TEGUCIGALPA, March 7 Honduras plans to issue $1
billion in bonds on international markets in 2015 to refinance
the country's internal debt, Finance Minister Wilfredo Cerrato
said on Friday.
The bond sale will partially restructure the Central
American country's rising local debt, Cerrato said.
Honduras, one of the poorest countries in the western
hemisphere, is facing a critical financial squeeze as its
internal debt has quadrupled since 2008 to $2.8 billion.
The planned placement follows the country's first-ever
issuance of sovereign debt last year in two installments of $500
million each. They were used to pay down internal debt and
partially fund the government's budget.
At the end of last year, the government's fiscal deficit was
7.7 percent of gross domestic product - its highest level in
nearly 20 years. The country's new budget seeks to narrow that
gap to 4.7 percent of GDP in 2014.
The planned bond issue aims to "restructure expensive
short-term internal debt with longer-term debt," Cerrato said.
The issuance will swap two-year maturities at high interest
rates for 10-year maturities at lower rates, he said.
The country's finances have suffered in recent years as the
cost of servicing its local debt has grown from $65.8 million in
2008 to $789.6 million last year.
Debt service costs are expected to total $930 million in
2014, according to the government's budget estimates.
Government officials are seeking a new line of credit with
the International Monetary Fund this year after passage of a
major tax and spending reform in December that seeks to generate
an additional $800 million annually.
"Along with the fiscal reform, efforts to rein in spending,
restructure local debt and grow the economy, we're going to go
to the IMF to seek a new agreement in 2014 or the beginning of
2015," said Cerrato.