Paraguay raised $1 billion in a two-part dual-currency bond deal that was roughly five times oversubscribed, President Santiago Peña said on Monday.
“Paraguay makes history by issuing bonds in guaraníes in the international market for the first time,” Peña said in a post on the social media platform X.
Demand from investors exceeded $5 billion, “a sign of a great moment for the Paraguayan economy,” he added. “Not all countries in the world have access to this possibility but today the guaraní generates enough confidence and makes investors bet on us.”
The South American country issued PGY3.6 trillion ($501 million) worth of seven-year bonds in guaraní and $500 million worth of 12-year notes in US dollars, market sources told LatinFinance.
The bookrunners were Citi, Itaú BBA and Goldman Sachs.
The sovereign priced the 2031 bonds at par to yield 7.9%. It opened the initial price talk earlier in the day in the low-8% area and set guidance around 7.95%, plus or minus five basis points, before launching the deal, a sell-side source said.
It priced the 2036 notes at par to yield 6% after opening the deal around 6.25%, the source added.
Investors placed up to PGY8 trillion in orders for the 2031s and as much as $4 billion for the 2036s, according to another source familiar with the deal.
OPENING THE DOOR FOR CORPORATES
According to Peña, the sale paves the way for corporates to tap the international market.
“This means that from now on Paraguayan companies will be able to issue abroad both in guaraníes and in dollars since they will have a reference interest rate to do so,” he said.
In a press release issued earlier on Monday, Paraguay said it is offering to repurchase any or all $457 million outstanding on its 5% 2026 bonds, putting up an even exchange for every $1,000 in principal for investors that turn in their notes by February 9.
The sovereign plans to use a portion of the proceeds from the bond sale to fund the tender offer, it added.
Last week, S&P Global Ratings upgraded Paraguay’s credit rating by one notch to BB+ with a stable outlook, citing the country’s economic stability and excess supply of renewable energy. Investors said they were unsurprised by the recent upgrade because they had anticipated the move ahead of Monday’s bond sale.
Paraguay issued $500 million worth of 5.85% 2033 bonds in June last year after waiting for a market window to open at a time of rising global interest rates.