Paraguay, the only Latin American economy set to contract this year, plans to issue the first dollar bonds in its two-century history in the first quarter of 2013 to tap booming global demand for higher yielding debt.
The landlocked South American country is looking to issue about $500 million to yield about 5 percent, in line with a recent sale by neighboring Bolivia, Finance Minister Manuel Ferreira said in a telephone interview from Asuncion today.
The exact amount and date is being worked out with underwriters Citigroup Inc. and Bank of America Merrill Lynch, he said.
“We want to exploit favorable market conditions to raise funds for a major infrastructure investment program,” Ferreira said today.
“We have similar debt and economic metrics to Bolivia and we believe we can repeat its success.”
Bolivia returned to the international bond market for the first time since the 1920s, selling $500 million of 10-year debt in October to yield 4.875 percent.
Yields on the securities have since risen to 5.2 percent, according to data compiled by Bloomberg. Paraguay’s debt fell to about 13 percent of gross domestic product this year from 58.4 percent in 2002.
The government will channel the funds from the bond sale into investment projects, such as roads and electricity networks, Ferreira said.
Benchmark interest rates close to zero in Europe, the U.S. and Japan have led investors to buy up bond sales by countries such as Bolivia, Mongolia and Zambia in search of higher yields.
Latin American sovereign debt yielded an average 5.26 percent on Dec. 28, according to JPMorgan Chase & Co.’s EMBIG indexes.
bloomberg.com
The landlocked South American country is looking to issue about $500 million to yield about 5 percent, in line with a recent sale by neighboring Bolivia, Finance Minister Manuel Ferreira said in a telephone interview from Asuncion today.
The exact amount and date is being worked out with underwriters Citigroup Inc. and Bank of America Merrill Lynch, he said.
“We want to exploit favorable market conditions to raise funds for a major infrastructure investment program,” Ferreira said today.
“We have similar debt and economic metrics to Bolivia and we believe we can repeat its success.”
Bolivia returned to the international bond market for the first time since the 1920s, selling $500 million of 10-year debt in October to yield 4.875 percent.
Yields on the securities have since risen to 5.2 percent, according to data compiled by Bloomberg. Paraguay’s debt fell to about 13 percent of gross domestic product this year from 58.4 percent in 2002.
The government will channel the funds from the bond sale into investment projects, such as roads and electricity networks, Ferreira said.
Benchmark interest rates close to zero in Europe, the U.S. and Japan have led investors to buy up bond sales by countries such as Bolivia, Mongolia and Zambia in search of higher yields.
Latin American sovereign debt yielded an average 5.26 percent on Dec. 28, according to JPMorgan Chase & Co.’s EMBIG indexes.
bloomberg.com
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