Argentina is paying hundreds of millions more than any of these countries would pay if they issued this debt. This is the result of gross economic and financial mismanagement, driven primarily by Argentina’s refusal to resolve its 2001 and 2014 defaults.

Kicillof’s Costly Bond Deal: Now Even Rwanda and Pakistan Pay Lower Rates than Argentina

Post date : 04.28.2015 10:18 am

In a recent post, we explained that the rushed BONAR 2024 issuance is aterrible deal for the Argentine people.  As we highlighted, the offering was executed at a yield that is more than 100% greater than the average 4% yield for Argentina’s regional peers, representing a massive “pay off” to foreign investors to the tune of hundreds of millions of dollars.

We’ve expanded our analysis beyond the region to compare Argentina to less-developed countries around the world. The chart below compares the yields on 10-year bonds of those countries, demonstrating just how poorly Argentina’s credit worthiness stacks up.

All of the countries listed above, from those in Africa to remote areas of Southeast Asia, can borrow at substantially better rates than Argentina, a G-20 nation.

To further illustrate the wastefulness in dollars, the chart below compares the implied interest paid over the life of the BONAR 2024 at its 9% yield compared to the interest payments that the less-developed countries would pay if they each issued a similar BONAR 2024 at their respective yields.

Argentina is paying hundreds of millions more than any of these countries would pay if they issued this debt. This is the result of gross economic and financial mismanagement, driven primarily by Argentina’s refusal to resolve its 2001 and 2014 defaults.

Given the data, it cannot be said that the Financial Times is engaging in hyperbole when it dubs this the “The Great Bonar Caper.”  As the FTobserves, “Iraq, fighting off ISIS, can be lent to for 7.5 per cent.” Not to mention Boko Haram in Nigeria and Al Qaeda and the Taliban in Pakistan. How is it possible that these countries, each fighting some of the most serious terrorist threats the world has ever seen, be perceived as less risky investments than Argentina?

The FT piece ends with, “Maybe this is ‘market access’ even so. But it isn’t coming cheap.”