Continental Paraguay Pulls Bond on Political Concern

Banco Continental Paraguay has decided against settlement of its $200m 2017 bond priced last week, after the impeachment of President Fernando Lugo caused a secondary market slide. The 8.875% coupon bonds, priced at par last week, were trading at 93.00-94.00 before news broke of the cancellation. “The cancellation is due to a decision by the bookrunners. We will wait until the market settles to revisit the international bond market. The deal was pulled because of political aspects and not because of the financial viability of the bank,” CFO Eduardo Cespedes tells LatinFinance. The official says the bank could revisit the bond market within a few months. S&P placed ratings of multiple Paraguayan banks on credit watch with negative implications, including Continental’s BB minus mark, following a similar rating action on the Republic of Paraguay. “The credit watch listing follows President Fernando Lugo’s recent impeachment and reflects the rising credit risks resulting from the possible political and economic ramifications of the abrupt change in government and the exit of Finance Minister Dionisio Borda,” the agency says.