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Retirement for record breaker


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.

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 the fact that on the same day Chile also issued a three-year ¤300 million note with a yield of just 5.31%.

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