The successful liability management transaction made yesterday to refinance Dollars and Soles-denominated debt will yield savings of up to S/100 million (about US$30 million) for the Peruvian State, Economy and Finance Minister Alfredo Thorne affirmed.
"It does not constitute new debt issue, but rather a debt-exchange, swapping expensive debt for cheap liabilities. We estimate it [savings for the Peruvian State] around S/80 -S/100 million [US$24-30 million]," the government official told Andina news agency.
It should be the noted the reprofiling transaction took place on Thursday through an international offer of Sol-denominated bonds maturing in 2028, under repo and/or exchange of Global Bonds (Dollar-denominated) due in 2019, 2025, 2033 and 2037, as well as via offer of Sovereign Bonds (Sol-denominated) due 2017, 2020, 2023 and 2026.
The 12-year bond stands as the highest local-currency international issuance by an emerging economy in capital markets. Thus, the operation reopens international debt markets in local currency for Latin American issuers.
Successful operation
The economist described the debt-exchange operation as "highly positive," since the Inca nation has reduced its Dollar debt exposure, in anticipation of what the U.S. Fed future holds.
Regarding the swap, he pointed out it can be compared to "a consumer refinancing his credit card with cheaper credit."
"We've also reduced our short-term debt by making it long-term, to 12 years, which is the new benchmark bond. It further increases market liquidity; that is, for investors to get in and out more quickly," he explained.
The Minister described the transaction as a major achievement no other emerging economy has managed to accomplish.
"We've made it and I think it is something we ought to be proud of," Thorne expressed.
Remarks were made after closing the II International Infrastructure and Development Congress (CIID) last Thursday.
(END) CNA/CNA/DHT/MVB