Notes of Paraguay

“Paraguay as a Green and Sustainable Country
Paraguay has been poetically described by the Paraguayan novelist Roa Bastos as an 'island surrounded by land.' This vision of an 'island' evokes an image of green as the color that Paraguay has in abundance. The idea of being 'surrounded by land' is partially true, as its vast neighbors, Brazil and Argentina, seem as immense as oceans. However, one might be mistaken in thinking that Paraguay is landlocked, given that it lies between the Paraná and Paraguay rivers, which gives the country a central role in a very important waterway (hydro via). It boasts the largest barge fleet in South America and the third largest in the world, after the United States and China. It has extensive access to the Guarani Aquifer, the largest freshwater reserve in the world. Paraguay is not exactly a dry land.

Since 2020, Paraguayan companies have been increasingly classifying their debt obligations as 'green' or 'sustainable' under international ESG standards, as most of the country's real economy does. Like many countries that have skipped the rudiments of industrialization, the so-called “import substitution,” Paraguay is largely unscathed from chemical and metal pollution in its lands and waters and, becoming ever more important, has a 100% carbon-free electricity grid, capable of generating strong and sustainable economic development.

Power generation and distribution are useful ways to understand the country as a whole, its blessings, and its curses. The government is planning actions and policies to improve the country's electricity distribution system. This is reflected in the investment project of the National Electricity Administration (ANDE). The energy investment master plan projects an investment of $6.2 billion in key infrastructure, such as transmission, distribution, and energy generation, over 10 years (2021-2030). This investment was expected to average $620 million per year. However, at the time of writing this article, the execution has been much lower, with an annual average of only $300 million between 2021 and 2023.”

Local Market and International Market.
“Towards the end of the 1970s, all large South American countries, such as Brazil, Argentina, Peru, Colombia, and Chile, boasted thriving stock markets with up to 100 years of history. In 1977, Paraguay's National Chamber of Commerce and Services founded the first, and to date, only Stock & Commodity Exchange in the country, the “Bolsa de Valores y Productos de Asunción S.A.” or (BVPASA).

Paraguay's debut in the international sovereign bond market.
In January 2013, under the government of Federico Franco, Paraguay made its debut in the international sovereign bond market with the launch of its first international bond with CITIGROUP as ‘Global Coordinator’ and BofA Merril Lynch as ‘Joint Book-Runners.’ The value of the issue was $500 million over 10 years, maturing in January 2023 at a nominal rate of 4.625%.
Paraguay, through the Ministry of Finance at that time, Mr. Manuel Ferreira Brusquetti, achieved resounding success in its first bond placement in the international market.

By the end of 2023, 48 issuing companies traded bonds in the Electronic Trading System, with a total of 161 bonds, 22 subordinated bonds, 18 financial bonds, and three Short-Term Stock Exchange Bonds.”

From the Capital Markets Perspective
“Paraguay incorporated the guidelines into its regulation for the issuance of bonds for Sustainable Development Goals (SDG). On March 5, 2020, the National Securities Commission (CNV), now the Superintendency of Securities, approved Resolution No. 9/20, which provides comprehensive legislation for "the securities market with new financial instruments that promote social and environmental issues," in line with the SDGs of the 2030 Agenda of the United Nations. The bonds issued under this resolution require standard certification from firms accredited under the Climate Bonds Initiative.
In turn, the Asunción Stock Exchange (BVA) signed an agreement in December 2020 with the SSE Initiative (Sustainable Stock Exchanges), the United Nations (UN) office, to adjust the issuance of Paraguay’s green bonds to international standards. This is not the first agreement of this type, as in 2019, the Asunción Stock Exchange also signed an agreement with the UNEP FI (Financing Initiative of the United Nations Environment Program) and with the Sustainable Finance Table (MFS). This non-profit association seeks to lead Paraguay's financial sector towards economically sustainable parameters.

Beyond the legal framework led by the regulators and the Asuncion Exchange, it is in the minds and hearts of most Paraguayans that they should avoid the depletion of natural resources and maintain an ecological balance. Now, the onus is more on the business community to adopt good practices that can be "doing well by doing good."