Honduras Eyes December Debt Sale

Honduras sees a path to issue the $250m in bonds remaining under its budget this year after November elections, its finance minister says. “Rates will keep going up, that is why we want to issue,” Wilfredo Cerrato tells LatinFinance. He notes that investors have wanted to see the resolution of a $205m US lawsuit, which has now been settled in the sovereign’s favor. A transaction would need to follow November presidential elections, and if conditions permit, Honduras would likely return with a new $250m 5-year benchmark in the first week of December. Proceeds would be used to cover short-term indebtedness. The sovereign is optimistic for pricing below the 7.50% it got in its debut $500m bond transaction in March, which widened out from earlier, 7.00%-area price talk. The B2/B+ issuer overcame the disclosure of the lawsuit – filed against a government-owned forestry entity – during marketing, and the loss of a bookrunner, to end up with more than $1.75bn demand. However, the legal issue led to wider pricing than the sovereign had wanted, Cerrato says. S&P lowered Honduras’ credit rating to B from B+ in August as a rising debt has made the government’s finances more vulnerable to external shocks. Cerrato expects a deficit of 4.7% of GDP in 2014, after a 6% deficit this year.