Article/Intelligence
Paz and Quiroga Advance to Second Round in Bolivian Presidential Elections, Boosting Eurobonds; Preliminary Results Show MAS Losing All Legislative Representation
Bolivia’s bonds traded up several points today after the Movement Towards Socialism party, or MAS, which has governed the country for most of the last 20 years, suffered a crushing defeat in general elections on Sunday.
The Republic’s $1 billion 4.5% bonds due 2028 were quoted at 81/84 today, up from 77/78 on Friday, while its $850 million 7.5% bonds due 2030 jumped to 80/83 today from 77/78 on Friday, according to Solve.
In the first round of presidential elections, centrist dark horse Rodrigo Paz outperformed most polls and won about 32% of the vote, securing a place in the second round on Oct. 19, where he will face conservative former president Jorge “Tuto” Quiroga, who came in second place with about 26%, according to preliminary results.
Businessman Samuel Doria Medina, who had been leading in many polls, came in third, while two candidates supported by different MAS factions each failed to break 10%.
MAS also suffered a disastrous defeat in legislative elections, failing to win a single seat in either the Senate or the Chamber of Deputies, according to preliminary results.
Paz’s Christian Democratic Party will become the biggest party in both houses, having won an estimated 15 out of 36 seats in the Senate and 51 out of 130 seats in the Chamber of Deputies, while Quiroga’s LIBRE party won an estimated 12 and 43 seats.
Whoever becomes Bolivia’s next president will face significant challenges, as the nation’s central bank’s reserves remain under pressure, while debt service is set to increase over the next few years, including through the first of three $333 million annual amortization payments on the 2028 bond coming due next March.
On June 30, S&P downgraded Bolivia to CCC- from CCC+, citing the Republic’s “weak capacity” to meet its obligations over the next six months to one year, given rising debt service starting in 2026, a significant fiscal deficit and limited access to international markets.
The political programs of both candidates include plans for fiscal consolidation and exchange-rate stability, as well as references to multilateral financing and possible renegotiations of existing debt.
Paz’s political program foresees renegotiating external debt in order to limit outflows of foreign currency, and taking on freely usable credit lines from multilateral lenders. However, Paz has expressed opposition to seeking support from the International Monetary Fund.
Quiroga says that he would pursue an IMF program for $2 billion to $4 billion and seek to reprogram the country’s debt, with the goal of reducing principal payments in the next three years.
Quiroga and Paz will face off in a second round on Oct. 19, and the winner will take office on Nov. 8.
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