Paraguay minister says bond issue ‘imminent’
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Emerging Markets

Paraguay minister says bond issue ‘imminent’

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Paraguay is seeking to capitalize on its progress in international capital markets and issue a second bond in little more than a year.

Officials from the Southern American country have been travelling across the world to sell the “new Paraguay” and attract investors.

“We want many sources of funding,” said Daniel Correa, Paraguay’s deputy finance minister, who is part of a new breed of technicians who are part of the economic team of president Horacio Cartes. “The bond issue is imminent, we are currently working on the approval of its amount in Congress and how we allocated these resources.”

The new president took office last August and rolled out an ambitious $16bn investment programme to modernize the country’s infrastructure and diversify its commodity-based economy.

The IDB, the World Bank, CAF, and “friendly countries such as South Korea and Japan” have pledged funds, said the trade minister Gustavo Leite, but Paraguay will also seek extra resources on the markets.

Correa said the bond value would be between $500m and $750m and it would realistically be placed within “the next couple of months”. The total bond programme amounts to $1.5bn, the Paraguay finance minister German Rojas told Emerging Markets. “We are always on alert to choose the best moment for an issue,” Rojas said.

Paraguay was the fastest growing country in Latin America last year and is aiming for 4.8% growth this year. Its orthodox economic policies and its potential have attracted interest from investors.

“Paraguay is a well unknown country,” Correa told Emerging Markets. “Something different is happening there, this is a story we want to tell.”

Moody’s upgraded Paraguay’s sovereign rating twice in little more than a year. Last month, it delivered a Ba2 rating and changed the outlook from stable to positive.

“International organizations have improved Paraguay’s ranking. We are now very close to investment grade. We think Paraguay could achieve very competitive rates on the international market,” said Leite in an interview with Emerging Markets. He admitted the costs may be higher due to market conditions. “Tapering has altered the scenario,” he said.

Correa insisted, however, that Paraguay really stands out among its Latin American peers. “Paraguay is the only country in the region to have received an upgrade from rating agencies in recent months. There was the Brazil [downgrade] this week and Venezuela is also in trouble. The region is basically in an uncertain situation. From this perspective, Paraguay is insulated. This is something that we want to show.”

Correa said the modernization of the local bank network was needed to handle a massive investment programme. “We want to connect international banks with local banks. This is one of the channels we intend to pursue to increase investment in the coming years... We need to adapt technology in terms of know-how and resources,” he said.

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