Paraguay Receives Double B

S&P has moved Paraguay into the double B universe by upping its long-term foreign currency rating to BB minus from B+, with a stable outlook. This comes on the back of increased fiscal flexibility thanks to Brazilian government’s agreement to raise the country’s share of revenues generated from the Itaipu Dam, it says. “As a result the Paraguayan government is able to continue to expand social programs and fund much-needed infrastructure while maintaining fiscal discipline,” it adds. Paraguay’s revenues from the project are expected to be increased by about 1.5% of GDP. The sovereign had been thought to be considering an international bond offering as far back as 2009, but no deal ever emerged. Earlier this year, BBVA Paraguay priced its $100m 3-year bond to yield 9.75% via Citi and BBVA, issuing what was thought to be one of the first cross-border dollar deals to emerge from the country. The Reg-S only transaction was rated Ba3.