MercoPress. South Atlantic News Agency

Argentina’s most populous province ready to return to international bond market

Buenos Aires province governor Daniel Scioli

Argentina’s most populous province is preparing a return to international bond markets to benefit from the lowest borrowing costs in two years. Buenos Aires province hired Bank of America and Deutsche Bank AG to arrange investor meetings in Europe and the US as it plans to sell 500 million US dollars in debt.

According to sources close to the La Plata provincial government the offering would be the first for Buenos Aires in three years and follows Cordoba province, IRSA Inversiones y Representaciones SA and Pan American Energy LLC in selling bonds abroad during the busiest year for Argentine issuers since 2007.

Buenos Aires yields are 10 percentage points above similar- maturity US Treasuries, which may help draw investors seeking alternatives to lower returns in developed economies.

Yields on the province’s bonds due in 2018 dropped to 12.51%, the lowest since March 2008, from 16% in January, as the country experiences the fastest economic expansion since at least 1995 boosting tax revenue.

Argentine companies and provinces have issued 1.03 billion USD of bonds in international markets this year as President Cristina Kirchner restructured 12.9 billion in defaulted debt. Sales were 3.65 billion in 2007 and 465 million last year, according to data compiled by Bloomberg.

Buenos Aires province officials are meeting investors after the province’s rating was raised one level by Standard & Poor’s last week to B, five levels below investment grade. That followed S&P’s Sept. 13 decision to raise the national government’s credit rating for the second time in two months to the same level, citing “improvements in the government’s financial profile.”

A record 55-million metric ton soybean harvest and surging auto exports to Brazil helped Argentina’s economy grow 11.8% in the second quarter from a year earlier, the fastest since at least 1995. The economy will expand 9.2% this year, up from a previous forecast of 6.5%.

Buenos Aires’s budget authorizes it to sell 1.1 billion USD of bonds this year, according to an Economy Ministry official in La Plata.

Argentine Economy Minister Amado Boudou told reporters June 23 that the national government has no fiscal need to sell debt this year and that it would wait until yields fall below 10% before considering a sale.