Notes of Paraguay: Introduction to Paraguay Capital Markets

Copyright © 2025 Jorge Daniel JD Usandivaras.

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ISBN: 978-1-6657-6904-4 (sc)

ISBN: 978-1-6657-6948-8 (hc)

ISBN: 978-1-6657-6905-1 (e)

Library of Congress Control Number: 2024924682

Archway Publishing rev. date: 02/18/2025

Table of Contents

Chapter 1 Paraguay as a Green and Sustainable Country

From the Capital Markets Perspective

Environmental Context

Paraguay as Environmental and Social (ES)

Governance (G)

Landmark Cases

Macroeconomic Data

Population and GDP Per Capita

Paraguay’s Inflation

Paraguay’s Exchange Rate

Chapter 2 Risk, Returns, Ratings, Terms, and Liquidity.

A Brief History of Paraguay Capital Markets

Stock Exchange and Products of Asunción (BVPASA) – Now, Asunción Stock Exchange (BVA)

1990s, a New Era for the Paraguayan Stock Market.

The new image of the Asunción Stock Exchange: BVA

Stock market evolution, growth, and development.

National Securities Comission (Comisión Nacional de Valores or CNV).

Brief Historical Review.

Current President of the Superintendency of Securities.

Securities Depository of Paraguay S.A. (CAVAPY)

Corporate Titles in Paraguay.

Local Market and International Market.

The CDA market and the banking system vs. the capital market.

Credit Rating Agencies.

Rating Categories.

Chapter 3 Bi Monetarism, Saving Mechanisms and Derivative Instruments

Brief Notes on the Paraguay Economy

Unemployment and informality and poverty

The Guaraní is a stable currency that is used to save and invest.

Saving and Investing in Paraguay

Brief introduction to CDAs and Local PYG Bonds

CDA Market

Guaraní Denominated Bond Market

The US dollar is a common currency in Paraguay and is also used to save and invest.

A Brief Introduction to CDAs and Bonds in US Dollars

Total CDA Market

Introduction to US Dollar Bonds

How many dollars are there in circulation?

Who clears Guaraníes and Dollars?

Active intervention policies of the Central Bank of Paraguay

Monetary Policy Rate

Inflation Targeting

Historical $/Gs rates

Currency hedge mechanisms in the local market

$/Gs futures and forwards with banks market and in BVA.

Bank Forward Contracts

Futures Contract at BVA

How are the instruments reflected in the market? Is there more of one than the other?

CHAPTER I

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 (hydrovia). 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