Given the growth in its stock market activity, what is Panama’s strategy for attracting investors to the capital markets?

Panama Strengthens Its Capital Markets and Attracts More International Investors

Article by: Jesús Hurtado – Interview with Luis Chalhoub for Lex Latin

In February of this year, Panama issued $2.5 billion in sovereign debt, which saw demand five times higher than the supply, reaching $13 billion, according to local authorities. The high demand clearly illustrates investor confidence—especially among international investors—in the strong health of the Central American country’s stock market.

This confidence has been hard-earned over the past few years, largely as a result of positive performance in debt management, the consolidation of fiscal accounts and the economy in general, as well as political stability. These factors have allowed the country to emerge as a benchmark for securing financing and strong returns through the stock market.

“The significant level of development of the local market benefits not only local companies and investors but also those in the region, giving them access to financial options different from those traditionally offered, through the many banks that have been operating over the past 56 years,” states Luis Chalhoub Moreno, a partner at the Panamanian firm Icaza, González-Ruíz & Alemán.

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Economic Growth and Expansion of the Capital Market in Panama

In 2025, Panama was the Central American nation with the highest growth in its gross domestic product (GDP). According to the National Institute of Statistics and Census (INEC), the economy grew by 4.4%, driven by the transportation and trade sectors—areas linked to the interoceanic canal, a major route through which more than 6% of global merchandise trade passes.

The local financial services industry has established itself as a key pillar not only for the main driver of the Panamanian economy but also for companies throughout the region and even beyond that are seeking financing.

This is evident when one considers that, according to figures released by the Latin American Stock Exchange (Latinex), the total trading volume in 2025 exceeded $9.6 billion, a 34% increase over the previous year. Added to this is a 26% year-over-year increase in securities custody, which closed the year with over $44 billion in assets under supervision.

For Chalhoub, this growth is closely linked to the consolidation of regulations that have been in place for 26 years, under which the Panamanian market came to be regulated and supervised by an entity with greater autonomy and authority (the Superintendency of the Securities Market); clearer rules were established for market participants, regulating the products offered in greater detail and establishing rules for investor protection.

However, given the market’s advancement driven by technology, the specialist believes it is necessary to update the laws to regulate new products and strengthen transaction security.

“It is necessary to regulate the integration of artificial intelligence into decision-making to improve international competitiveness, facilitating the integration of Central American markets and the attraction of foreign issuers, and to update regulations regarding the prevention of money laundering.”

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More issuers and greater activity: signs of a maturing stock market

Based on data from Latinex, at the end of 2025, the Panamanian market had 291 listed issuers, indicating a diversification of offerings capable of serving investors with different profiles and targets, while also marking a significant shift in the origin of issuances, which were mostly local, reflecting greater maturity of the ecosystem.

LexLatin: Which sectors are attracting the most attention?

Luis Chalhoub Moreno: Although the government sector continues to play a prominent role among issuers in the Panamanian market, companies in the logistics, transportation, and communications sectors, as well as banks, have surpassed it, particularly in fixed-income instruments. Investment companies (funds) have also come to occupy a significant position in the market.

In recent years, there has been significant growth in participation by foreign issuers and investors. It is also worth noting the interest in purpose-driven issuances.

How has the initial public offering (IPO) segment performed, and what is expected for this year?

LCM: According to the report presented by Latinex, 82% of the growth in 2025 is attributed to the primary market, which experienced a 60% increase compared to 2024. Furthermore, the report indicates that approximately USD 4.4 billion is in the pipeline for 2026. Thus, the statistics point to significant growth and high activity in the IPO segment.

You mentioned there is interest in purpose-driven issuances. What share do these bonds hold in the issuance mix, and how have they been received?

LCM: The Latinex report tells us that there are more than USD 1 billion in thematic bonds, issued through more than 12 programs, of which more than 60% has been placed. This represents approximately 13% of issuances and indicates strong market appetite.

Although Panama does not yet have a law regulating digital assets, how is this market developing in the country? Has there been any progress on regulation?

LCM: Although there have been several legislative attempts, they have not been successful. In August of last year, a draft bill was presented to the National Assembly that aims to establish a comprehensive legal framework for the supervision, registration, and control of “Virtual Asset Service Providers” in accordance with International Standards on Anti-Money Laundering and Counter-Terrorist Financing.

In addition, we know that the Superintendency of the Securities Market has been analyzing the need to update the current securities law, which includes considering the inclusion of digital assets. So, although progress has not yet materialized, significant strides have been made.

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International Integration: Key to Attracting Issuers and Investors

In 2024, Panama took a significant step toward expanding its secondary securities market by approving an agreement that establishes the regulatory framework for listing securities issued abroad on Latinex, without the need to comply with the entire traditional local registration process.

This made it possible to implement Euroclear’s I-Link standard, which enables the international settlement of securities listed on the local exchange through Euroclear’s global infrastructure, while also allowing issuances to be listed under Regulation S and Rule 144A of the U.S. Securities and Exchange Commission (SEC), thereby promoting participation by international investors and increasing potential liquidity.

Additionally, and thanks to the implementation of international standards recommended by the Financial Action Task Force (FATF) to combat money laundering, in 2025 Panama was removed from the European Union’s gray list in this area, which has opened up many opportunities to establish the country as a reliable, world-class financial center.

How has the structuring of new issuances and the influx of European capital been impacted by the removal from that list?

LCM: This development enhances our international reputation and boosts the country’s competitiveness—particularly that of its banking center, financial system, and logistics hub—by fostering greater investor confidence and removing barriers that hinder commercial operations.

This has a significant impact on the Panamanian stock market, as it contributes significantly to strengthening the efforts that have been underway for years—especially with Euroclear and Clearstream—to transform Panama into an international securities listing center and provide reliable access to international investors.

Regarding Latinex’s integration with regional exchanges, how has the process progressed, and what benefits has it brought to the Panamanian market?

LCM: The Superintendency of the Securities Market (SMV) has designated several countries—including Costa Rica, El Salvador, Honduras, Mexico, Argentina, Ecuador, the United States, Nicaragua, and Uruguay—as “recognized jurisdictions,” which facilitates the local registration of securities issued in and originating from those jurisdictions.

Latinex statistics show a 26% increase in internationally connected securities custody accounts compared to 2024, for the purposes of international trading, which, in fact, has increased by 45% compared to 2024. Regional integration has also borne fruit, with approximately USD 1.627 billion in transactions.

How has the removal from that list impacted the structuring of new issuances and the inflow of European capital?

LCM: This development enhances our international reputation and benefits the country’s competitiveness, particularly that of its banking center, financial system, and logistics hub, by generating greater investor confidence and eliminating barriers that slow down commercial operations.

This has a significant impact on the Panamanian stock market, as it contributes significantly to strengthening the efforts that have been underway for years—especially with Euroclear and Clearstream—to transform Panama into an international listing center.

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Geopolitical Tensions and Their Impact on Market Confidence

The war waged by U.S. President Donald Trump against his arch-rival in trade, China, has had repercussions beyond tariffs and the movement of goods, and Panama has been the scene of one of the battles.

Last January, the Supreme Court of Panama revoked the concession granted to a subsidiary of Hong Kong-based CK Hutchison to operate two major ports on the Canal, accusing it of mismanagement and causing harm to the State.

Previously, in February 2025, the José Raúl Mulino administration announced Panama’s official withdrawal from China’s “Belt and Road Initiative” (the Silk Road), a move widely viewed as a decision influenced by the U.S. to diminish China’s influence over the vital interoceanic waterway.

In this regard, Luis Chalhoub notes that, as a result, the People’s Republic of China has not only threatened to halt its investments and take economic retaliatory measures, but has also announced international arbitration proceedings and, through its customs authorities, has stepped up inspections of Panamanian imports—a situation that created some uncertainty in the markets, though without major repercussions.

“The Panamanian government explained the independence of state bodies, implemented the necessary measures to ensure the continued operation of the ports once the Supreme Court’s ruling becomes final, and highlighted the relative weight of Chinese investments in the Panamanian economy, which sent a message of reassurance to the market.”

What expectations does the possible resumption of mining operations hold for the stock market?

LCM: As is widely known, following a ruling by the Supreme Court of Justice on November 27, 2023, declaring the mining concession contract—which governs the copper mining operations of Minera Panamá, a subsidiary of First Quantum Minerals—unconstitutional, and with the approval of a law imposing an indefinite mining moratorium, also in November 2023, metal mining activities in Panama were suspended, and only a plan for the preservation and maintenance of the copper mine has been implemented, which includes the processing and export of certain accumulated material, with the intention of avoiding environmental risks.

It is also known that the current government is interested in reactivating mining operations related to copper extraction, for which Minera Panamá has been required to suspend the ongoing arbitration proceedings.

Although it is not known for certain whether agreements will be reached to reactivate the copper mine’s operations, it is speculated that, if so, they will be finalized by the end of this year, with operations set to begin next year and the results expected to be reflected in the state’s finances by 2028.

In Panama, both the government and the private sector are clearly aware that mining activities must be carried out in a socially and environmentally responsible manner, but there is also an awareness that our environmental legislation requires updating to bring it in line with the best international standards, especially to strengthen regulatory powers and regulate matters related to safety, closure, and post-closure activities.

Given the uproar surrounding this case, what role do you think ESG criteria will play in future bond issuances?

LCM: There is no doubt that the market reflects a growing appetite for bond issuances from companies that meet ESG standards, and both regulators and market participants are aware of this and are promoting the adoption of regulations in this area.