Paraguay’s Ministry of Economy and Finance (MEF) placed G. 230.527 billion in Treasury bonds on September 23 at lower interest rates than in previous operations. The result, however, came with the smallest issuance volume among the four local operations analyzed in 2026, limiting the extent of the rate reduction.
Yields on bonds maturing in 2035 fell from 9% in July to 8.70% in September; they had been 8.90% in April and 9.10% in June. For bonds maturing in 2030, the rate declined from 8.50% in July to 8.26% in September. The decreases were 30 and 24 basis points, respectively.
The September issuance was below those in April, at G. 698 billion; June, at G. 974.35 billion; and July, at G. 360.548 billion. Together, the four operations totaled G. 2.263 trillion. Demand for the September bonds reached G. 906 billion, nearly four times the amount awarded, but that high ratio alone does not show how much investors would be willing to buy if the government offered a larger volume.
Economist Arnold Benítez said the lower interest rates were favorable for financing in guaraníes, but cautioned that a small operation provides limited evidence of the cost of raising funds on a larger scale. With a smaller offering, the Treasury also had more leeway to select the proposals it considered most advantageous.
A change in bank liquidity rules may support some of the demand. The Liquidity Coverage Ratio (LCR) requires banks to hold sufficient assets to cover net cash outflows during 30 days of stress. The minimum, currently 70%, will rise to 90% in November and reach 100% in March 2027. Eligible Treasury bonds count at their full market value as Level 1 assets, allowing banks to earn a return while meeting the regulatory requirement.
Benítez also noted that supplier financing through the assignment of collection rights competes for banks’ financial capacity. The MEF reported authorizations totaling G. 2.388 trillion linked to the purchase of medicines in 2025, involving 39 suppliers and five banks, with payments spread over 36 installments. The amount exceeds the total issued in local bonds across the four operations analyzed; the effect on future purchases will depend on liquidity and the regulatory treatment of these transactions.
The draft 2027 General National Budget provides for issuances equivalent to US$ 2.1 billion and a deficit of up to 3.9% of gross domestic product, but both figures are subject to legislative approval. Benítez cautioned that it cannot be assumed all the financing will be raised in the local market: the distribution across markets, currencies and maturities will determine the pressure on interest rates. He called for greater predictability in local issuance volumes and an ideally monthly issuance calendar.