Paraguay cuts funding costs with new bonds

Paraguay cuts funding costs with new bonds

Bonds Debt Capital Markets Corporate & Sovereign Strategy Economy & Policy Fixed Income Paraguay

Paraguay has sold $500m in 31-year bonds at its lowest rate for long-term notes, as investors rewarded the country for solid economic growth and low debt levels.

The underwriters Citi, Goldman Sachs and Morgan Stanley priced the new notes with a coupon of 5.4%, or 234bp over US Treasury bonds, the lowest spread for any of Paraguay's 30-year paper.

"They did well and had no shortage of appetite," said a debt capital markets banker in New York who was not on the deal. 

Demand for the new notes reached roughly the same levels as the $530m in 30-year notes that Paraguay sold in March last year, when the order books were roughly five times oversubscribed, said an analyst from Fitch Ratings

"Paraguay is a really good story," the analyst said."They have very good debt levels, pretty strong economic growth and a good balance of payments."

Paraguay paid slightly more than Colombia, which issued $1.5bn in 30-year bonds at 5.2%, but less than half than Ecuador, which sold $1bn in 10-year notes at 10.75%. 

Before last year's bond sale, Paraguay sold $1bn in 30-year notes at 6.1% in August 2014.

Paraguay's Finance Minister Benigno López said in July last year that the country could issue up to $1bn in bonds in the local and international markets in 2019.