspond to issuance
of government bonds, commercial papers and medium-term notes.
· Financing from International Financial Organisms.
· Resources directly obtained from commercial banking.
· Bilateral loans, which are loans granted between governments through their official
banks, or from commercial banks guaranteed by an official entity.
· Assumed debt is the debt of liquidated or merged entities that the Republic assumes.
· Restructured debt corresponds to the financing sources that have been renegotiated
in various programs in order to reduce the balance of the debt as well as its service.
Currencies
All foreign currencies and any other payment instrument denominated in a foreign currency.
Issuance of Securities
It is the set of Public Debt securities created at once and put in circulation simultaneously.
Issuance of Bonds
Placement of tradable instruments by the State among investors, receiving in exchange a specific price and assuming
the obligation to repay the amount plus a premium or surcharge within a specific period and to ensure the issuance with
its monetary reserves or future yields from the exploitation of the natural resources that are under its direct control
by constitutional mandate.
Evaluation of Program Performance
The individual assessment of the commitments made by Market Makers and Market Maker Candidates, through mathematical
performance measurement formulas described in the Regulation of the Market Makers Program. It has four (4) periods of (3)
months each, as follows: from the first (1st) of January to the thirty first (31st) of March, from
the first (1st) of April to the thirtieth (30th) of June, from the first (1st) of July
to the thirtieth (30th) of September and from the first (1st) of October to the thirty first (31st)
of December of a calendar year, which will determine the MM and MMC ranking. The results of this assessment will be provided
on a quarterly basis to participants of the Program according to the methodology that the Responsible Unit establishes.
(Ministerial Resolution No. 001-2013). 36
Cash Flow
In finance and in economy, cash flows mean the inflow or outflow of cash in a specific period. The cash flow is the
net accumulation of liquid assets in a specific period, and therefore, it constitutes an important indicator of the State's
liquidity. For Public Financing it is an important input to determine the State's need of resources, and based on that,
establish auction schedules and the use of credit lines.
http://es.wikipedia.org/wiki/
OPEC Fund for International Development (OFID – OPEC).
The OPEC Fund for International Development (OFID) is an intergovernmental institution for financing development established
in 1976 by Member States of the Organization of Petroleum Exporting Countries. The OFID was created during the Conference
of Sovereigns and Heads of State of OPEC member countries held in Algiers (Algeria) in March of 1975. A solemn declaration
of the Conference reaffirmed the natural solidarity which unites OPEC countries with other developing countries in their
struggle to overcome underdevelopment, and called for measures to strengthen cooperation among these countries.
It aims to:
· To promote cooperation between OPEC Member Countries and other developing countries
as an expression of South-South solidarity.
· To help particularly the poorer, low-income countries in pursuit of their social
and economic advancement.
It acts by:
· Extending financial assistance in favorable conditions in the form of loans for
development projects and programs, supporting the balance of payments and trade financing.
· Participation in the financing of private sector activities in developing countries.
· Providing grants in support of technical assistance and food aid programs, research
and similar activities, and humanitarian emergency relief.
· Contributing to the resources of other development institutions whose work benefits
developing countries.
· Serving as an agent of OPEC Member Countries in the international financial arena
whenever collective action is deemed appropriate.
Its beneficiaries are all developing countries, except OPEC Member Countries. Maximum priority is given
to the least developed countries, that therefore, receive greater support from OFID.
http://www.austria.gob.ve/content.php?contecual=23&contepert=1
International Fund for Agricultural Development (IFAD)
The International Fund for Agricultural Development-IFAD, is a specialized agency of the United Nations which aims
to provide funds and to mobilize additional resources for programs specifically designed to promote the economic progress
of the poor inhabitants of rural areas, mainly to improve agricultural productivity. It was founded in 1977 and its headquarter
is in Rome. http://www.ifad.org/
International Monetary Fund (IMF)
It is an agency of the United Nations System that supervises the international monetary system and follows up on economic
and financial policies of its one hundred and eighty-seven (187) member countries. This activity is known as a supervision.
As part of this process, which is both globally and in each of the countries, the IMF highlights the risks that may compromise
stability and provides advisory services on the necessary economic policy adjustments. Thus, the IMF contributes to having
the international monetary system comply with its essential purpose of facilitating the exchange of goods, services and
capital between countries, supporting a solid economic growth. http://www.imf.org/external/spanish/index.htm
Multilateral Investment Fund (MIF)
The Multilateral Investment Fund of the IDB Group is the leading provider of technical assistance to the private sector
in Latin America and the Caribbean. The MIF is also one of the main investors in micro-finance and funds of entrepreneur
capital for small companies. Projects that need financing should increase access to finance, markets, skills and basic services.
The MIF always works with local partners, mainly private, to help finance and execute projects. It provides subsidies, loans,
guarantees, investments and quasi investment of capital, as well as consulting services to commercial associations, non-governmental
organizations, foundations, public sector agencies and financial institutions, and in some cases, companies of the private
sector to support projects that benefit the low-income population (their businesses, their farms, and their homes) through
the 26 borrowing member countries of Latin America and the Caribbean of the IDB Group. The MIF does not finance directly
micro and small enterprises.
Financing and/or technical cooperation are also provided through its Social Entrepreneurship Program that focuses on
pilot initiatives with a commercial approach to increase the financing and access to the market of marginalized rural communities,
and improves access to basic services. http://www.iadb.org/es/recursos-para-empresas/fondo-multilateral-de-inversiones,5763.html
Collateral
Only means that the creditor can use to ensure its credit in the event of partial or total insolvency of the debtor
and any origin of this insolvency. Collaterals can be personal and real. The first certainly provide security to the creditor,
as the number of debtor increases, but the credit remains unsecured and devoid of the priorities which real collateral provide.
Real collaterals based on Roman law include pledge, mortgage, antichresis and lien. http://revistaderecho.um.edu.uy/wp-content/uploads/2012/
International Financial Institutions (IFIs)
These are institutions that provide loans, grants and technical assistance to finance investment projects and political
reforms, mainly in low or middle income countries. The specific missions of each IFI vary, but typically range from the
reduction of poverty, economic development and the promotion of international trade.
Financial Instrument
An instrument that is intended to satisfy financing or investment needs of economic agents of a society (families,
companies or State), circulating the money generated in some sectors and transferring it to other sectors that need it,
thus generating wealth.
The ultimate purpose is to satisfy cash needs (money) that arise in agents either for financing (borrowing) or for
investing (lending), all in exchange for conditions that will govern the price for the service at a given time. i.e., within
the financial system, and more specifically within financial markets, financial entities use financial instruments to meet
financing or investment needs of economic agents (families, companies and State) in the most efficient and optimal method
possible, distributing the financial resources between the economic sectors that need it. http://educacionbancaria.wordpress.com/2012/
Financial Intermediary
They are officially authorized entities to keep custody
accounts and through which it is possible and viable to invest in the stock market.
Treasury Bills
They are very short term financial assets, issued by the State to finance the public deficit. The price of acquisition
is lower than the amount that the investor will receive at the time of the reimbursement. The difference between the bill's
reimbursement price and the acquisition price will be the interest or yield.
Global Note
It is a document prepared by the Ministry of Economy and Finance which contains the terms and conditions of securities
issued by the State via auction or direct placement.
Liabilities Management
They are operations that are carried out both at the international and local level to mitigate the refinancing risk
to which the Republic of Panama could be exposed to in case of "spikes" or debt instrument outstanding balances
reflected in the amortization profile of the public debt. Such operations include tranches, purchase, redemption for cash,
exchange for another instrument and issuance of new instruments.
Stock Market
Primary and secondary market of trading and issuance of fixed income securities and equity.
Capital Markets
It is where medium and long term issued securities are traded, including public debt, medium- and long-term instruments
issued by private or public agents and obligations and shares issued by corporations under the regime established by law.
Financial Market
Set of markets formed by the capital market, the money market and the exchange market. They make spot and forward transactions
(options and futures). It is a market only for financial assets.
Primary Market of Internal Public Debt
Securities
The market in which the auction of Internal Public Debt Securities is made, with the participation of the Responsible Unit,
the Market Makers and Market Maker Candidates, for the primary allocation of these securities. The tender procedure will
only take place through Electronic Trading Systems that have been previously approved by the Responsible Unit. (Ministerial
Resolution No. 001-2013).
Secondary Market of Internal Public Debt Securities
The market in which Internal Public Debt Securities are traded after the primary allocation of such securities. Negotiations
in this market will be developed only through Electronic Trading Systems that have been previously approved by the Responsible
Unit. (Ministerial Resolution No. 001-2013).
Ministry of Economy and Finance
It is the State institution in charge of the formulation of economic policy initiatives; public investment planning and social
strategy; design and implementation of the general guidelines and Government specific tasks on finance and national treasury;
the elaboration, execution and control of the General State Budget; Public Financing and State modernization, as well as
the elaboration and execution of the State Financial Planning, as established by Law 97 of December 21, 1998.
Defaults
Delay or culpable delay in the fulfillment of an obligation.
Treasury Notes
It is a financial instrument issued by the State, which is committed to return at maturity, ranging from two to ten years,
the amount borrowed from the investor and to repay the loan with a periodic amount of interest.
Open Market or Open Market Operations
It is the procedure by which a Central Bank purchases or sells securities in the open market in order to implement a given
monetary policy. (Panama has no Central Bank).
Public Financing Operations
Public Financing Operations are:
· The issuance and placement of securities including Treasury Bills, loans or treasury
operations.
· The opening of credits of any nature.
· Contracting works, services, goods or acquisitions whose total or partial payments
are required to be performed over the course of one or more future periods to the one that has caused the contract, provided
that the operation involves financing.
· The granting of collaterals.
· The consolidation, conversion, unification or any form of refinancing or restructuring
of current pubic debt.
Stock Market Operation
Contracts that are carried out in stock markets subject to the special legislation that regulates these institutions.
They are basically the purchase and sale and the commission.
REPO Operations
Repos are sale operations with repurchase agreements at maturity of fixed income securities. The investor temporarily
acquires an asset, for a specific period of time. In these operations, the investor acquires the securities at a given price
from a financial institution, who undertakes to repurchase them after a certain period of time at a price fixed beforehand.
(Ministerial Resolution No. 001-2013).
Multilateral Agencies
They are organizations formed by three or more nations whose main mission is to work together on problems and issues
related to the member countries.
Bilateral Agencies
They are government agencies of different countries that focus on bilateral interactions with another country and facilitate
the development aid flow.
Multilateral Investment Guarantee Agency (MIGA-MIGA).
Multilateral Investment Guarantee Agency, MIGA, is an agency of the World Bank, created in 1988. Its purpose is to facilitate
the flow of private capital investment with productive purposes in developing countries, granting investors collaterals
against losses caused by non-commercial risks such as expropriation, non-transferability of currency, currency transfers,
civil war or disturbances. It also provides technical assistance to help countries share information on investment opportunities.
It has 171 member countries.
http://es.wikipedia.org/wiki/
Overnight
They are loans or funds made in the interbank market for a maximum period of twenty-four (24) hours.
Promissory Notes
They are short term, fixed income assets. It is a credit security, targeted to individuals or legal entities requiring financing.
The customer or "grantor" undertakes to unconditionally pay the Bank or "beneficiary", or whoever is
the legitimate holder of the instrument, a fixed amount of money. The promissory note is a promise to pay, not a payment
order. The promissory note can be renewed or extended as capital is amortized or interests are canceled respectively.
Participants of the Market Maker Program
The participants are the Responsible Unit, the Market Makers and Market Maker Candidates. (Ministerial Resolution No. 001-2013).
Validity Period of the Program (Market Makers)
It is the period between the first (1st) of January and the thirty-first (31st) of December of one
calendar year, renewable indefinitely. (Ministerial Resolution No. 001-2013).
Plain Vanilla
It is the most basic or standard version of a financial instrument. Example: options, bonds, futures and swaps.
Plain Vanilla Foreign Currency
Currency exchange contract.
Plain Vanilla Interest Rate Swap
Standard interest rate swaps that exchanges the interest of a loan or a notional deposit from a floating type to a fixed
interest type.
Weighted Average Price of the Auctioned Issuance
It is the average price of the Competitive Offers allocated during an auction (as defined in the "Regulation for the
Allocation of Internal Public Debt Instruments through Public Auction"), with the corresponding amounts allocated.
(Ministerial Resolution No. 001-2013). 44
First Round
The first allocation process regarding certain Internal Public Debt Instrument eligible to both MM and MMC. A Market Maker
may request, upon consideration of the Responsible Unit, the constitution of a second round. The process of the First Round
ends as soon the Responsible Unit discloses, through the Electronic Trading Systems or by any other means, the official
results of an auction. (Ministerial Resolution No. 001-2013).
Allocation Process of Internal Public Debt Securities
Tasks carried out under the direction of the Responsible Unit, which results in the allocation of Internal Public Debt Securities
in the primary domestic market by auction in the First Round and direct allocation in the Second Round. If the Process for
Allocation of Internal Public Debt Securities is not detailed in this Regulation, they will comply with the current "Regulation
for the Allocation of Internal Public Debt Instruments through Public Auction" (Ministerial Resolution No. 001-2013).
Market Makers Program.
It is a set of activities driven by the Ministry of Economy and Finance to develop the domestic capital market and to contribute
to ensure the financing of the General State Budget. (Ministerial Resolution No. 001-2013).
Forecast of the Direct External Debt Service.
They are statistics that reflect future payments of a specific period, corresponding to commitments contracted by the Republic,
with international and/or foreign agencies including capital amortizations, interests and commissions.
Forecast of the Direct Internal Debt Service
They are statistics that reflect future payments of the Direct Internal Debt Service corresponding to capital amortization,
interest and commissions derived of contractual obligations up to date, from public financing operations.
Annual Ranking
It is the cumulative result of the rankings of Market Maker Candidates and rankings of Market Makers, for a specific period
of validity of the Program. It will be presented by the Responsible Unit at the end of each term of the Program. (Ministerial
Resolution No. 001-2013).
Ranking of Market Maker Candidates
It is the descending result of the performance evaluation of all Market Maker Candidates, according to the performance measurement
methodology described in the Regulation of the Market Makers Program, which will be published by the Responsible Unit, at
the end of each evaluation period. The MMC with the best score in the annual ranking can aspire to become Market Makers
for the next term of the Program. (Ministerial Resolution No. 001-2013).
Ranking of Market Makers
It is the descending result of the performance evaluation of all Market Makers, according to the performance measurement
methodology described in the Regulation of the Market Makers Program, which will be published by the Responsible Unit, at
the end of each evaluation period. The MM with the least score in the annual ranking can become Market Maker Candidates
for the next term of the Program. (Ministerial Resolution No. 001-2013).
Reimbursement
Repayment of a loan.
Fixed-income
It is the yield of a security whose profitability is known from the moment that is contracted, as well as the interest to
be paid, as long as the investment is kept until maturity.
Equity
It represents a property title on a fraction of the equity of a company, mutual fund, investment fund, etc. They are entitled
to dividends or benefits that are distributed periodically.
Profitability
It is the profit obtained by the purchase of a financial asset, expressed as a percentage.
Consolidated Statistical Report of Balances and Forecasts of the National Public Debt (LAC-Debt Group Methodology)
A summarized quarterly report that presents balances and forecasts of the National Public Debt, separated by External Debt
and Internal Debt, by instrument and source of financing, using the methodology elaborated by Lac Debt Group of the Inter-American
Development Bank.
Restructuring of Current Public Debt
It is the process that is performed when the debtor country is unable to pay the commitments they have entered into or when
both parties, for various reasons, prefer to modify the terms of the previously agreed debt, to enable the country to have
better conditions to pay, either by increasing its income or seeking more accessible payment terms. The restructuring almost
always includes modification of maturities, thus eliminating the accumulation of short-term debt and making them consolidated
long-term debts; the rescheduling of the debt, i.e. change in the amounts to pay annually, so that they are uniform; the
change in interests and other similar clauses. Also, sometimes the previously contracted debt is refinanced, i.e. issuing
new loans, in more accessible terms, to pay the previous debt. In this case, and when the debtor is in a critical financial
situation, grace periods can be established. These are periods in which the debtor has time to recover before starting the
payments of the new contracted loan. Grace periods usually mean that, during that time, there will be only interest payments
but no capital payments.
Refinancing of Current Public Debt
Repayment of the current debt with cheaper new loans.
Financial Performance
Profit obtained through investments in fixed or variable income markets.
Second Round
The placement process regarding certain Internal Public Debt Instruments, upon written and verbal request from a Market Maker,
in which the rest of the MM may participate on equal terms. In the event that one or more MM do not wish to participate
in the Second Round, the requesting MM may access the full amount of the Second Round. (Ministerial Resolution No. 001-2013).
Debt Service
It is the payments that the State makes on interest or debt amortization.
Swap
It is a contract by which two parties commit to exchange a series of amounts of money in future dates. Normally future money
exchanges are subject to types of interest, called
IRS (Interest Rate Swap), although in a more generic way a swap can be considered as any future exchange
of goods or services referenced to any variable (including money). Swaps were introduced for the first time to the public
in 1981, when IBM and the World Bank entered into an exchange contract. A
swap is considered a derivative financial instrument. http://es.wikipedia.org/wiki/
Currency Swap
It is a foreign exchange contract between two parties who agree to exchange elements (principal and/or interest payments)
of a loan in one currency for equivalent elements of a loan equal in net present value in other currencies. Thus, it is
a type of derivative in a foreign currency. Currency swaps are used to leverage comparative advantages. http://es.wikipedia.org/wiki/
Rate
It is the compensation paid by individuals, the State or other public entities, in retribution for a specific and divisible
public service.
Interest Rate
It is the percentage that is applied to the capital and which represents the remuneration or yield that is obtained for placing
a capital to invest or to lend.
Fixed Interest Rate
It does not change during the term of the loan.
Floating Interest Rate
It is modified according to a preset basis, during the term of the loan.
Public Securities
It is a credit security representing rights to the holder and on the other hand, a debt by the issuer, which is the State.
Maturity
It is the lifetime of a financial asset. The lifetime is established when they are issued. On that date, the investor will
receive again the money it lent at the beginning.
