The Dominican Republic broke ground last year, using the proceeds from a dual-tranche bond issue to strike a deal with Venezuela’s PDVSA that helped reduce the country’s debt.

B1/B+/B+ rated Dominican Republic sold $2.5 billion of debt across two tranches in January. The issues included a $1 billion 10-year bond and a $1.5 billion 30-year tranche. The sovereign sold the 10-year and 30-year instruments at a yield of 5.5% and 6.85%, respectively, trimming the yield on both by 15bp from initial indications. 

The prices for the notes were “fairly attractive” and offered just a slight concession to the curve, an investor said at the time of issue.

Bank of America-Merrill Lynch and JPMorgan, winner of LatinFinance’s Bond House of the Year and Investment Bank of the Year awards, respectively, led the transaction for the island nation. With the cash, the country struck a deal with PDVSA, successfully taking aim at the Venezuelan government-backed oil company’s cash-strapped position.

The Dominican Republic paid back $4.1 billion of PDVSA borrowing at a sharp discount, spending just $1.93 billion to retire the debt with the Venezuelan oil company. The transaction cut the country’s debt by 3.3% of GDP, bringing it to 34%. 

There was substantial competition for this award. Mexico launched a complex, large-scale liability management exercise in January, adding $500 million onto its 2025 notes issued a few months earlier and selling a new $2.5 billion 2046 note while offering holders of 10 outstanding bonds to switch into the new paper.

Peru also launched an impressive dual-currency liability management operation in March. The Andean country reopened its 6.95% 2031 instrument, raising more than 2.25 billion soles (then $728 million), and using the cash for a buyback of seven bonds denominated in local currency and dollars.

While Mexico’s and Peru’s liability management exercises were resoundingly successful, the Dominican Republic’s issue and subsequent deal with PDVSA had a huge impact on the country’s debt profile and paved the way for Jamaica to perform a similar exercise.

In late July, Jamaica sold a $2 billion dual-tranche bond during a lull in the primary cross-border bond market and used the cash to broker its own deal with PDVSA. The Caribbean nation sold an amortizing 6.75% $1.35 billion 2028 note and a 7.875% $650 million 2045 note. Jamaica used $1.5 billion of proceeds to retire $3.2 billion of its debt to PDVSA. LF

WINNER: Dominican Republic

Issuer: Dominican Republic

Finance Type/ Size: $2.5bn 2025 bond

Supporting Banks: JPMorgan, Bank of America-Merrill Lynch, Banco de Reservas de la República Dominicana, BNY Mellon

Law Firms: Cleary Gottlieb, Simpson Thacher, Pellerano & Herrera