Sometimes emerging-market sovereigns retire higher-yielding Brady
bonds when they issue lower-yielding globals. Sometimes, they issue
higher-yielding global bonds even when they have access to
lower-cost funding from the official sector in an attempt to
diversify their funding base. Never, until now, has a country
retired higher-yielding official-sector debt as part of a
lower-yielding bond issue.
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Finance minister Eyzaguirre: a
borrowing
strategy tied into dollar earnings from
copper |
The whole point of funding from multilateral development
banks, after all, is that it is extended at concessionary rates in
return for preferred-creditor status and the country's accession to
an IMF plan.
But in April Chile found itself in the enviable and thus far
unique position of being able to retire $600 million of World Bank
debt yielding between 7% and 8% by issuing a five-year global bond
yielding just 5.695%. It would have been the lowest-yielding bond
in emerging-market history if it hadn't been for...
