Aruba Brings Small 5-year Bond

Aruba is preparing the sale of $50m in 2013 bonds, expected to price as soon as Friday, and guidance has been set in the area of UST+295bp. The offering is not expected to grow in size. S&P has rated the transaction A minus, noting the island nation’s overall economic health and an expectation that its government will make progress toward reducing the fiscal deficit to less than 1% of GDP in 2008 and 2009. “Offsetting these positive factors are Aruba’s narrow economic base, debt burden, and limited monetary and external flexibility,” says S&P analyst Richard Francis. The tourism sector accounts for about half of GDP and Aruba has demonstrated flexibility and adaptability to external conditions. S&P projects gross general government debt at about 43% of GDP in 2008, higher than the 31% median level for A rated peers. “Projections are for net general government debt and general government debt to reach 31% of GDP and 123% of revenues, respectively, in 2008, which are higher than the 26% and 109% median levels for rated peers,” says the agency. Aruba sold $45m in 6.5% 2019s in November 2007 via Bear Stearns.