Paraguay has joined the pipeline of Latin American countries eyeing the international bond markets with a potential issue between $500m to $600m early next year to fund several infrastructure projects, debt capital markets sources said.
In October, Paraguay awarded its first public-private partnership (PPP) project to Spain’s Sacyr, Portugal’s Mota-Engil and local road builder Ocho to expand and maintain two of the country’s federal highways. The $520m 30-year contract will involve the Ruta 2 and Ruta 7 highways.
Paraguay’s government is also seeking a loan from the International Finance Corporation (IFC) and regional development bank CAF to find funding to rebuild the national highway Route 9, known as the Ruta Transchaco.
One fixed income investor said Paraguay’s economic prospects looked good and expected the sovereign to issue as soon as market conditions were favorable.
Paraguay’s Central Bank President Carlos Fernández Valdovinos told LatinFinance in October that the country’s economy was expected to grow 4% this year, up from a previous forecast of 3.5%.
“They [Paraguay] are just waiting to pull the trigger [on a new bond issue],” a second investor said. “How early they come will also depend on how many other sovereigns come to the market.”
Several countries are expected to tap the market in January, including El Salvador, which has the approval to issue up to $550m in cross-border bonds, one debt capital markets banker said. Colombia, which is seeking to win congressional approval of a fiscal reform bill, may also sell international bonds, an investor said.
Paraguay has been an occasional issuer in the bond market since debuting in January 2013 with a $500m 2023 bond.
The sovereign issued its fourth cross-border bond in March, a $600m 2026 note that priced at par to yield 5%.