Sovereign debt: Next in line?
Bolivia and Paraguay have shown the bond market is open for riskier credits at exceptionally low rates. An Ecuadorian benchmark may push the limits of incredulity – but might not be so farfetched
By Ben Miller and Mariana Santibáñez The much
talked about search for yield has sent Latin American borrowing
in unprecedented directions, pushing investors into sovereign
credits that would have been unthinkable even two years ago.
They are not even finding much yield in these places. Bolivia
paid 4.875% to borrow 10-year money in October and Paraguay
debuted in January paying 4.625% for the same tenor. Such
precedents have prompted the question: which sovereign might be
next from a group for whom external debt issuance would have
seemed improbable not so long ago? The lower-rated Central
American and Caribbean issuers enjoy decent access. Guatemala
achieved a 5% yield on a 15-year bond in February. A return
from Costa Rica is expected in April or May. A Honduras debut
has been considered in the past, and as far as new credits,
perhaps only Cuba is off the table. But the name that...
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