WASHINGTON, Oct 8 (IFR) - Uruguay is exploring ways to
capitalize on renewed investor appetite for local currency debt
as it seeks to plug its funding gap next year, the country's
debt head told IFR Saturday.
Moderating inflation and a strengthening peso have helped
the South American nation increase the appeal of its local bonds
at a time when investors globally are struggling to boost
"We see renewed appetite for local currency," Herman Kamil
told IFR on the sidelines of the IMF/World Bank meetings. "We
are always looking for ways to increase stable sources of
funding in local currency."
Uruguay plans to issue about US$2bn-equivalent in local and
international bonds in 2017 to help meet financing needs of
US$2.757bn for that year.
That is up from total bond issuance of US$1.75bn-equivalent
this year, which included a US$1.147bn tap of existing
international bonds the sovereign completed in July.
While Kamil expects to return to the hard currency bond
markets, the country is also considering ways to cater to the
rising appetite for local currency debt.
For now that is likely to occur through the domestic markets
as opposed to the larger Global peso-denominated inflation
linkers the country offered to foreigners in the past, Kamil
This time, investors are increasingly expressing an interest
in buying fixed-rate peso bonds, and the government has already
made efforts to heighten the appeal of the domestic markets, he
Foreign accounts can already freely move in and out of the
market, and also have the option to receive principal payments
in dollars or pesos.
"The easier we make it for foreigners to liquidate their
positions and leave, the more likely they will stay," Kamil
Tapping peso debt has its appeal given the importance the
rating agencies put in the risks of carrying too much hard
But Uruguay may want to wait a bit as the cost of nominal
debt is likely to fall further as Uruguay's inflation declines.
"We like local currency debt but not at any price," said
Kamil. "We have to be mindful of the fiscal impact."
(Reporting by Davide Scigliuzzo; Editing by Paul Kilby)