Paraguayan Bank to Test DCM

With new issuance conditions still somewhat uncertain, Banco Continental Paraguay is planning to start meeting fixed-income investors this week in Europe, Latin America and the US. A deal, to be the issuer’s first in the international markets, could follow if conditions allow. The Ba3/BB minus bank begins in Montevideo Wednesday, visits London and Santiago Thursday, Switzerland and Lima on Friday, and Los Angeles and Miami the following Monday, before wrapping up in New York June 19. The investor circuit suggests that Banco Continental may be eyeing $100m-$200m in a 5-year, 7-year or 10-year bond, though no official details have been released. Guatemalan Banco Industrial’s 2021 subordinated bond (Ba2/BB) and BBVA Paraguay’s (B+/Ba3/BB minus) 2016 are two bonds highlighted by bankers and investors as reference points for Banco Continental. Banco Industrial and BBVA Paraguay were trading Monday to yield 7.44% and 8.14%, respectively, according to a trader. Investors have been saying that markets are open only to top investment grade names if they can pick the right window. The potential transaction is heard to be backed by reverse inquiry from the US, with full meetings scheduled with both retail and institutional interest. Though plans announced over the weekend for a Spanish rescue package have improved sentiment, Greek elections looming this weekend mean borrowers run the risk of the mood suddenly turning against them once they have announced a deal. Other would-be issuers have decided to hold off on announcing transactions until after the elections. Some investors are open to hearing Banco Continental Paraguay’s story, while others say timing is not yet right for a high-yield first-timer. “I haven’t seen the credit fundamentals but this represents scarcity value, and there are not too many corporates out there,” says a London-based portfolio manager. Irrelevant of its sub-investment grade status, participation in the issuance will depend on the quality of the ba