Paraguay Makes Historic Bond Issuance After Achieving Investment Grade Status

The Republic of Paraguay successfully closed a landmark sovereign bond issuance worth $1.2 billion on March 4, 2025. This transaction marks Paraguay’s first international debt offering since achieving investment grade status from Moody’s in July 2024.

The issuance consists of two distinct bonds with impressive demand from global investors. Paraguay sold $600 million in 30-year bonds with a 6.65% interest rate maturing in 2055.

The country simultaneously issued PYG 4.74 trillion (equivalent to $600 million) in 10-year bonds with an 8.5% interest rate due in 2035. This offering represents Paraguay’s second issuance of sovereign bonds in domestic currency.

The government has pioneered the use of guaraní-denominated bonds in international markets. Citigroup Global Markets and Itau BBA USA Securities managed the transaction as joint dealers.

Paraguay conducted a concurrent tender offer to purchase outstanding bonds due in 2026 and 2027. The government accepted $201 million of 2026 bonds and $99.75 million of 2027 bonds for repurchase. Holders received the purchase price plus accrued interest on the settlement date.

The bond issuance started on February 18, priced on February 25, and officially closed on March 4. Paraguay will use the proceeds to pay for the repurchased bonds and fund general government purposes.

Paraguay’s Financial Strategy and Investment Grade Rating

Finance Minister Carlos Fernández has encouraged private sector companies to follow the government’s example. He believes banks and public-private partnerships can benefit from Paraguay’s new investment grade rating. The guaraní-denominated international issuances establish reference rates for Paraguayan companies planning foreign debt offerings.

Paraguay has implemented a sophisticated liability management strategy through these transactions. The government aims to extend debt maturities by swapping short-term bonds for longer-term instruments.

This approach represents Paraguay’s transition to a modern, market-based financing model. The country further demonstrates financial innovation through its Sovereign Sustainability Bond Framework.

This framework enables Paraguay to issue debt funding for green and social initiatives aligned with development goals. Paraguay continues to strengthen its position in international markets while creating opportunities for domestic financial growth.

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