Category: Paraguay

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.

The Republic of Paraguay has made its anticipated international bond debut, raising $500m at a tighter than expected 4.625% level and getting about $5bn demand. The 2023 bond priced inside of Bolivia, who itself debuted last year bringing similar political and macroeconomic risk. Paraguay becomes the latest high-yield borrower to capitalize on low US rates and heavy demand for exotic credits. “Timing could not have been better for Paraguay,” notes a participating EM sovereign bond investor following the trade. The Ba3/BB minus/BB minus trade priced at par with a 4.625% coupon to yield 4.625%, at the tight end of 4.625%-4.75% guidance given Thursday morning and revised from Wednesday’s 5%-area. Orders were heard peaking at $5.6bn before the final tightening. The bonds were trading up 1.25 points in the grey, according to a trader. “Issuers normally leave a bit of spread on the table, but Paraguay is squeezing from the market, but that doesn’t mean that the bond will not be successful,” says a participating London-based EM portfolio manager, noting the difficulty in finding Paraguayan paper. The issuer’s main comp was Bolivia’s (Ba3/BB minus) 2022, which also started at 5% indications before tightening to price at 4.875% in October, and was recently trading in the 4.75%-4.80% range. “The deal is not particularly cheap. On a relative basis, Paraguay should trade inside Bolivia but the problem is that Bolivia is trading very rich,” says a New York-based sovereign credit investor. “A credit like Paraguay is able to price at those levels because of the strong rally in middle yield credits like El Salvador, Guatemala, Costa Rica and Dominican Republic. They are pricing in a major rally and benefitting from that,” says a participating London-based EM investor. Some 211 accounts participated. Paraguay has enjoyed fiscal surpluses in 2005-2011, though it posted a small deficit in 2012. For 2012, it reported a government debt of 14% of GDP and external debt to GDP of 8.8%. “Wh

Paraguay has given 5.00%-area yield guidance for a 10-year $500m bond debut expected to price as soon as today, according to investors following the transaction. Books exceeded $1.2bn 30 minutes after announcement Wednesday morning, and the sovereign has indicated the $500m size will not grow. The issuer’s international bond debut is being compared to Bolivia’s (Ba3/BB minus) 2022 bond sold last year. Bolivia, too, started at 5% levels before tightening to price at 4.875%, and now trades in the 4.75%-4.80% area. “Paraguay seems cheap relative to Bolivia, so I would expect a strong book and hence decent performance,” says a New York based EM sovereign investor following the deal. “Fair value would be at 5% and above, but this deal may be priced too aggressively, like Bolivia. In both cases, upside is fairly limited,” adds another buysider looking at the transaction. In a report, Barclays spots fair value at 4.85%-5.00%. Bank of America Merrill Lynch and Citi are managing the sale, rated Ba3/ BB minus/BB minus.

Paraguay is scheduled to start investor meetings today ahead of what should be its international bond debut, according to people familiar with the matter. The sovereign has previously indicated it would seek up to $550m at a maturity of up to 10 years. The issuer will begin the roadshow in London and Lima today and visit Los Angeles, Santiago and New York before finishing in Boston Wednesday. Bank of America Merrill Lynch and Citi are managing. In addition to integrating with the global financial community, Paraguay is looking to raise funds for road and energy projects. It was given a new BB minus rating from Fitch Thursday. Moody’s had upgraded Paraguay to Ba3 from B1 earlier in the week, and did the same Thursday for Telefonica Celular del Paraguay, which priced a $300m 2022 NC5 bond last month at 6.75% yield.

Telefonica Celular del Paraguay (Telecel) has priced a $300m 2022 NC5 bond in a debut transaction that signifies a continued broadening of DCM access for Paraguayan credits. The first non-bank international issuer from Paraguay drew $4bn in orders and saw a pop in the aftermarket. The BB telecom priced at par with a 6.75% coupon to yield tight to the low 7%-area initial price thoughts. The bond traded up 2-3 points in the grey, traders say. Investors following the deal say Telecel attracted US high-yield accounts and dedicated EM buyers. “We were excited at 7.0%, but clearly a lot of people stayed once it tightened with some accounts heard looking to stick around even at 6.5%,” says a New York-based EM investor citing 7.00% as fair value and opting out of the trade at 6.75%. The buyside saw the deal as a loose proxy for Paraguayan sovereign risk. “Paraguay is highly exposed to agriculture and commodities, but the country is run conservatively so we’re not too concerned about political issues,” says a participating East Coast EM investor. The buyer adds that 6.75% was a justifiable level to help compensate investors for questions arising over Telecel’s capex plans and pending regulations from Paraguay’s congress. Telecel holds a strong market position as the main operator in the Paraguayan telecom sector. Despite increased competition in recent years, it holds a comfortable 57% market share in the mobile segment. While it has 100% penetration in the telephony segment, it is looking to branch out in broadband and pay TV. It recently acquired Cablevision, which holds 89% market share in pay TV and sizeable fixed broadband operations. Proceeds from the bond issue will be used to repay a $150m bridge loan raised for the Cablevision buy, with the balance to finance capex and potential spectrum license costs. Citi and Morgan Stanley managed the deal. Telecel operates the Tigo brand and is a subsidiary of Millicom International Cellular. The deal follows Banco Continental P