Dominican Rep placed Sovereign Bonds at 5.875%

DOMINICAN REPUBLIC - In Brief 12 Apr 2013 by Pavel Isa

Yesterday, the government of the Dominican Republic announced that it successfully placed USD 1 bn in Sovereign Bonds. The interest rate negotiated was 5.875% on bonds with 10 years maturity. This has been the lowest rate negotiated by the DR since its first Sovereign Bonds issued in September 2001. These bonds are of critical importance for the government. They were included in the 2013 Budget Law, and represent 58% of the public deficit and 40% of total external financing. The funds will contribute to finance projects in infrastructure that will contribute to boost domestic demand and economic activity, something that is very much needed. They could also help to make significant payments on debts that the government has with power generators. The payment could provide authorities with high leverage to renegotiate contracts with power plants. Prices of energy are a critical piece for reducing the deficit in the electric sector, and in public subsidies.

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