Deutsche Bank, HSBC, JP Morgan and Santander are arranging the meetings, but few other details were immediately available.

More than us$12 billion could be targeted

Friday, April 8, 2016

Details of ‘roadshow’ to lure international creditors emerge

NEW YORK — Argentine representatives will begin meeting investors Monday as the country returns to the international bond market for the first time in 15 years.

Excluded from foreign credit markets since a default in 2001, the country has made peace with litigant investors under Macri’s administration. Now it will hold a five-day roadshow in the UK and the US as it preps a new bond expected to raise US$12 billion — or more — to help pay off holdouts who had rejected a debt restructuring.

Finance Secretary Luis Caputo and Undersecretary Santiago Bausili will each lead teams meeting with investors in London, Boston, New York, Washington and Los Angeles. Deutsche Bank, HSBC, JP Morgan and Santander are arranging the meetings, but few other details were immediately available.

“The dealers on it are keeping it hush-hush until they are ready to come to market,” said Sean Newman, a senior portfolio manager at Invesco Fixed Income.

One of the lead banks said that investors had not yet been given any information about the ultimate size of the deal or the potential currencies of issuance.

At US$12 billion, the transaction would be the largest ever from an emerging markets borrower, according to Thomson Reuters data.

“It does mean something really huge for Argentina,” said Bianca Taylor, a senior sovereign emerging markets analyst at Loomis, Sayles & Company.

“They are back in the game with the curing of this longstanding issue with the holdouts, and they once again have access to the foreign capital markets.”

One trader in New York said he had heard yields whispered in the 7.5 percent range, but said 8.5 percent on a 10-year bond was a more feasible target given the current climate.

But Taylor said a useful comparable would be a Brazil 10-year currently trading at 6.13 percent.

“The talk of 7.5 percent seems rich for a country still in a balance-of-payments crisis and just coming out of default.”

The government reached the agreement in March and now has until April 14 to pay US$4.65 billion to the main investors that were fighting the country in court, though that deadline could be extended.

But the country has also reached other agreements with different investors, and will need even more cash to pay those bondholders.

In addition, after being unable to raise debt abroad for so long, Argentina might well come to market with a debt sale larger than US$12 billion in order to replenish its coffers and plug partof its fiscal deficit.

— Herald staff with Reuters