Bolivia is undertaking early marketing to measure demand for a dollar-denominated sovereign bond, its first such offering in four years, after the country's recently installed market-oriented government averted a missed external debt payment in March.
Officials have enlisted Deutsche Bank Securities and Santander to hold investor meetings beginning Monday to test appetite for what is being described as a benchmark-sized dollar note, a banking source told Bloomberg News.
The timing of the outreach coincides with a period of narrower spreads across emerging-market debt markets. Spreads on emerging-market sovereign bonds have contracted to levels near their lowest since 2013, even as the economic fallout from the Iran conflict continues to affect global risk perceptions.
Market data compiled by JPMorgan Chase & Co. show that the additional yield investors demand to hold Bolivian sovereign debt over comparable US Treasuries has tightened to 378 basis points, a level not seen since 2020.
The investor meetings led by the appointed banks are intended to assess whether there is sufficient demand to support a full benchmark sale in dollars. If investor interest is confirmed, the intended issuance would represent Bolivia's return to international dollar markets after a four-year hiatus.
For now, the government is in the solicitation phase and has not announced terms, sizing, or a formal launch. The outreach process beginning Monday is being used to take the temperature of the market and to inform any decision about proceeding to a priced transaction.
Context and market reactions
Market participants tracking sovereign spreads and sovereign issuance schedules will be watching the meetings. The narrowing of spreads across emerging markets has reduced borrowing costs in relative terms, a dynamic reflected in Bolivia's tightening risk premium as reported by JPMorgan Chase & Co.
Whether Bolivia moves from investor solicitation to a full issue will depend on the feedback gathered by Deutsche Bank Securities and Santander during the meetings and on prevailing market conditions.