Argentina's New Debt Offering Drawing Strong Demand
April 18 2016 - 3:00PM
Dow Jones News
Argentina is receiving strong demand for its giant debt offering
that could grow to $15 billion, attracting an array of investors
looking for higher yields during a period of low interest
rates.
The government is looking to raise at least $12.5 billion of
debt in four tranches, with maturities ranging from three to 30
years, says Siobhan Morden, head of Latin America fixed-income
strategy at Nomura.
But government officials have said they are prepared to sell as
much as $15 billion if there is sufficient demand, according to
investors who spoke with Argentine officials.
A dollar-denominated debt offering of that size would be the
largest from a developing country in at least 20 years, according
to Dealogic data.
Initial price talk suggests the 10-year tranche pricing with a
yield of 8%, with the three-year at 6.75%, the 5-year at around
7.5% and the 30-year at 8.85%, Ms. Morden said. Other emerging
market 10-year bonds that are single B issuers are trading at about
7.47%.
Ms. Morden said the strong demand could enable the government to
lower those yields even if it raises the size of the bond
offering.
The bonds could price as early as Monday, according to debt
investors.
The global debt offering will be Argentina's first since
defaulting in 2001, and the government plans to use proceeds to pay
back holders of the country's defaulted debt. Argentina ended a
15-year dispute with bondholders when it agreed to settle in
February with a group of U.S. hedge funds and other holdout
creditors.
Ms. Morden said the recent emerging debt bond rally, and a
growing risk appetite after the Federal Reserve said it was taking
a cautious approach to raising interest rates, is helping drive
demand for Argentine debt. The country's new bonds are rated B- by
S&P and were recently upgraded to B3 by Moody's.
"It's been risk on in everything," she said. "Mexico is up,
Colombia is up, everything has been rallying for three weeks now.
This isn't any specific driver or any specific credit. With that
stability, there is conviction that you should add to things that
are high yield."
Deutsche Bank AG, HSBC Holdings PLC, J.P. Morgan Chase & Co.
and Santander Group are the lead underwriters along with
bookrunners Banco Bilbao Vizcaya Argentaria SA, UBS Group AG and
Citigroup Inc.
Write to Julie Wernau at Julie.Wernau@wsj.com
(END) Dow Jones Newswires
April 18, 2016 14:45 ET (18:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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