For the first time, Paraguay issues bonds in its local currency

Asunción, Agencia IP.- The President of the Republic, Santiago Peña, expressed that «Paraguay makes history by issuing bonds in guaraníes for the first time in the international market. This means that from now on, Paraguayan companies will be able to issue abroad, both in guaraníes and dollars, as they will have a reference interest rate to do so.»

In a historic placement of sovereign bonds in the international market, Paraguay issued bonds in local currency for the first time, equivalent to USD 500 million.

Peña highlighted that the trust in our currency and the policies implemented by the Government make this possible today. «Not all countries in the world have access to this possibility, but today, the Guarani (a currency that has turned 80 years old) generates enough trust and makes investors bet on us,» he wrote on his X account.

He also explained that bonds worth USD 1 billion were issued, of which half were in guaraníes. «However, the demand exceeded five billion dollars, a sign of the great moment of the Paraguayan economy. This is a big step for our country; Paraguay is moving forward,» he concluded.

On the other hand, the Minister of Economy and Finance (MEF), Carlos Fernández Valdovinos, emphasized that «the trust in our currency and the policies implemented by the Government have allowed, for the first time, bonds to be issued in guaraníes in said market.»

He mentioned that the resources obtained from the sale of the bonds will be used for financing the public works projected in the General Budget of the Nation (PGN) 2024 and for the amortization of debts with suppliers inherited from the previous Government and liability management.

The Head of Economy and Finance reported that the demand for the bonds greatly exceeded the available supply and reached a figure equivalent to USD 1.2 billion (2.5 times the amount offered) and that the rate was well below the regional average and close to investment-grade countries that have issued internationally in local currency.

On his X account, the official expressed that the issuance of bonds in USD was equally successful, as demand was eight times more than supply, USD 4.1 billion, and that the issuance interest rate was historically low, implying the smallest differential compared to U.S. treasury bonds from an issuance in ‘non-pandemic’ times.

He also pointed out that the interest rate on the dollar-denominated bonds is likewise lower than the regional average and close to investment-grade countries. The bonds issued have a term of 7 years for bonds in local currency and 12 years for those issued in dollars.

He highlighted that more than 60 international institutional investors have shown interest in acquiring government bonds issued in guaraníes. At the same time, that number exceeded 150 for those denominated in U.S. dollars.