Man Behind World’s Biggest Bond Rally Seeks Encore in Honduras Election

  • Honduras bonds returned the most in the world as deficit fell
  • Alarm bells sounded over president’s concentraction of power

The leader who brought Honduras back from the brink of being a failed state and oversaw the world’s biggest sovereign bond rally is seeking to become its first president to get re-elected in more than three decades.

Juan Orlando Hernandez, 49, has pledged to continue to cut debt under an IMF program and to try to make the Central American nation -- until recently the planet’s murder capital -- safe enough for foreign tourists to visit. He’s leading in polls ahead of the Nov. 26 vote.

Juan Orlando Hernandez

Photographer: Orlando Sierra/AFP via Getty Images

Hernandez’s lead, “reflects the fact that the country is more comfortable with the more business-friendly, conservative track that he is on,” said Eurasia Group analyst Risa Grais-Targow. “The economy is doing well under him, he’s helped to reduce crime quite a bit and he has done quite a bit in terms of changing investor perception.”

Hernandez inked a three-year program with the International Monetary Fund in 2014 and cut the fiscal deficit to 2.6 percent of gross domestic product last year, from 7.9 percent in 2013, helping the country earn ratings upgrades from Moody’s Investors Service and S&P Global Ratings. The nation’s dollar bonds -- it has $1.7 billion outstanding -- have returned 78 percent since October 2013 when Hernandez took a lead in polls ahead of his election, the most among all the countries in Bloomberg’s sovereign bond indices over the period.

The murder rate, which reached 86 homicides per 100,000 people in 2011, is now about half that, after Hernandez sought to purge the police of corrupt officers and allowed courts to extradite alleged drug lords and business elites accused of money laundering.

Supporters of Hernandez attend the closing electoral campaign rally on Nov. 19.

Photographer: Orlando Sierra/AFP via Getty Images

If elected, Hernandez would be the first president to gain a second term since the nation’s 1982 return to democratic rule. Honduras’s Supreme Court overturned a constitutional ban on re-election in 2015 allowing Hernandez to run again for the high office, even after a 2009 coup that led to the ousting of former President Manuel Zelaya amid his attempt to allow for a second presidential term.

Alarm Bells

It’s not just the local opposition who are sounding the alarm over Hernandez’s growing power. S&P warned that increased concentration of power is a risk and that the country’s system of political checks and balances remains weak.

Economic growth will accelerate to 4 percent this year from 3.6 percent in 2016, according to the IMF. The economy has benefited from cheaper energy prices for its fuel imports, higher remittances from Hondurans in the U.S., and a record coffee harvest.

Hernandez, a conservative former congressman, led a September poll by Cid-Gallup with 37 percent, 15 points ahead of his nearest rival in the one round, winner-take-all vote.

Hernandez’s closest opponent is television sports journalist Salvador Nasralla, who leads an opposition coalition backed by left-leaning, ousted President Zelaya and his wife Xiomara Castro, who lost to Hernandez in 2013.

Miss Universe

Salvador Nasralla and his wife Iroshka Elvir, left, attend a rally in Tegucigalpa.

Photographer: Orlando Sierra/AFP via Getty Images

Nasralla, 64, boasts a love for Speedos and claimed in an interview that he has slept with more than 700 women. He is married to a 26-year-old former Miss Universe contestant Iroshka Elvir who is running for congress in Sunday’s election.

Polling third is former university rector Luis Zelaya, of no relation to Manuel, who has pledged to expand credit to small and medium-sized businesses and to crack down on corruption.

Polls close at 6pm on Sunday with initial results expected later that evening.

— With assistance by Shin Pei, and Boris Korby

    Before it's here, it's on the Bloomberg Terminal.