Argentina Said to Plan Four-Part Bond Sale in Market Return
Argentina plans to sell as much as $15 billion of bonds in its return to global bond markets after 15 years of isolation.
The South American nation is offering notes that mature in three, five, 10 and 30 years, according to people with knowledge of the matter, who asked not to be identified because the offer is private. The country is planning to sell three-year debt to yield about 6.75 percent, and 10-year bonds at about 8 percent. The five-year securities will probably yield about 0.5 percentage point less than the 10-year bonds and the 30-year securities about 0.85 percentage point more than the 10-year, the people said.
The sale, which is slated for tomorrow, will mark the end of Argentina’s pariah status among international investors after it defaulted on a then-record $95 billion in debt in 2001. It avoided tapping global bond markets amid litigation with holdout creditors. Those creditors, led by billionaire Paul Singer’s Elliott Management, will be paid with the cash raised by the sale. Any remaining funds will be used for general government purposes.
“They will encounter a good appetite from the market,” said Giuliano Palumbo, a Milan-based money manager at Arca SGR. “If we compare with peers, we find that Argentina’s guidance is quite generous.”
Government officials including Finance Secretary Luis Caputo traveled last week to the U.S. and U.K. to meet with several dozen investors from hedge funds, mutual funds, insurance companies, and pension funds.
Argentina had a “very credible team who have done a great deal in a short amount of time,” said Jim Craige, a money manager at Stone Harbor Investment Partners, who participated in the roadshow. “We hope this ushers in a culture of professionalism and prudent fiscal management for future administrations long after Caputo and team retire from public service.”
Finance Minister Alfonso Prat-Gay last week described interest in the bonds as “awesome.” The nation aims to pay the holdout creditors by the end of this week, he said. An estimated $10.5 billion will be used to pay holdouts, Caputo told reporters.
The notes are expected to be rated six levels below the lowest investment-grade classification by Moody’s Investors Service. Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., and Banco Santander SA are global coordinators for the offer. Banco Bilbao Vizcaya Argentaria SA, Citigroup Inc., and UBS Group AG are joint bookrunners.
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