The Government of Paraguay made history on Monday by issuing international bonds worth US$500 million in Guaranies, the local currency of Paraguay, which marks a significant step forward for large Paraguay-based businesses.
“Paraguay makes history by issuing for the first time bonds in Guaraníes in the international market. This means that from now on Paraguayan companies will be able to issue abroad, both in Guaraníes and Dollars, since they will have a reference interest rate to do so,” President Santiago Peña said.
He added that bonds were issued for a total of US$ 1 billion, half of which were in Guarani. “However, the demand exceeded five billion dollars, a sign of the great moment of the Paraguayan economy. This is a great step for our country, Paraguay is moving forward.”
Economy Minister Carlos Fernández Valdovinos highlighted that “the confidence in our currency and in the policies implemented by the Government have allowed that, for the first time, bonds in Guaraníes have been issued.” He added that the money raised by these bonds will be used for the financing of the public works projected in the General Budget of the Nation (PGN) 2024, as well as to refinance existing debt.
Fernández Valdovinos said the demand for the Guarani-denominated bonds reached a total of US$ 1.2 billion, and that the rate was well below the regional average, nearing that of investment-grade countries. Some ₲ 3,643,235,000,000 (~US$ 500 million) worth of bonds were issued at an interest rate of 7.9%, with a 7-year maturity, while for those issued in US dollars it was of 12 years with a 6% interest rate. More than 60 international investors were interested in government securities in Guaraníes, and over 150 were interested in the USD-denominated bonds.
Paraguay has one of the strongest economic outlooks in the South American region, with the World Bank predicting GDP growth to continue at a rate of 3.8% per year for 2024 and 2025. The outlook for all other countries in the region are substantially less, with predictions ranging from Argentina’s 2.7% in 2024 and 3.2% in 2025, down to Brazil’s 1.5% in 2024 and 2.2% in 2025.
