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Argentina provinces turn to domestic market

Aug 7, 2013

Argentina’s sub-sovereign borrowers maintained some international bond market access through last year. Those same credits are turning to the domestic markets in 2013, often for dollar funds

Argentina’s Buenos Aires Province sold $200 million in dollar-linked domestic bonds this week, becoming the latest sub-sovereign to tap the local markets. More could follow this year, under an $800 million program. The transaction followed a similar sale from Entre Rios, which represented the northern province’s dollar-denominated debut. Entre Rios is working under a 900 million peso ($163 million) authorization.

Buenos Aires last issued internationally in 2011, when it was one of several Argentine provinces making use of the international market even while it remained firmly closed to the sovereign. Mendoza and the City of Buenos Aires were also in that group. Each hit the local market in May of this year – Mendoza for $95 million and BA for $216 million in an upsized, well-bid sale.

Chubut, which successfully sold a $150 million oil revenue-backed ABS in 2010, is heard to be among the next provincial issuers bond for the domestic market.

On the corporate side, Arcor, one of the few Argentine coprorates with recent international access, tapped local investors last month. Edesa was the last Argentine issuer to tap the international markets, in May of last year. Industrias Metalurgicas Pescarmona (IMPSA) met international investors this year, though held off on issuing.

The domestic bond market accounted for $1.26 billion-equivalent this year through August 6, according to Dealogic data, compared to $598 million-equivalent in the same period in 2012. LF

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