Dominican Rep government placed Sovereign Bonds for USD 2.5 bn

DOMINICAN REPUBLIC - In Brief 22 Jan 2015 by Pavel Isa

The government of the Dominican Republic announced that it placed Sovereign Bonds for USD 2.5 bn. USD 1 bn worth of bonds were placed with 10 years maturity at an interest rate of 5.5%, and USD 1.5 bn were placed with 30 years maturity at an interest rate of 6.85%. Average maturity of the two lots is 22 years and average rate reached 6.3%. The Ministry of Finance said that both lots were placed at the lowest rate ever for comparable maturity. Demand for the bonds reached USD 6 bn. The institutions that structured the transaction were JP Morgan and Bank of America/Merrill Lynch. Banco de Reservas de la República Dominicana served as co-manager. The budget for 2015 approved a combined emission of domestic and global bonds for up to USD 2.5 bn or its equivalent in DOP. The government decided to issue the totally in global bonds. In our view, it was the right decision. CAD reduced in 2014 and will experience a significant reduction in 2015. That is diminishing the risk of devaluation. Also, compared to global bonds, the cost of domestic debt is significantly higher.

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