Two years ago, Paraguay had never sold a guaraní-denominated bond to foreign investors. On Tuesday, it sold $1 billion worth of them — the largest local-currency sovereign issuance in the country’s history — in a deal that Finance Minister Carlos Fernández Valdovinos called proof that Paraguay’s currency can now stand on its own in global markets.
A Currency That Keeps Getting Bigger
The trajectory tells the story. In February 2024, Paraguay placed its first international guaraní bond — $500 million at 7.9% over seven years. A year later, it doubled the bet: $600 million at 8.5% over ten years, drawing 44 international investors. Now the third issuance has doubled the amount again to the equivalent of $1 billion (6,507 billion guaraníes), extended the maturity to 12 years and attracted 64 foreign investors. Each deal has been larger, longer and more heavily subscribed than the last.
Alongside the guaraní tranche, Paraguay reopened an existing dollar bond with a $300 million tap due in 2055 — a 30-year maturity. That tranche drew demand of $1.89 billion, or 6.3 times the amount on offer, with 65 investors participating.
Why It Matters
For a small, landlocked economy of about eight million people — known internationally more for soybean exports and the giant Itaipú hydroelectric dam than for financial innovation — the deal carries outsized significance. Fernández Valdovinos said the guaraní issuance means Paraguay can, for the first time, finance its entire authorized fiscal deficit — 1.5% of GDP under the 2026 budget — in local currency rather than dollars. That reduces the country’s exposure to exchange-rate risk, a vulnerability the ratings agencies had flagged for years as public debt remained overwhelmingly dollar-denominated.
It also deepens what economists call the sovereign yield curve in guaraníes — giving local companies a reliable benchmark for pricing their own debt in international markets. Finance Minister Fernández has repeatedly urged Paraguayan banks and infrastructure developers to follow the government’s lead and issue abroad in local currency, arguing that the sovereign has opened a door the private sector should now walk through.
Double Investment Grade
The market appetite reflects Paraguay’s improved credit standing. Moody’s upgraded the country to investment grade (Baa3) in July 2024, citing robust growth and institutional reforms. S&P followed in December 2025 with a BBB- rating, noting that private investment and domestic consumption should drive GDP growth of around 4% over the next two years. The double endorsement crosses the threshold required by many institutional funds to allocate capital at scale. President Santiago Peña called the bond sale evidence of “real confidence in our national currency and our economic management,” adding that the proceeds would fund roads, hospitals, schools and infrastructure.
A Regional Trend
Paraguay is not alone. Jamaica, Uruguay, the Dominican Republic, Peru, Chile and Mexico have all issued local-currency bonds on international markets in recent years, part of a broader Latin American push to reduce dollar dependence in sovereign debt. But few have scaled as rapidly as Paraguay, which went from zero to $1 billion in guaraní international issuance in just two years. The strategy carries risks — an 8.5% coupon is expensive by investment-grade standards, and the country’s domestic capital market remains small, typically absorbing about $300 million a year. For now, though, the numbers suggest foreign investors are willing to bet that a currency most of them had barely heard of five years ago is worth holding for the next twelve.