IMF Stymies Bolivia Bond Comeback

The IMF will be doing a study of the financial system in Bolivia next March or April, meaning the country’s planned bond issue will not take place until 2012, finance minister Luis Arce tells LatinFinance. Bolivia had been planning to do its first bond issue in 70 years mid-2011. Arce adds that CAF is helping to co-ordinate the transaction, but bookrunners, size and spread have not yet been discussed. “We want do the bond issuance to position Bolivia in international capital markets and demonstrate the country’s macroeconomic strength,” says Arce. “Interest rates are low and the economy is well managed. After 15 years working to overcome the debt crisis, we have not defaulted on payments, and have reduced our external debt from $4bn in 2006 to $2bn, so now is a good opportunity to issue a bond,” adds Arce. The finance minister says a bond issue would lead the way for corporates to also be able to tap the market. “The economy is growing but the financial system isn’t so we expect this to help develop the capital markets as Bolivia only really has money markets, not capital markets,” adds Arce. Proceeds will go towards strategic government projects. Over the next 7 years, Bolivia plans a $32bn investment program, and Arce says it already has 40% of the funding. It is looking for $17bn to come from overseas investment. Projects include generation and export of energy to Brazil and Argentina, a fertilizer plant and infrastructure. The latter includes a motorway to the northern region of the country to access natural resources. Funding for its projects will come from a mixture of public, private and PPP investment.