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CAPITAL MARKETS

Central America: El Salvador plans $800mln issue

El Salvador is planning to come to market with an international long-term issue of up to $800 million.

"If El Salvador does make it to market with this deal then it would be very well received," says Walter Molano, head of research from BCP Securities. "There is still a lot of cash on the sidelines but it is hard to trade anything at the moment as the market is very illiquid and so this is a good moment for new issues, especially smaller sovereigns."

There is still uncertainty as to when a deal would come, however. On September 30 the government is announcing fiscal reform plans and the new budget. "I reckon it will outline its financing plans when the budget is released," says Casey Reckman, senior sovereign analyst at Fitch Ratings. "Even though it has been mentioned I think an $800 million deal is ambitious. It would be great if they could get it done but as yet it is not clear what the funds will be used for."

Political costs
Alejandro Grisanti, senior economist at Barclays Capital, says: "They might end up doing similar to Dominican Republic in the end... they will look at the market and price how much it would cost to issue internationally versus going to the multilateral agencies and then decide what route to take.

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