Guatemala Issued $1.2 Billion in Eurobonds

The country issued $500 million in the international market with a 12-year term, at a rate of 5.37%, and $700 million in the 30-year term, at an interest rate of 6.13%.

Wednesday, April 22, 2020

The operation was carried out through the Bank of America (BOFA), one of the most important investment banks in the world, chosen through a competitive process, informed the Public Finance Ministry (Minfin).

From Minfin's press release:

April 21st, 2020. The Ministerio de Finanzas Publicas -Minfin-, placed today US$ 1.2 billion of Treasury Bonds of the Republic of Guatemala in the international market (Eurobonds), said transaction was structured in two tranches looking for the best market conditions.

- First Tranche: US$500 million at 12 years’ term, with a 5.375% rate
- Second Tranche: US$700 million, 30-year term, with a 6.125% interest rate

The first tranche was structured as a Social Bond directed to eligible projects, including measures to respond to the effects of the Coronavirus (COVID-19).

Guatemala is the first country to issue a bond of this nature in Central America and the Caribbean and the second in Latin America. The second tranche is part of the financing sources of the General Budget of Income and Expenditures of the State for the fiscal year 2020.

The operation was carried out through the Bank of America (BOFA), one of the most important investment banks in the world, chosen through a competitive process. The issuance of Eurobonds reached a historical demand of over US$8.1 billion ($8.1 trillion) and 180 investor accounts for both tranches, with investors from Europe, the United States, Asia and Latin America participating. It is important to note that the premium paid for this new issue was lower than those paid by Panama, Israel, Abu Dhabi (investment grade countries) among others, and the final rate (yield) is the lowest in the history of Guatemala for a 30-year bond.

Currently, the country is opting for various sources of financing for public spending, through local market funds, multilateral banking and global markets. The favorable conditions obtained in this issuance reflect the credibility that the country has built for many years in international markets where, despite the global economic slowdown and its uncertain recovery, confidence remains in Guatemalan bonds.

The Minister of Public Finance, Alvaro González Ricci, indicated that the monetary, exchange and credit policy that the country maintains along with the effective prevention and containment measures of the Covid-19 place Guatemala as one of the countries with greater expectations in the recovery and return to normality of its economy.

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The operation was carried out through the bank Citigroup Global Markets Inc, one of the three most important investment banks in the world, chosen through a competitive process, informed the Ministry of Finance.

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