Costa Rica and Uruguay tapped the international bond market for a second time this year on Monday, as they sought to take advantage of a drop in borrowing costs last week to raise a combined $2.2 billion.
Costa Rica placed $1.5 billion worth of 30.5-year bonds in a deal that was 3.4 times oversubscribed, the finance ministry said in a press release.
The Central American country priced the 7.3% 2054 notes at 94.788 to yield 7.75% after opening the initial price talk in the very low 8% area and setting the guidance at 7.8%, plus or minus five basis points, according to a source involved in the deal.
Bank of America and JPMorgan were joint bookrunners on the bond sale, the source added.
Costa Rica moved to lock in lower borrowing costs following a rally in US Treasuries last week that pushed down 10-year yields to their lowest level in five weeks on Friday amid growing expectations the Federal Reserve’s hiking cycle is over.
Additionally, Moody’s upgraded Costa Rica’s credit rating by one notch to B1 on Friday, citing the government’s efforts to steadily reduce its borrowing costs while increasing both the liquidity of and access to its debt. S&P raised the country’s debt to BB- from B+ last month.
“The improvements in the risk rating and compliance with the commitments with the International Monetary Fund, among other factors, allowed us to place our securities in favorable conditions,” said deputy finance minister Priscilla Zamora in the release.
A source working on the deal said last month that Costa Rica was waiting for more favorable market conditions to price the notes. The sovereign sold $1.5 billion worth of three-year notes in the international market in March.
URUGUAY SLBS
Meanwhile, Uruguay added $700 million to its 5.75% 2034 sustainability-linked bonds (SLBs) on Monday in a deal that was roughly 3.9 times oversubscribed, according to a source involved in the transaction.
“Books at peak were about $2.7 billion for what originally was going to be a $500 million tap. The idea was for Uruguay to take advantage of this window,” the source said, in reference to Friday’s drop in Treasury yields.
The South American country priced the tap at 101.148 to yield 5.597%, equal to a spread of 95 basis points over Treasuries. It opened the initial price talk at around 120 basis points and set the guidance around 100, plus or minus five basis points, according to the source.
BNP Paribas, Goldman Sachs and Scotiabank were joint bookrunners on the bond sale, the source added.
TREASURIES RETREAT
The outcome of the deal was positive considering there was a retreat in US Treasuries on Monday, the source said.
“Many were repeat buyers. The anchor orders were your typical Uruguayan and SLB buyers, and there were some new buyers,” the person said. “It was a really good mix of investors.”
Uruguay sold $1.2 billion worth of 12-year notes in its first sale of SLBs in the international market in October last year. It went on to sell $1 billion worth of 10-year, peso-denominated global bonds in July.
GEB PRICING
Colombia’s Grupo Energía Bogotá (GEB) also priced $400 million worth of 10-year sustainable bonds in the international market on Monday, according to reports from Bloomberg and Refinitiv.
The power company priced new 7.85% 2033 notes at 99.932 to yield 7.86%, or 320 basis points over USTs, after opening the deal in the low-mid 300s and setting the guidance at 320 basis points, according to the reports. JPMorgan, Santander and Scotiabank were joint bookrunners on the bond sale, the reports said.
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