Paraguay completed a landmark bond sale on 24 February 2026, raising the equivalent of US$1 billion entirely in guaraníes, its own currency, from international investors, marking a new milestone in the global reach of Paraguay’s sovereign bonds.
A sovereign bond allows a national government to borrow money directly from investors. Governments repay that money, with interest, over an agreed period. When a developing country issues bonds in its own currency rather than in a major currency such as the US dollar, foreign investors, not the state, bear the risk if the local currency loses value.
A third attempt, and the most ambitious yet
Paraguay’s third sovereign bond in guaraníes is its largest and longest yet on international markets. Paraguay equalled its 2014 record, raising US$1 billion in a US dollar-denominated bond.
Alongside the guaraní bond, the government also reopened an existing dollar-denominated bond, raising an additional US$300 million at a 30-year term maturing in 2055. That transaction attracted demand of US$1.89 billion, more than six times the amount on offer, from 65 international investors.
Strong demand for Paraguay’s sovereign bonds
The guaraní tranche drew offers of approximately US$1.5 billion from 64 international investors, exceeding the amount placed by 1.5 times. The Minister of Economy and Finance, Carlos Fernández Valdovinos said the strong demand allowed the government to secure more favourable terms than those seen in Paraguay’s own domestic market in recent months. The government secured an 8.5% rate, below the 9.1% recorded in a local Treasury bond in November 2025.
The government roadshow, a series of meetings between Paraguayan officials and potential investors, was managed by Citi, Goldman Sachs and J.P. Morgan, with presentations held in London and New York.
“The world trusts our currency”
The minister framed the transaction as evidence of growing international confidence in Paraguay’s economic management. He said Paraguay will, for the first time, cover its entire 2026 fiscal deficit using local currency.
The operation also forms part of a deliberate strategy to reduce reliance on dollar-denominated debt. The share of public debt held in guaraníes has now reached a record 22% of the total, up from just 8.3% in August 2023. The ministry plans to refinance 2027 and 2031 dollar bonds with guaraní bonds due in 2038. The ministry said the operation sets a benchmark for Paraguayan companies seeking foreign capital in local currency.
Credit ratings opened the door
The transaction follows Paraguay’s receipt of a second investment-grade credit rating. In December 2025, Standard & Poor’s assigned the country a BBB- rating with a stable outlook. Moody’s Ratings had awarded the first investment-grade rating in July 2024. Investment-grade status signals to the international financial community that investors consider the government a reliable borrower. It typically broadens the pool of eligible investors and lowers borrowing costs. In October 2025, Fitch Ratings upgraded Paraguay’s outlook from stable to positive but has not granted investment-grade status.
What the money will be used for
Of the US$1 billion raised, US$661 million will fund the national budget, while US$339 million will be used for liability management, a process by which a government buys back or exchanges existing debt to improve its repayment profile. The funds are authorised under Paraguay’s 2026 national budget law. By December 2025, public debt totalled US$20.4 billion, or 41.2% of GDP, before this issuance.
For more on the credit rating upgrade that made this bond issuance possible, read: Following Moody’s, S&P Upgrade Delivers Paraguay Second Investment Grade
