Argentina – Emerging Market Bond Party Time? by Firehorsecaper, iBankCoin
Latin American issuer Argentina (B- rated as of last week) returned to the bond market with great fanfare, raising $16.5bln across four maturities, making it the largest ever EM bond issue. There were over $68bln in orders for the debt issue which allowed the 10 year (largest) tranche to price a full 50bp (0.50%) tighter than initial price talk. The bond rallied in the gray market, with the $6.5bln of 10’s trading up $1.60-$2.10 in price terms in late Tuesday trade.
Argentina was rewarded for being market-friendly (legacy default on $95bln of debt in 2001 aside) and having a pragmatic administration at the helm. 15 years “in the box” was deemed to be enough by the market and the recent uptick in emerging market sentiment was pushed to full advantage.
Over 60% of bond proceeds ($10bln) are earmarked for hedge funds and other investors, led by billionaire Paul Singer’s Elliott Management, who recently won a protracted court case against Argentina with respect to defaulted Argentinian debt. 15 years is a long time to wait for a 10 bagger. Thirty years is also a long time to hold a B3/B- sovereign credit with a 8% coupon. JCG
Expat Cape Bretoner. Learning to live in a de-leveraging world. Better suited to the crusades. CFA & FRM charter holder.