IDB Invest, the private sector investment arm of the Inter-American Development Bank, raised 180 billion Paraguayan guaraníes ($28 million) to expand credit for microentrepreneurs and small businesses in Paraguay. The proceeds from the six-year, local-currency bond will fund a senior loan to Banco Familiar. Banco Familiar has one of the largest retail lending networks in Paraguay, and its customer base is mostly lower-income and informal-sector borrowers.
It is IDB Invest’s eighth such issuance in Paraguay’s capital markets, where long-term, local capital is scarce. Banks often have to borrow abroad, typically in dollars. When the guaraní, the local currency, weakens, small businesses absorb the cost.
The latest bond, issued via Paraguayan stock market Cadiem Casa de Bolsa, was sold to local institutional investors.
“Issuing in local currency is not just a financing choice; it is a development strategy,” said IDB Invest’s Orlando Ferreira.
Building the market
Legislation in Paraguay last year raised foreign exchange limits for overseas investors and allowed for direct trading between domestic and foreign holders of government securities. Paraguay also sold its first international bond denominated in guaraníes last year, a $600 million, 10-year note on the New York Stock Exchange. The country now holds investment-grade ratings from both Moody’s and S&P Global.
