DR Commercial Paper

mondongo

Bronze
Jan 1, 2002
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Commercial paper in the DR has ballooned over the last 2 years to over US$1billion per year. a few thoughts come to mind:

1) what does it take to register at the BOLSARD and issue paper?
2) what happens when there is a default?
3) are there any DR BOND Funds that bundle up a bunch of these obligations to mitigate individual company risk?

any thoughts?

mondongo
P.S. Frederic...I need your opinion on this one!
 

frederic

DR1 Expert
Jan 1, 2002
93
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0
mondongo said:
Commercial paper in the DR has ballooned over the last 2 years to over US$1billion per year. a few thoughts come to mind:

1) what does it take to register at the BOLSARD and issue paper?
2) what happens when there is a default?
3) are there any DR BOND Funds that bundle up a bunch of these obligations to mitigate individual company risk?

any thoughts?

mondongo
P.S. Frederic...I need your opinion on this one!


Two words: CAVEAT EMPTOR = (Let the buyer beware)

Answers to your questions:
1) NOT MUCH
2) YOU LOOSE MONEY OR CONTRACT A LAWYER
3) NOT YET
 

ricktoronto

Grande Pollo en Boca Chica
Jan 9, 2002
4,837
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There is a great publication

By the Chamber of Commerce, and sponsored by a large DR commercial law firm , available in English and Spanish that goes into this - something titled like " Doing Business in the DR" - I picked one up from the Admiral's Club in SDQ yesterday.
 

mondongo

Bronze
Jan 1, 2002
1,533
6
38
frederic, thanks for the reply. Here's a follow up question: how frequent are the defaults on the commercial paper...and....are there any reputable ratings agencies that rate the creditworthiness of the issuers of the commercial paper?

thanks in advance
mondongo

PS ricktoronto: I believe the document you are referring to is :

http://www.phlaw.com/guides/doibus_enlg.pdf
 

frederic

DR1 Expert
Jan 1, 2002
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So far, there has been no default that I know of in the DR Securities Exchange, since it was founded around 10 years ago; and there is no local rating agency. Basically, its a primitive system but it works!'

It's based on hard earned trust and if you are interested in buying paper, the broker will usually provide you with information from the company.

Most, if not all, companies selling Commercial paper here are reputable and reknown locally. Hardly anyone would buy papers of unknown and new companies.
 

mondongo

Bronze
Jan 1, 2002
1,533
6
38
according to recent news reports, it appears that the central bank is abandoning its tight money policy in favor of faster money supply growth. It also appears that the forex intervention of a few weeks ago did nothing but deplete the DR of some foreign reserves. This all leads me to believe that we are going to see some inflationary pressures that will spill into a faster devaluation of the peso.


Any comments?....frederic, what do you think?
 

frederic

DR1 Expert
Jan 1, 2002
93
0
0
RD$21.60 per dollar by mid 2003

I stand on my earlier forecast of RD$21.60 pesos per dollar by the summer of 2003, without a War with IRAQ, which could imply a higher exchange rate by that time or by early 2003.