Paraguay targets investment grade rating after 30-year bond
Country says long-maturity bond is a landmark in its efforts to attract investment and consolidate growth
Paraguay will strive to achieve investment grade status
following the sale of a 30-year $1bn bond that was a "vote of
confidence" from investors, the country's deputy finance
minister Daniel Correa has told LatinFinance.
The landlocked South American
country met strong demand when it priced the deal on
Monday, prompting it to shed plans for a 10-year tranche
and instead focus on the longer maturity.
"This was a vote of confidence that the market has given to
Paraguay ... We achieved one of the objectives the government
had: to issue a 30-year bond," Correa said soon after the deal
"Market conditions are really good for emerging countries like
Paraguay that have been implementing coherent political
economies for a while, which has helped us improve our
ratings," he added.
Paraguay presidential palace - Marco Bogarin
The Paraguayan government would continue implementing "sound"
economic policies in a bid to reach investment grade status,
Paraguay is rated Ba2/BB/BB-.
"This helps us to send a message to the international arena
that Paraguay is a country where investments can be safe,
effective and profitable. We think this is just the beginning,
we'll continue going to the international markets. Now we need
to further improve our economic policies and increase
investments so that Paraguay can reach investment grade
status," he said.
The country aims to implement an investor-friendly legal
framework to boost foreign direct investment, and to revamp
infrastructure to diversify the economy from agricultural
"We are using this financial investment in order to bridge and
attract all kinds of investment," central bank governor Carlos Fernández
said in a special report on Paraguay in the July/August edition
of LatinFinance, regarding the country's plan to return to
the international bond market. "That is investment in
factories, in land, in real estate. That is the way we are
using the sovereign bonds."
The bulk of the capital raised with the 30-year bond is
earmarked for infrastructure investment, Correa said. "Now we
have to work with the different ministries so that these
investments start in a rapid, effective and transparent way.
"This will foster economic growth and an increase in state
spending and we think that the private sector will also be part
of the process, doing the kind of investments that Paraguay
needs," Correa said. LF
Paraguay goes long in $1bn deal -
Paraguay: An agenda for
reform - special report
Paraguay upgraded - 12