Paraguay has just completed a successful issuance of sovereign bonds in foreign markets, giving the world the clear and positive signal of investor confidence in the country’s economic prospects.
The issuance was made for the amount of USD 1 billion in the financial market, at a rate of 6.1% and a term of 30 years.
These new funds – which constitute the largest issue of foreign debt in Paraguayan history – will be credited to the Central Bank of Paraguay (BCP) the second week of August 2014.
Money will go towards the priorities of the national Government, particularly, infrastructure.
The Position of the International Community
Foreign media voted enviable the placement of USD 1000 million in Paraguayan bonds.
Other countries in the region followed the same pattern: Uruguay just issued bonds worth USD 2 billion 36-year term, for which he paid a rate of 5.1% annually. Ecuador issued by USD 2 billion to 10 years at 7.95% per annum and Bolivia issued USD 500 million at 5.95%.
While the initial intention was to issue a total of USD 750 million the amount was increased to USD 1 billion, because the market demand was almost five times higher than the initial offering of USD 750 million, which also helped to reduce the rate for the transaction from 6.375% to 6.10%.
The offer was placed at a spread of 281.6 basis points over comparable US Treasuries.
The agents responsible for the placement were Bank of America, Merrill Lynch and JP Morgan Ltd.
The Local Stock Exchange
The Paraguayan Securities Law was enacted in 1998 and became operative through the creation of the National Securities Commission (CNV, in Spanish).
In the latest report published last July, CNV reported the existence of 38 listed companies, 1 mutual funds manager, 1 stock exchange, 7 brokerage firms, 9 stockbrokers, 38 auditors, 30 debt issuers and 4 risk rating companies.
It was also reported that three Global Issue Programs were recorded in July for the amount of USD 5.2 million.
The year 2013 registered shares with a total value of Gs. 431 billion (approximately USD 97 million), representing 172% increase over 2012.