Paraguay wants lawmakers to greenlight as much as 17.4 trillion guarani in international issuance next year, roughly $2.9 billion, which would more than double this year's $1.3 billion. With an investment grade label now in hand, the finance team is preparing a sale governed by New York law that Lovera says will probably land in the first quarter of 2027. The government is weighing notes in both dollars and guarani, though he did not specify the split, and he left open the possibility of returning to markets twice next year.
"We are organizing a non-deal road show probably in late October or the beginning of November to gather investor views," Lovera said from Asuncion. "We are also talking with our banks."
The bigger tab is meant to cover a wider budget gap. Policymakers expect the shortfall to reach 3.9% of GDP, up from 3.2% in 2026. Lovera's first budget since his April appointment sketches a return to a 1.5% deficit by 2028, which is also election year for the presidency and Congress. Paraguay has missed that legal 1.5% ceiling every year since 2018, with Congress signing off on exceptions.
By year end, officials estimate the state will still owe around $1 billion to local healthcare vendors that serve public hospitals. Last year, combined arrears to health providers and construction firms stood at $1.3 billion. Lovera says part of that has been reduced, and an active program enabled 39 companies to sell collection rights worth millions to banks in exchange for immediate funding.
"The most significant component is addressing the Health Ministry's arrears," he said. A larger health allocation and a new supplier invoice tracking system are intended to keep fresh arrears from building. "That lack of information we had until last year is something we're addressing starting this year" with the tracking system, he added.
How much a country borrows abroad shapes its currency and its budget. Market Briefs covers sovereign debt free every morning.
Paraguay is moving ahead even as global borrowing costs have climbed, with US Treasury yields rising in recent weeks. Its 2031 dollar bond most recently yielded 5.86% and traded around 97 cents on the dollar.
The macro backdrop helps. The economy's extended spell of rapid growth with subdued inflation has been fueled by robust appetite for farm exports, and foreign investors have been lured by low taxes alongside cheap electricity. After a 6.6% expansion in 2025, the central bank projects growth will ease to 4.5% this year.
Ratings have followed the trend: Moody's and S&P upgraded Paraguay to investment grade over the last two years. Fitch, meanwhile, kept a BB+ rating with a positive outlook last month and flagged that current supplier arrears, along with a similar episode in 2023, have eroded fiscal policy credibility.
A larger funding program, a likely early 2027 sale under New York law, and a mix of dollar and guarani bonds could bring more Paraguayan paper to market, where the 2031 issue already trades below par. The key variables are straightforward: how quickly healthcare arrears get cleared, whether the deficit tops out near 3.9% of GDP before narrowing, and if the recent ratings momentum holds. If you track emerging market debt, those are the tells to watch as Paraguay tries to finance priorities and tighten its budget process.
Doubling an issuance plan is a statement about market confidence. Get the free Market Briefs daily newsletter and follow it.
