(Bloomberg) — El Salvador plans to return to international debt markets for the first time in almost four years, while it offers to repurchase some of its existing bonds from global investors.
The government hired BofA Securities to pitch fixed-income money managers on a deal in calls that started Monday, according to people familiar with the matter. The issuance of an amortizing, macro-linked dollar bond may follow, said the people, who asked not to be identified because the talks are private.
The potential debt sale comes as appetite grows for risky emerging-market bonds. That’s driven the extra yield investors demand to hold El Salvador’s debt over US Treasuries — known as the sovereign risk premium — down 70 basis points since the start of 2024 to 6.1 percentage points, according to data from JPMorgan Chase & Co.
Since mid-2022, President Nayib Bukele has been winning over investors by engineering two dollar bond buybacks, a pension debt exchange and the refinancing of its local short-term obligations. That helped drive a triple-digit rally in bond prices.
But the market has turned more cautious lately as the nation’s fiscal accounts deteriorate while a loan from the International Monetary Fund hasn’t materialized.
The government hasn’t specified how much of the notes due in 2025, 2027 and 2029 it plans to buy back. About $1.75 billion is outstanding across those securities.
The country last sold bonds at the height of the pandemic four years ago when it priced $1 billion of debt at a coupon of 9.5%.
Fondo de Conservación Vial, a government agency, shelved a planned $500 million bond sale in December, stating the conditions proposed by the bookrunner — including the double-digit yields — weren’t convenient.
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