Uruguay pleased with its debt swap

Creditors tendered US$1.17 billion of eligible bonds in Uruguay’s debt swap, in line with government expectations, in the country’s bid to scrap lightly traded bonds and extend debt maturities.

On October 19, Uruguay launched a bond swap for up to US$2.2 billion on 20 bonds due on or before 2019 and one series due in 2027, in exchange for dollar-denominated bonds maturing in 2022 and 2036, or a cash payment.

The bond swap attracted about 52 percent participation, the Economy Minister said yesterday. Some analysts had expected subscription of as much as 70 percent.

“The results have been very successful,” Economy Minister Danilo Astori told reporters. “Participation was nearly 60 percent in the 2011 and 2015 bonds, which worried us the most because during the next government’s term the country faced very significant payments” on them.

“The financial urgencies of this term have been completely cleared away,” Astori said.

Center-left President Tabaré Vazquez has a five-year mandate, which began in March 2005. His government has paid off US$1.55 billion in debt owed to the International Monetary Fund this year and next, thanks in part to nearly US$3 billion in dollar-denominated debt issues.

Uruguay said in a statement it will issue US$602 million in reopened 2022 global bonds and US$277 million in 2036 bonds as part of the swap. Uruguay had priced its global bonds due in 2022 and 2036 at 106.75 and 100.75, respectively.

Uruguay’s 2022 bonds changed hands in early evening trade at a bid of 108.25, with a yield of 7.128 percent. The global 2036 bonds traded at a bid of 100.50, with a yield of 7.581 percent.