Bolivia touts healthy economic growth ahead of possible bond sale

Bolivia touts healthy economic growth ahead of possible bond sale

Bolivia Bonds Economy & Policy Corporate & Sovereign Strategy

Bolivia could issue up to $1bn in international bonds in the coming months to help finance the construction of new roads and hospitals as the South American country looks to tap into growing investor appetite for Latin American debt.

Luis Alberto Arce
Economy Minister Luis Arce says bond proceeds could fund infrastructure. Photo credit: OECD/Julien Daniel

Economy Minister Luis Arce told LatinFinance in an exclusive interview that he was watching market conditions and held talks with banks about a potential bond sale, which would be the third by Bolivia since it returned to international credit markets in 2012 for the first time in decades.

One investor predicted Bolivia would see favorable conditions over the next two months.

"Appetite for LatAm is strong right now,” the investor said. “Now is as good as ever for Bolivia to issue debt at favorable terms.”

Arce said the proceeds of any bond sale would be used for infrastructure investments, with a “significant portion” going to fund a government plan to build new hospitals.

“Today, Bolivians have to travel outside the country for speciality medical treatments, and we need to provide options for them at home,” he said. “And we need to improve our infrastructure connecting to our key markets of Argentina and Brazil.”

Bolivia, rated Ba3 by Moody’s and BB by S&P Global Ratings, last tapped international credit markets in August 2013 when it sold a $500m 2023 bond.

The country’s light debt burden “puts us in a comfortable to issue debt if we want,” Arce said. Bolivia’s debt-to-GDP ratio currently stands at around 19%.

Bolivia’s economy is on pace to grow just under 5% this year, he said. Under President Evo Morales, the Bolivian economy has tripled in size since he came to office in 2006. Morales has tightened state control over the economy but also won praise from Wall Street for carrying out prudent macroeconomic policies.

Arce has largely been seen as the architect of Morales’ economic plan.

“We believe that our economic model, which is based on redistributing gains in strategic areas like the hydrocarbon, electrical and mining sectors helps keep our internal market stimulated. 

“That provides a little motor to keep the economy growing. We’re obviously paying attention to external demand, but we believe internal demand should not be overlooked.”