Paraguayan Bank Sidesteps Volatility

Banco Continental Paraguay has priced a $200m 2017 bond, representing the bank’s debut in the international bond market, and the first high-yield corporate issuance from LatAm since Peru’s Ajecorp last month. Whether the deal indicates a true reopening for LatAm high-yield has yet to be seen, but scarcity value and a $450m book allowed the senior unsecured deal to price amid continued uncertainty in the market. Starting at 9%-area guidance, Continental tightened to 8.875% before pricing the Ba3/BB minus bond at par with a 8.875% coupon. The new bond was trading up 0.375 points in the grey Wednesday afternoon, according to a trader. There is some scarcity value and juice there,” says an investor following the trade. “The deal shows that there is appetite for non-investment grade names, and that the market is still open,” says a banker following the deal. The issuer was being comped against BBVA Paraguay’s (B+/Ba3/BB minus) 2016, which recently traded in the mid-7% range. “The deal was important for the bank and for the country as Banco Continental Paraguay looks to improve its credit rating and return to the debt capital markets in the future,” says a source close to management. Proceeds will be used to fund medium and long-term loans to customers and for general corporate purposes. North American buyers took 53% of the sale, Europeans 16%, LatAm accounts 15%, and Asia and other regions 13%. The transaction was heard backed by reverse inquiry from the US, and follows a roadshow in Europe, Latin America and the US. Bank of America Merrill Lynch and Citi managed the sale. Banco Continental services the agribusiness, industrial, commercial and services sectors, and is the second-largest financial institution in Paraguay in terms of net income, total deposits and shareholder’s equity, and third-largest in terms of total assets. The International Finance Corporation (IFC) owns 15.73% of the bank.