MercoPress. South Atlantic News Agency

Paraguay successfully issues bonds in local currency

“This is a great step for our country, Paraguay is moving forward,” President Peña said

The Government of Paraguay made history Monday by issuing international bonds worth US$ 500 million for the first time in local currency, it was reported in Asunción. “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.

“Not all countries in the world have access to this possibility but today, the Guarani generates enough confidence and makes investors bet on us,” the head of state added on X.

He also explained that bonds were issued for 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 funding stemming from those bonds will be used for the financing of the public works projected in the General Budget of the Nation (PGN) 2024, and to pay up debts with suppliers from the previous administration of President Mario Abdo Benítez, who, like Peña, is from the Colorado Party but from a rival faction within it.

Fernández Valdovinos said the demand for bonds reached some 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$ 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. More than 60 international investors were interested in government securities in guaraníes and over 150 coveted those in US dollars at an interest rate of 6%.

In this scenario, the World Bank has issued a report forecasting that Paraguay would keep its growth trajectory, projecting a solid 3.8% for the years 2024 and 2025, which consolidates the South American country as a leader in the region.

The WB said this 3.8% growth level was consistent with the average that Paraguay has maintained in recent years, marking a positive continuity. In the previous year, the Paraguayan economy experienced a significant rebound of 4.5%, in contrast to the practically null growth of 2022, which barely reached 0.1%, according to recent data.

As per the WB study, Brazil's economy will grow 1.5% in 2024 and 2.2% in 2025; Mexico 2.6% in 2024 and 2.1% in 2025; Argentina 2.7% in 2024 and 3.2% in 2025; Colombia 1.8% in 2024 and 3% in 2025; and Chile 1.8% in 2024 and 2.3% in 2025.