Thursday, August 13, 2015

Gov’t to issue US$500M in bonds

The national government announced yesterday it would be auctioning a new series of dollar-linked bonds valued at US$500 million. The bond sale will be carried out next Tuesday, and could grow if market demand is higher than supply. It will be repayable in 18 months, with an interest rate of 0.75 percent plus however much the peso depreciates during that time.

A dollar-linked bond is denominated in local currency, in this case Argentine pesos, but adjusted to whatever the official exchange rate happens to be at the moment of maturity. The government argued this move would “help diversify the country’s funding sources.”

The City and Province of Buenos Aires, Chubut, Neuquén, Chaco, Mendoza, Formosa and Entre Ríos have also issued this kind of bond over the past few years.