Barron’s | Argentina’s Huge Upcoming Debt Issuance Attracts Plenty Of Interest
Argentina finally looks like it will reenter global capital markets after brokering a deal with bondholders that had kept the country from issuing debt on the world stage, a major departure from previous policy by President Mauricio Macri.
The Argentine Congress is expected to vote this week to finalize the deal that Macri’s government has made with creditors, which would position the country to issue the largest amount of debt by any emerging market economy in two decades.
Despite the protracted battle with bondholders, financial institutions aren’t shying away from the new debt, as Bloomberg reports. Highland Capital Management’s Jim Dondero said that his firm, which oversees some $19 billion, will look to buy “significant amounts” of the new securities:
Highland’s plan to invest is a good sign for Argentina as the country attempts to sell an unprecedented amount of debt to pay for settlements with holdout creditors led by billionaire Paul Singer. It also suggests that so-called distressed debt investors who have piled into Argentina in recent years may remain buyers of the country’s debt even after it exits default.
“We plan to hold what we have in the original bonds but are looking to buy some of the new issuance,” Dondero said from Dallas. “We’re optimistic on where Argentina is likely to price the debt and where it’s likely to trade, especially relative to other Latin American sovereigns.”
Argentina is expected to issue the bonds in April, yielding 7.5% to 8%, however, the government hopes yields will fall to around 6%, based on brighter outlooks for the country.
Teneo Intelligence writes of the situation:
The government is planning to send its proposal to end the holdouts dispute to the lower house on 10 March. The government needs to repeal two laws that block any debt settlements that would offer better terms than previous restructurings, and secure backing for USD 11.7bn in fresh debt issuance to pay the holdouts. Although the governing Cambiemos coalition lacks a legislative majority, the splintering of opposition Peronists should give the government the numbers it needs in the lower house. President Mauricio Macri is hoping that a tax rebate to the provinces will win over Peronists in the Senate.
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