The Republic of Paraguay plans to issue up to US$500 million of unsubordinated bonds under the authorization granted by Congress in its 2016 annual budget, which has been reinstated for 2017. While the issuance of the bonds has attracted political opposition in Congress, we do not believe that the political challenges have materially weakened Paraguay's institutions or its capability or willingness to service its debt. We characterize Paraguay's institutional framework as developing. We are therefore affirming our 'BB/B' long- and short-term sovereign credit ratings on Paraguay, and we are assigning our 'BB' issue rating on the bonds in an amount up to US$500 million. The stable outlook reflects our expectations that structural challenges and implementation difficulties will continue to hamper
