Paraguay charts local bonds
The sovereign hopes to round out its 2017 fundraising needs with $58m in seven-year notes in guaranies
Paraguay is looking to issue the equivalent of $58m in local
seven-year bonds to provide a boost to the domestic capital
markets and round out its fundraising requirements for the 2017
"There are a lot of resources in the market that are not
being channeled into the economy," Lea Gimenez,
Paraguay’s vice minister for economic affairs,
told LatinFinance. "We want to use this to generate
long-term lending locally.
Paraguay has $58m remaining in it capital markets
fundraising plans for 2017, following a 10-year $500m bond issue in March. The
cross-border sale came after a drawn-out tussle in Congress,
which ended with President Horacio Cartes using a veto to keep
the 2016 budget in place.
With elections looming next year, Paraguay’s
Finance Ministry is facing heightened congressional scrutiny,
Gimenez said. Lawmakers have proposed allocating parts of the
budget to increase wages for public-sector employees and
limiting the Finance Ministry's ability to issue new
"[Congress] does not want the country to collapse, but
Congress wants bargaining power," Gimenez said. "It generates
an uncomfortable situation for someone managing those
Cartes’ veto in December last year came after
the Senate lowered the amount of debt the government could
issue in 2017 to $349m from $558m.
Guarani-denominated bonds will limit the government's
exposure to cross-border debt and raise funds for
infrastructure investments, Gimenez said.
"This government came with a strong infrastructure plan,"
she said. "The number one priority is to push the
Since taking office in 2013, Cartes' administration has
issued almost $2bn in cross-border bonds to finance
"When the executive needs to repay [cross-border bonds], we
have to beg to issue bonds," Gimenez said. "If you have an
investment plan, you cannot finalize it because the money you
wanted for projects has been allocated elsewhere."
Paraguay’s capital markets recently received a
boost when the IIC announced a
PYG1bn ($180m) local bond program.
During a closed session on April 1, the Senate voted to
amend the constitution to allow the sitting president to run
for reelection and also allow former presidents to enter future
elections. The country’s constitution had
prohibited presidents from running for reelection since
The proposed amendment now requires approval by the lower
chamber, but a vote has been postponed due to unrest in the
Opponents say the amendment, if approved, will weaken
Paraguay’s democratic institutions, reminiscent of
the days under dictatorship.
"Cartes is not trying to violate the constitution," Gimenez
said. "It is perfectly fine because, to amend the constitution,
the only way to do this is voting to have a referendum, where
the people can then choose to amend [the constitution] or
If the amendment becomes law, the next presidential election
could see Cartes face off against former President Fernando
Lugo, who maintains strong support in Paraguay.