Paraguay elections: Son of ex-dictator’s aide leads race

Bloomberg

Paraguay headed to the polls on Sunday, with voters set to elect a new Congress and a new president in one of the fastest-growing economies in South America.
Voting stations opened at 7 am with the Electoral Tribunal expected to publish preliminary results on its website as early as 5 pm. About 4.2 million Paraguayans are registered to vote with almost a third of them under the age of 30.
In the race for the presidency, Mario Abdo Benitez, a 46-year old former senator from the ruling, conservative Colorado Party is up against former public works minister Efrain Alegre, who’s backed by an unlikely coalition of opposition conservatives and leftists. Recent polls give Abdo Benitez, whose father was the personal secretary of dictator Alfredo Stroessner, a hefty lead over Alegre, who lost to businessman Horacio Cartes in 2013. The candidate who receives a simple majority of votes wins and will take office on August 15.
Paraguay enjoyed a rare period of sustained growth during Cartes’ five-year term, with the economy averaging growth of 6 percent a year between 2013 and 2017.
However, an economic boom fueled largely by soy and beef exports hasn’t erased many of the country’s dismal social indicators. More than a quarter of the population remains below the poverty line and about a third of 15 to 19 year olds don’t receive any formal schooling.
Bondholders have certainly benefited from the landlocked country’s impressive GDP numbers and reasonably solid public finances.
As of last week, Paraguay’s US dollar debt returned 42 percent since Cartes took office in August 2013, compared with average emerging market gains of 31 percent in that
period, according to data compiled
by Bloomberg.
Bond markets are pricing in an Abdo Benitez presidency and continuity in macroeconomic policies, said Juan Manuel Pazos, chief macro and sovereign debt strategist at Buenos Aires-based brokerage house Puente. Paraguayan bonds would likely suffer a correction in Alegre pulls off an upset victory, he said.
“I would expect it to be short lived and a buying opportunity,” said Pazo, who has an overweight recommendation on Paraguay’s 2026 and 2027 global bonds.
“An Alegre administration probably wouldn’t see too much incentive to significantly deviate from the prudential fiscal path of the last
few years.”
Paraguayans cast their votes on Sunday for all members of the Senate and Lower House of Congress as well as the country’s 17 governorships.