El Salvador issues bonds as debt load rises

Arnold & Porter Kaye Scholer LLP in Washington, DC, and Consortium Legal (El Salvador) has helped El Salvador issue bonds worth US$601 million.

The joint-lead managers and bookrunners hired Shearman & Sterling LLP in New York and LatamLex Abogados - Guandique Segovia Quintanilla in San Salvador for the deal, which closed on 28 February.The offering was more than five times oversubscribed, but the bonds’ yield of 8.6% is more than 2% higher than El Salvador’s last issuance in 2014.El Salvador’s debt has been rising steadily. Debt-to-GDP in Central America’s smallest country averaged 47% between 1991 and 2015, but has recently soared to over 60%. This resulted in ratings agency Moodys downgrading the sovereign last year. It is also causing legislative scuffles. ARENA, the main opposition party, argued the latest issuance broke the government’s own fiscal responsibility law and unsuccessfully attempted to halt the offering. However, the Sánchez Cerén administration argues the debt tap is crucial if the country is to make future debt repayments.Counsel to El SalvadorArnold & Porter Kaye Scholer LLPPartners Whitney Debevoise and Neil Goodman, associate Carlos Pelaez and foreign associate Mateo Morris in Washington, DCConsortium Legal (El Salvador)Partner Oscar Samour and associate Felipe Aragon in San SalvadorCounsel to Credit Suisse Securities and Deutsche Bank SecuritiesShearman & Sterling LLPPartner Antonia Stolper and international associate Ana Maria Alpizar in New YorkLatamLex Abogados - Guandique Segovia QuintanillaPartner Ana Patricia Portillo and associate Miguel Medina in San Salvador

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