Paraguayan President Santiago Peña said Monday that his country is in no rush to tap the green or sustainable bond market in the wake of gaining an investment grade credit rating from Moody’s Investors Service on Friday.
“No rush. We already have quite an open market. If you look at the spread for Paraguay sovereign bonds, it is already very tight,” he told LatinFinance in an interview.
“But at the same time, we are very eager and we have a lot of important projects that could be very well suited for ESG or the green bond,” Peña added.
“Paraguay is already compliant with ESG standards,” the president said. “On the public sector side, we are very committed to advance on this front, but the driving force will be coming from the private sector, which is also very eager to get financing at very competitive prices.”
Penã mentioned that Banco Continental issued a green bond two years ago.
The president said that he will stick to the fiscal discipline and path to fiscal consolidation that helped gain the country investment grade on Friday.
“We are in the process of consolidating our fiscal position after years of fiscal deficit,” he said. “We have ample sources of financing coming from the multilaterals and the international capital market and also the domestic market, which is very attractive because of the very low inflation rate.”
THE REAL TARGET IS THE OECD
Peña showed no sign of triumphalism after Moody’s upgraded Paraguay’s sovereign rating to Baa3 with a stable outlook, arguing that the real goal is to join the Organisation of Economic Co-operation and Development.
“We are enthusiastic but this is not the end for us,” he said of the upgrade. “This mountain that we have reached is just the base of the next mountain [that] we need to continue to pursue. We think the other credit agencies will follow [suit].”
Peña said the goal is for Paraguay to become a full member of OECD in the medium term.
“This is something we thought about almost 10 years ago when we decided to decide to join the development committee of the OECD,” he added. “When you think about our economic structure, Paraguay is, after Mexico, the most open economy in Latin America.”
FOREIGN AFFAIRS
On the international front, Penã said Paraguay, which has no diplomatic ties with China, has been working to find alternative sources of trade and investment, including Saudi Arabia.
He said the talks are most advanced with the United Arab Emirates, adding that he believes that Mercosur — a trade bloc of Argentina, Brazil, Paraguay and Uruguay — can sign a trade deal with the UAE by the end of the Brazilian presidency of the G20 at the end of the year.
Meanwhile, he said the long-lasting free trade negotiations between Mercosur and the European Union are “in a state of coma” and showing “no sign of vitality.”