S&P rates Paraguay bonds BB-

Standard & Poor's said it assigned a BB- rating and 3 recovery rating to Paraguay's proposed debut issuance of $500 million bonds due in 2023.

The agency also affirmed the BB- and B sovereign credit ratings on Paraguay.

The outlook remains stable.

The ratings reflect its solid fiscal position, low debt and improved external indicators, S&P said.

Although the central government likely had a fiscal deficit of nearly 1% of GDP in 2012 after running surpluses since 2004, S&P said it expects the central government to return to a balanced budget in 2013.

The fiscal position has resulted in a steadily declining general government debt burden, likely reaching 14% of GDP in 2012, the agency said.

Paraguay's weak political institutions, less developed economy and limited monetary flexibility constrain the ratings, S&P added.

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