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Dominican Republic Government makes History in the Global Capital Market          


Today, the Government of the Dominican Republic made history in the global capital market by placing for the first time a bond denominated in local currency, the Dominican peso (DOP), of 5 years for DOP 40,000 million (US$822 million), and a 30-year USD bond for US$1,000 million at the lowest coupon rate issued by the country for this maturity.

The DOP issuance, part of the Dominican Government's strategy to continue reducing the exposure to foreign exchange variation, is the first carried out by a non-investment grade country in Latin America, reflecting the investor’s confidence in the economic growth of the country and the stability of the Dominican currency. This placement was made at an interest rate or coupon on the DOP bonus of 8.90%.

The 30-year issuance at an interest rate of 6.50%, the lowest issued by the Dominican Republic for this maturity, reflects the great confidence of investors in the future of the Dominican economy.

The conditions obtained in these transactions will allow extending the average term to maturity from 9.6 years to 11.3 years, thus reducing the refinancing risk of the debt, maintaining the average interest rate levels of the portfolio.

These bond placements were stipulated in Law No. 243-17, which approves the General State Budget for the year 2018, as well as Law No. 248-17 on Public Debt Securities, as it is part of the Government's Financing Plan for the year approved in the aforementioned laws.

Despite the volatility that has characterized the international financial markets in recent days, the placement was successful and the total demand for the Dominican Sovereign Bonds was much higher than the amount offered by the country.

Some 64 accounts of investors from around the world demanded the DOP bonds with a total demand of DOP80,000 million, twice the amount placed, while the bond in USD had demand for USD2,100 million, more than two times the amount of the issue, on the part of about 84 investor accounts, reflecting a considerable interest for bonds of a country with a sovereign rating of Ba3/BB-/BB-.

This reflects the excellent reception that the investors offered during the Roadshow that took place in New York, Boston and London, to the extraordinary effort made by the Government of President Medina in a process of fiscal consolidation that led the fiscal accounts to have a primary surplus in last year, and valued the excellent economic performance that the country has had in recent years, being one of the Latin America economies with the highest economic growth, with low inflation rates. In addition, they positively pondered the reduction in the deficit of the current account in 2017, the growth of International Reserves and the relative stability of the Dominican peso. They also evaluated the positive impact on fiscal accounts and the balance of payments that the conversion of the electricity generation matrix will have when substituting petroleum derivatives for natural gas and coal.

The Dominican Republic team was led by the Minister of Finance, Lic. Donald Guerrero Ortíz, and integrated by technical staff of the Ministry of Finance. The transaction took place in New York and counted with J.P. Morgan and Citi as leading banks in the transaction and Banreservas as co-manager.