Bolivia Weighing First International Bond Sale Since 1920s
March 16, 2012 - BusinessWeek.com

By Eliana Raszewski

Bolivia is considering tapping international debt markets for the first time since 1920 with a sale of as much as $500 million in bonds this year, Finance Minister Luis Arce said.

Bolivia is working with Bank of America Merrill Lynch and Goldman Sachs Group Inc. in placing the sale, Arce told reporters today at the Inter-American Development Bank's annual meeting in Montevideo, Uruguay. The government expects the bonds to yield less than 10 percent, he said in an interview after his news conference.

The government would use the funds for mining and electricity projects, Arce said. The country should be in a position to export energy to Brazil, Peru and Chile and to create more value-added mining exports to accelerate economic growth, he said.

"This is the best moment for Bolivia to enter international financial markets," Arce said in the interview. "The markets will see that Bolivia can meet its obligations and be just like any other country in Latin America."

The land-locked South American nation's economy will expand 5.5 percent this year after growth of 5.1 percent last year, he said. Bolivia doesn't need the funds to fuel deficit spending, he added, saying that Bolivia had an estimated budget surplus of 0.8 percent of gross domestic product last year.

'Great Opportunities'
"We want to take advantage of capital flows in Latin America that are escaping from Europe and the U.S.," Arce, 48, said. "Latin America has great opportunities and Bolivia as well and it's important to use this capital to help sustain economic growth."

Bolivia's economy is poised to grow 4.5 percent this year, according to estimates by the International Monetary Fund.

Standard & Poor's raised Bolivia's credit rating in May last year to B+ from B, four levels below investment grade, putting the country on the same level as Venezuela, Nigeria, the Dominican Republic and Sri Lanka.

Arce, who joined the central bank in 1987, received a degree in economics from the Universidad Mayor de San Andres in Bolivia and a master's degree in economics from the University of Warwick in England. He became Bolivia's finance minister in 2006 under President Evo Morales.

Bolivia's annual inflation slowed in February to 4.64 percent from 5.86 percent in January, the national statistics institute reported. Last year, consumer prices rose 6.9 percent. Central bank reserves climbed to $12.7 billion on March 12 from $9.7 billion a year earlier. Reserves are above the country's "optimal" level of $8 billion to $8.5 billion, Arce said.

To contact the reporter on this story: Eliana Raszewski in Montevideo at eraszewski@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net