UPDATE 1-Costa Rica mandates banks for up to USD1bn bond

Thu Mar 27, 2014 3:33pm EDT

(Adds background, bond levels)

By Paul Kilby

COSTA DO SAUIPE, Brazil, March 27 (IFR) - Costa Rica has mandated Bank of America Merrill Lynch and Deutsche Bank for an international bond of up to USD1bn, the country's vice president of investment and public credit, Jordi Prat, said on Thursday.

The sovereign, rated Baa3/BB/BB+ by Moody's, S&P and Fitch, is considering a new 10-year or 30-year bond, or a combination of both.

Costa Rica was last in the market in April 2013 with a USD1bn dual-tranche issue comprising a 12-year 4.375% USD500m tranche and a 30-year 5.625% USD500m tranche.

Both bonds have fallen by between 10 to 15 points since then, and were bid at 89.5 and 85 respectively, according to Tradeweb.

Original issue discount restrictions on those bonds mean that the sovereign is unable to increase the size of those tranches at the current low dollar prices. (Reporting by Paul Kilby; Additional reporting by Joan Magee; Writing by Natalie Harrison; Editing by Marc Carnegie)

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