Bolivia, Latin America’s poorest country, is said to be planning its second sale of overseas bonds in a year after almost a century of avoiding international capital markets.
The nation is seeking to sell $500 million of 10-year bonds to yield about 6.25 percent, according to a person familiar with the matter who asked not to be identified because he isn’t authorized to speak publicly. The proposed rate is 0.73 percentage point above the 5.52 percent yield on the country’s existing bonds due 2022.
The $500 million of bonds Bolivia sold in October were the first it had sold internationally since the 1920s. The extra yield, or spread, investors demand to hold the debt instead of U.S. Treasuries has narrowed 0.18 percentage point since they were first sold to 2.96 percentage points, according to data compiled by Bloomberg.
“Seems like it’s priced to sell,” said Wilbur Matthews, who oversees $100 million of emerging-market debt as chief executive officer of San Antonio-based Vaquero Global Investment LP. “The last bond they did was the first time they had had tradeable debt in eons so maybe the scarcity value will force it to trade tighter.”
Bolivia hired Bank of America Corp. and HSBC Holdings Plc to manage the new sale, according to the person.
The Andean country is rated Ba3, three steps below investment grade, by Moody’s Investors Service and at the equivalent levels by Standard & Poor’s and Fitch Ratings. The rating is in line with classifications of Nigeria, Suriname and Bangladesh.
Lower-rated bonds have outperformed better-rated debt with lower spreads since U.S. Treasury yields started rising in May on speculation the Federal Reserve would taper bond buying. Bolivia’s bonds returned 0.8 percent this quarter, beating debt from Brazil, Colombia and Chile, according to data compiled by Bloomberg.
Bolivia had income per capita of $1,260 in 2012, topping only Haiti in the Western hemisphere, according to data from the World Bank.