Guatemala talks 2018 fundraising plans

Guatemala talks 2018 fundraising plans

Central America Guatemala Bonds

Guatemala is likely to wait until Q2 next year to issue cross-border bonds, joining a list of LatAm sovereigns that talked up their 2018 funding plans, LatinFinance understands.

The Central American country's finance minister Julio Hector Estrada said no issue size had been determined, but in line with previous bond sales, Guatemala should raise around $500m.

“Typically, we don’t issue for less than $500 million," he said. “Our plan is to be in the market in the second quarter."

Estrada shrugged off any potential sales in 2017, saying the sovereign issuer was "fully funded."

Guatemala's fundraising, however, may get a little more expensive next year after S&P Global Ratings cut the sovereign issuer to BB- from BB. Potential political noise over the 12 to 24 months could lead to further downgrades, the rating agency said in a report on Wednesday.

But an upgrade could present itself, should Guatemala propose and implement a reform agenda that strengthen's governability and public institutions, increases revenue and bolster GDP growth prospects, S&P also said.

The downgrade, for now, reflected Guatemala's decelerating economic growth, that S&P expects to persist over the next two years. This is related to the country's recurrent political instability and weak institutions.

Guatemala issued $500m in 2027 bonds in June with Citi the sole bookrunner. The 10-year paper priced with a 4.375% coupon to yield 4.5%.

The government forecasts that the economy could grow between 3% and 4% next year, Estrada said.