Sovereign debt issuance in the Dominican Republic, sophistication and market dynamic
April 4, 2025
The most recent operation combined the issuance and repurchase of bonds in both U.S. dollars and local currency.
The success of the Dominican Republic’s recent debt issuances—most notably the placement of over US$5 billion—has been driven by economic stability, strategic management of financial instruments, and strong investor confidence.
Ricardo Pellerano Nadal, senior advisor at Dominican law firm Pellerano Nadal—which has been involved in debt issuances for the past six years—expects success to remain consistent in future transactions and sees no major obstacles ahead.
“We expect the trend to continue, provided that prudent debt management remains in place and financing conditions are optimized,” the expert said.
Renewed vision
In February, the Dominican Republic executed a new debt issuance denominated in both U.S. dollars and local currency. The operation aimed to secure funding for the 2025 national budget and to retire maturing debt through a structured repurchase.
The issuance was divided into three tranches:
· USD 2 billion in global bonds maturing in 2037, with a 6.95% coupon;
· USD 1 billion in global bonds maturing in 2055, with a 7.15% coupon;
· And a local currency tranche indexed to Dominican pesos, equivalent to DOP 125 billion, maturing in 2037, with a 10.50% coupon.
The innovative element of the operation was a parallel debt repurchase offer totaling USD 2.382 billion, which included the buyback of global bonds denominated in both U.S. dollars and Dominican pesos. According to the specialist at Pellerano Nadal—the firm that served as local counsel to the initial purchasers and dealer managers—this combination of new issuances with repurchase strategies reflects responsible planning aimed at cost optimization and enhancing the debt maturity profile.
Key differences
This transaction marked a strategic shift in the Dominican government’s approach to debt management by including, for the first time, bonds denominated in local currency and issued under Dominican law—maturing in 2026—in a repurchase offer.
“This combination of foreign and local currency bond issuance, alongside a dual-currency repurchase offer, reflects the sophistication of the Dominican State in international financial markets and highlights the need for specialized legal guidance in transactions of this scale,” noted Pellerano Nadal.
Typically, such operations involve only bonds issued under the U.S. 144A/Reg S framework. The inclusion of locally issued bonds is far less common and added layers of complexity to the deal. As a result, the tender offer required additional documentation in Spanish, coordination with Cevaldom—the country’s centralized securities depository—and compliance with local procedural requirements not usually present in standard repurchase transactions.
With a tailwind
According to Dominican authorities, the recent operation has strengthened the public debt portfolio while delivering several strategic benefits: it reduced the share of foreign currency-denominated debt, extended the average maturity of global bonds, and lowered the government’s financing needs for 2026—thereby easing fiscal pressure for the next budget cycle.
Do you consider that the country has an adequate debt management through issuance?
Ricardo Pellerano Nadal emphasized the strategic use of debt by the Dominican government:
“From a technical standpoint, the government has leveraged debt issuances not only to fund key projects but also to refinance existing obligations. The mix of new placements and bond repurchase strategies reflects responsible planning aimed at cost optimization and maturity profile improvement. That said, all borrowing must be evaluated within the broader context of fiscal health and long-term sustainability.”
Could the policies pursued by the new US government have any impact on the Dominican financial market?
RPN: The decisions of the U.S. Federal Reserve (Fed) regarding interest rates have a direct impact on financing costs for emerging countries such as the Dominican Republic. If the Fed maintains high rates, access to external credit could become more expensive. In addition, factors such as US monetary policy, inflation, and trade tensions may affect the risk perception of investors in emerging markets, impacting demand and yields of Dominican bonds.
Good prospects
What are your expectations for the Dominican financial market this year?
RPN: We expect the Dominican financial market to continue to show dynamism and resilience, driven by a growing economy and a structured financing strategy.
At a regional level, what is your perception of the financial market's performance?
RPN: Regionally, we continue to see good activity in sovereign debt markets, driven by funding needs and refinancing strategies similar to those implemented by the Dominican Republic. Volatility in global markets, U.S. interest rate behavior and political stability will be determining factors in access to financing for Latin American countries. We believe that countries with solid macroeconomic fundamentals and well-structured debt strategies will continue to attract investor interest.
How many times has the firm served as advisors in debt management transactions?
RPN:
“At this point, we’ve worked on so many sovereign debt transactions that we’ve honestly lost count,” says the team at Pellerano Nadal. Since the firm’s founding in 2019, it has advised on every 144A/Reg S debt issuance and liability management operation carried out by the Dominican government, representing the structurers and placement banks.
The team’s experience extends even further. Prior to establishing Pellerano Nadal, its partners and professionals were involved in every 144A/Reg S sovereign issuance by the Dominican Republic since the country’s first transaction of this kind in the early 2000s, while working at a previous firm.
This uninterrupted involvement has enabled Pellerano Nadal to build deep expertise in sovereign debt transactions, including the regulatory frameworks, legal intricacies, and structuring challenges that come with deals of this scale.
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Free translation by Pellerano Nadal Law & Consulting