Introduction#
Bolivia is reaching out to investors for its first dollar bond sale in four years. This move comes after the country’s new government successfully avoided defaulting on external debt payments earlier this year.
Investor Meetings#
To gauge interest, Bolivia has appointed Deutsche Bank Securities and Santander to hold investor meetings starting Monday. These meetings aim to assess demand for a benchmark-sized dollar bond, which is a standard size for such financial instruments.
Market Context#
The potential bond sale is taking place at a time when the spreads on emerging-market bonds have narrowed significantly. Spreads refer to the difference in yield between these bonds and safer investments, like U.S. Treasuries. Currently, the spreads are at their lowest levels since 2013, despite ongoing economic challenges linked to the Iran conflict.
Risk Premium#
Investors are currently requiring a lower risk premium to hold Bolivia’s sovereign bonds. The risk premium is the extra yield investors demand to compensate for the risk of default. As of now, this premium has decreased to 378 basis points over U.S. Treasuries, marking the lowest level since 2020, according to data from JPMorgan Chase & Co.