Guatemala Plans $500m Bond Return

With funding costs at attractive lows and an infrastructure pipeline to develop, Guatemala is considering its first dollar bond since 2004, finance minister Juan Alberto Fuentes tells LatinFinance. “We are evaluating possibilities. This year would be ideal and Guatemala is capable,” the official says. Congress should approve soon a plan allowing the government to issue $500m in the international markets, he says. A tenor has not been decided, though 10 years would be a likely possibility. Bankers in Cancun for the IDB meetings say that the Central American issuer is a good candidate to tap and there are plenty of shops pitching. Fuentes says proceeds of the sale would help fund infrastructure investments the government has planned including roads, ports and airports. The sovereign, rated BB+/Ba2/BB, does not have maturities to refinance until 2011. It also has good access to multilateral lines. Fuentes highlights the fact that Guatemala was one of the few economies in the region to grow in 2009. It expanded by 0.6%, owed to a reliance more on food exports as opposed to durable goods shipments. He expects 2% expansion in the economy this year. An improving picture in the US would also help remittances boost the economy. While conditions in the US have improved since last year, Fuentes does not see unemployment falling significantly in the short term.