Argentina launched a US$7bn two-part bond on Thursday, covering its planned dollar issuance for the year in one fell swoop on the back of more than US$21bn of orders. The deal was the sovereign's third in US dollars since being welcomed back to the international capital markets last year after a protracted fight with creditors, and demand was strong.
The buy side appeared satisfied with pricing on the offering of five and 10-year bonds, and many in the market said Argentina looked attractive compared to other EM and high-yield debt.
We still see Argentina as undervalued and relatively cheap at this level, said Yong Zhu, a senior portfolio manager at DuPont Capital Management.
Leads launched the US$3.75bn 10-year at 7%, at the wide end of 6.875%-7.00% guidance, and the US$3.25bn five-year at 5.625%, or the tight end of guidance of 5.625%-5.75%.
Overall, Argentina's cost of dollar financing was considerably cheaper than last year, when it printed a 2021 and 2026 to yield 6.875% and 7.5%, respectively. Earlier in the week those bonds were trading at yields of 5.21% and 6.66%, or at G spreads of 350bp and 432bp, according to a banker away from the new deal.
Investors see plenty of upside as President Mauricio Macri rolls back the populist policies of his predecessor and tries to steer the economy back onto a sustainable growth path.
Yet while the sovereign's debt is relatively low, the markets are keeping a sharp eye on the fiscal numbers given the country's high primary deficit - and its history of defaults.
Its 2001 default sparked a battle with creditors that kept the country locked out of the international capital markets for 15 years, a deadlock that Macri helped break last year. Yet investors say weak growth and the possibility of fiscal slippage ahead of legislative elections this year remain major risks.
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@Marti LlazoJan 23rd, 2017 - 06:13 pm +1
Let me, once more, correct you. ¿Between January and October last year the national government emitted new debt totaling some US$45 billion? Have you included the short term bonds called Letras? This debt is in pesos and has the goal of sterilize the economy to reduce the effects of the large monetary base.
I don't know the source of your data but during year 2016 some media showed as new national external debt U$D 12.000 millones needed to pay the bondholders (old and not recognized debt), new provincial external debts (around U$D 6.000 millions) and, finally, private companies external debt (around another U$D 6.000 millions). .
@pgerman. Why? Argies do it all the time.Jan 23rd, 2017 - 05:30 pm 0
@Marti LlazoJan 24th, 2017 - 12:43 am 0
Let me ask again..What's your source of information?
Basically, it seems you are considering the national debt but not the external debt.
There were U$D 30.364,83 millions in Letras the last week of the previous government mostly in argentine pesos (almost U$D 2,000 millions were in U$S). Currently there are U$D 39.585,42 millions in Letras but none of them are in U$D.
Of the U$D 16,500 million only U$D12,000 million were used to pay ALL the bondholders with judgment won.
I have never mentioned that the public debt is growing but the risk country is plunging to 460 points abd interest rate is now, a llitle more than 5% while the previous year it was around 8%...so the size of debt doesn't seem to be an issue for the investors...