Guatemala Sends RFPs for Foreign Bond

Guatemala has sent out RFPs to raise up to $500m in the international bond markets through a 144A/RegS offering, with submission deadlines set for August 26. But bankers are resigning themselves to competing on a fee basis as is standard practice in many Central American countries. “[It] will be a typical point-based antiquated RFP a la El Salvador that heavily favors the lowest fee above all else,” said one banker. Competition for such mandates have stirred up its fair share controversy, most recently after Deutsche Bank won sole lead spot on an El Salvador deal late last year with a 1bp fee. Proceeds from the Guatemala trade are expected to refinance its maturing $325m 10.25% bond due November 2011. This comes after S&P recently revised its outlook on Guatemala’s BB/B foreign currency rating to negative from stable. The rating agency noted that political polarization is hindering fiscal reform at a time when the country is suffering from low tax revenues combined with an increasing interest burden.