Nicaragua Goes Left
It’s official. One more country has leftist leadership and the sky hasn’t fallen. Daniel Ortega, the former Sandinista leader, has been elected president of Nicaragua, the second poorest country in Latin America after Haiti, sometimes touted as “the next Costa Rica” in attempts to lure expats. Among those unhappy with the election are Nicaraguans living in the U.S., and some Nicaraguan industrialists aren’t too pleased either. Also, landowners are offering properties at a discount, calling it an “Ortega discount,” according to a Miami Herald article.
For most, though, the reaction is “wait and see.” Ortega, 61, claims that the country’s economic stability is a priority. He has already met with officials from the IMF, the World Bank and the Inter-American Development Bank.
Nicaragua’s economy has been improving for the last few years, and in the future may offer opportunities other than cheap real estate. A Reuters story details some little known high risk, potentially high-yield bonds known as BPI bonds or bonds of payment of compensation, also called land bonds.
The bonds were issued in 1993 by the former Ministry of Finance to compensate those who had lost property during Sandinista rule in the 1980s. They are traded daily on the Bolsa or Nicaraguan Stock Exchange and are held by domestic financial institutions and foreign investors.
The bonds are denominated in córdobas but indexed to the U.S. dollar. Depending on the maturity, amount outstanding and liquidity, yields currently range from 11% to 19%. Please note that this is not a recommendation to buy BPI bonds, however, any information on them or on expat life in Nicaragua now would be appreciated.