El Salvador sells cross-border bonds for coronavirus funding
July 9, 2020 |
Sovereign issuer raises $1 bln for emergency plan worth 8% of GDP
El Salvador sold $1 billion worth of 32-year bonds in an effort to bolster the economic response to the devastation caused by the COVID-19 pandemic, a source involved in the deal told LatinFinance.
The new 2052 bonds priced at par to yield 9.5%, the source said.
El Salvador started with the initial price talk in the mid 9% area and then launched $1 billion at 9.5%, the source said.
The bookrunners were Scotiabank and Santander.
Moody's affirmed the sovereign issuer's B3 rating on March 12, changing its outlook on the government to positive from stable. Key factors in the change of outlook included "materially reduced government liquidity risks," and "improved business conditions that could lift private investment and economic growth," the ratings agency said.
In late March, El Salvador's congress authorized the government to take on debt of up to $2 billion to fund an emergency package for coronavirus response equal to 8% to GDP. To raise money for the fund, the government said it would seek $1.6 billion from multilateral lenders.
In April, the IMF granted the country $389 million in emergency financial assistance. In May, El Salvador got $250 million in emergency funds from the Inter-American Development Bank (IDB) to contain the spread of the virus. The IDB lent El Salvador another $250 in June to strengthen public policy and fiscal management to address the health crisis. The IDB and CABEI have each lent another $50 million, while the World Bank has approved $20 million. The country is still negotiating $600 million worth of loans with CABEI.
Before the closing of this deal, El Salvador had $6.65 billion outstanding in dollar denominated bonds, according to data provider Refinitiv.