Paraguay to Emulate Bolivia With First Dollar Bond Sale

[Judi Lynn]

Paraguay to Emulate Bolivia With First Dollar Bond Sale
By Anatoly Kurmanaev - 2012-12-28T20:30:57Z.

Paraguay, the only Latin American economy set to contract this year, plans to issue the first dollar bonds in its two-century history in the first quarter of 2013 to tap booming global demand for higher-yielding debt.

The landlocked South American country is looking to issue about $500 million in bonds to yield 5 percent, in line with a recent sale by neighboring Bolivia, Finance Minister Manuel Ferreira said in a telephone interview from Asuncion today. The exact amount and date is being worked out with underwriters Citigroup Inc. and Bank of America Merrill Lynch, he said.

“We want to exploit favorable market conditions to raise funds for a major infrastructure investment program,” Ferreira said. “We have similar debt and economic metrics to Bolivia and we believe we can repeat its success.”

Bolivia returned in October to the international bond market for the first time since the 1920s, selling $500 million of 10-year debt to yield 4.875 percent. Yields on the securities have since risen to 5.2 percent, according to data compiled by Bloomberg.

Paraguay’s debt fell to about 13 percent of gross domestic product this year from 58.4 percent in 2002.

More:
http://www.bloomberg.com/news/2012-12-28/paraguay-looking-to-emulate-bolivia-with-first-dollar-bond-sale.html

[naaman fletcher]

1. Let's hope Paraguay can manage the associated currency risk with doing this.

Unlike, say Argentina.

When you borrow in Dollars you have to pay back in dollars.

That works well for Venezuela who sells it's oil in dollars.

If you don't have a dollar income, you have to convert your pesos to dollars first, and then pay back the bondholders.

If your inflation is higher than US inflation between the time you borrow the money and the time you pay it back, then you are paying back more in pesos than you thought they would.

[Lucky Luciano]

2. Perhaps Paraguay's confidence in issuing $ bonds instead of guarani bonds

comes from their recent very large oil find.

http://www.speroforum.com/a/GUJJSQEAYQ45/73329-Oil-find-is-a-gamechanger-for-Paraguay