Category: Paraguay

With a new finance ministry team in place, Paraguay continues to see a follow-up to its debut bond as a necessary part of its broader engagement with the international financial community. “We are considering the possibility to go back to the market,” Finance Minister German Rojas tells LatinFinance. Borrowing should include a new bond, as well as multilateral debt to raise funds for infrastructure and fighting poverty. Consistent sources of external funding are a key part of the ministry’s efforts to drive strong yet consistent GDP growth in the years ahead, Rojas says. “The international scenario is giving us signals as to how Paraguay can approach the international market,” vice minister Daniel Correa tells LatinFinance. He says The timing is “probably next year.” Officials from the previous administration said in May the sovereign was contemplating a GDN placement, and this remains a goal, Correa says. “We want to build a curve for local currency,” he says. The choice between dollars and a GDN, though, ultimately depends on the markets, and the ability of a GDN – a more difficult sell since the June market shakeup – to offer a benchmark size. The government is working with Citi as an advisor. A new international transaction would follow the Ba3/BB minus/BB minus issuer’s debut in January, raising $500m in 2023 bonds at a 4.625% yield via Bank of America Merrill Lynch and Citi.

Paraguay is targeting a $400m global depository note (GDN) sale in May, its finance minister tells LatinFinance. Citi is advising. Minister Manuel Ferreira Brusquetti says the sovereign is evaluating pitches from other banks as part of a wider funding program. “The idea is to have two yield curves – a domestic curve and the other that we have already established through our global bond,” the official says. Banco Regional intends to follow the sovereign into the international capital markets, with an international bond also considered for May, the minister adds. As for the sovereign’s $500m 2023 global bond in January, Ferreira says the terms were fully expected. “We weren’t surprised. Zambia and Bolivia did it. Our expectation was to trade inside Bolivia and we did,” he says. Paraguay priced at a 4.625% yield in its international debut. He says political risk from uncertainty over next month’s elections should not be a source of concern, noting there is a lot of agreement among political parties on the economic future of the country. Ferreira says he expects the sovereign to be upgraded in 2013, though not before the elections. He adds that Paraguay has met all upgrade targets set by S&P. “After an upgrade we could achieve pricing between 150-200bp over UST, compared to 250bp on our recent issue,” Ferreira says. Paraguay is rated Ba3/BB minus.