Long-term borrowing by Latin America and Caribbean sovereign to rise in 2005, says S&P

By Reshmi Basu

New York, Feb. 10 - Long-term borrowing by Latin American and Caribbean sovereigns is expected to increase by more than 33% to $167 billion in 2005, according to a report by Joydeep Mukherji and Sebastian Briozzo, analysts for Standard & Poor's.

Brazil is projected to be the largest issuer of long-term debt in 2005, with debt sales expected to exceed $107 billion. Brazil is projected to account for about 49% of the total sovereign debt stock in the Latin America and the Caribbean region.

Argentina is expected to follow with $38.5 billion to $41.8 billion in new bonds once it completes its $102 billion debt structuring with creditors.

That would put Argentina well above the approximately $28 billion that is likely to come from Mexico.

Venezuela and Colombia are likely to issue around $10 billion to $11 billion this year.

With Argentina, the projected issuance for the region could reach $200 billion in 2005.

The total long-term borrowing in the region including Argentina may amount to about 25% of the total gross long-term borrowing by the United States in 2005 or less than 5% of the total for all the world's sovereigns, estimated S&P.

In terms of local and regional governments, the agency rates subsovereign issuers in Mexico, Argentina and Colombia. Total debt issuance by Mexican local and regional governments totaled $102 million in 2004. Borrowing this year is expected to be along the same lines, at an estimated $106 million. All new issuances will be issued in local currency, since Mexican local and regional governments are not permitted to issue in foreign currencies. Most of the debt will be structured as commercial bank loans.

Local and regional governments in Argentina are not expected to issue much debt this year. Most of the country's provincial debt has been restructured since 2001, which has pushed back amortizations until 2006.

Colombia's Capital District Santa Fe Bogota may issue $100 million in 2005.

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