10 de octubre de 2015 / 20:09 / hace 2 años

Uruguay considers foreign bond issue before year-end

LIMA, Oct 10 (IFR) - Uruguay is contemplating returning to the international bond markets before year-end to pre-fund for 2016, the country’s head of debt management told IFR on Saturday.

After years of prudent debt management policies, the country is under no pressure to raise funding at a time of heightened volatility.

But the prospects of looming rate hikes in the US has been driving funding strategies among emerging market sovereigns, including Uruguay.

“We do not rule out looking into windows of opportunity before the end of the year,” Herman Kamil, the head of Uruguay’s debt management unit, told IFR on the sidelines of the IMF meetings in Lima.

Pre-funding and maintaining ample liquidity to cover at least 12 months of debt service have long been pillars of the country’s debt management strategy.

“It is a cost in terms of carry, but it gives investors peace of mind,” said Kamil. “We bought an insurance.”

The government currently holds around US$2.5bn in liquid assets, in addition to US$2bn of contingent credit lines from multilateral institutions. That US$4.5bn is enough to cover two years of interest and principal payments, said Kamil.

US dollar-denominated liabilities represent around 50% of Uruguay’s total government debt, down from 95% in 2002, while the average maturity of government debt has more than doubled over the last decade to 15.5 years.

“Buffers are built to be used wisely and gradually when the cycle reverses,” said Kamil.

“We need to be attuned to changes in investor preferences when it comes to currency, duration and liquidity.” (Reporting by Davide Scigliuzzo; Editing by Paul Kilby)

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