Guatemala Returns to Global Market With $700 Million in Bonds

  • Ten-year senior unsecured notes sold today to yield 4.6%
  • Central American nation last sold dollar debt in 2013

After a three-year drought, Guatemala offered $700 million in bonds to help refinance debt and fund a budget deficit.

The 10-year notes sold today to yield 4.6 percent, the lowest in the nation’s history, Finance Minister Julio Hector Estrada told reporters in Guatemala City. Demand for the bonds totaled $3 billion, Estrada said.

“There is high appetite for Guatemala debt, it’s a very low-maintenance, well-managed macro story,” said Sean Newman, a money manager at Atlanta-based Invesco Ltd. “Risks are fairly muted.”’

Guatemala’s economy will expand 4 percent this year, according to the International Monetary Fund, while Latin America and the Caribbean as a whole are poised to contract. The fuel-importing nation is benefiting from lower oil prices, while Guatemalans living abroad are sending home more money in remittances as the U.S. recovers. Guatemala is seeking to boost tax revenue and restore faith in the government after the president, vice-president and central bank chief were all jailed on corruption charges last year, President Jimmy Morales said at Bloomberg headquarters in New York earlier this month.

Government revenue fell to a 19-year low of 10.8 percent of gross domestic product last year, the lowest in the region, after former President Otto Perez Molina was jailed and accused by prosecutors of bribery and leading a customs tax fraud racket. Morales, a former TV comedian, took office in January pledging to crack down on corruption.

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