Central America: A region finds its feet

After tumultuous decades of war, economic stagnation and isolation, Central America is at last standing on fairly stable ground with its eyes on wider horizons. In a relatively short period of time, the region has put an end to a number of debilitating civil wars, achieved steady economic growth and laid the groundwork for foreign investment.

In response to these efforts, several countries in the region were assigned investment-grade ratings for the first time last year. Standard & Poor's rated Costa Rica BBB-, while Moody's gave El Salvador Baa3 and Panama Baa1. The region's two poorest nations, Honduras and Nicaragua, are also making slow progress on restructuring their economies as they privatize and streamline bloated state bureaucracies under IMF pressure.

When Panama tested the international waters with the region's inaugural Eurobond last February, international investors gave a broad welcome. Led by Bank Boston, the five-year issue was to have been...