Argentina weighs bond sales in Swiss francs, euros and yen
Finance Minister Luis Caputo says Argentina could raise $2.5bn through the end of the year
Argentina will tap into other currencies to round
out the $2.5bn it requires to meet its external funding needs
for the year, Finance Minister Luis Caputo said.
The sovereign issuer is focusing on refinancing
debt and Caputo told journalists in New York that Argentina
could look to more Swiss francs, euros or yen.
Argentina also plans to raise $6.5bn in the local
capital markets in either pesos or dollars, he said.
The country covered roughly 70% of its fundraising
needs in Q1 this year, which has limited its exposure to global
risks, such as the presidential election in France or higher
interest rates in the US, according to Caputo.
"We have a spread that has narrowed, based on what
we have achieved on the economic side, not what happens in the
rest of the world," he said. "As long as we do that –
narrow our spread – we can compensate for any higher
Argentina sold CHF400m ($401m) in 3.5-year
notes in March at 383bp over mid-swaps, or 55bp below the
bonds that the state-owned oil company YPF issued in
September last year.
Since the sovereign
returned to the market in April last year, a number of
provinces also raised billions of dollars in cross-border
Neuquen is next in line with a possible $366m bond issue
Santa Cruz plans to sell some $350m new notes later this
Caputo said the provinces ask the central
government if and when they can issue cross-border bonds so
there is not an overlap of sovereign and sub-sovereign debt in
the market. But opening the market last had less to do with
fundraising for the public sector and more to do with the
"There is definitely a lot of appetite for
corporate issues. I spoke to two investors who said just that,"
Among Argentina's corporate issuers,
Pampa Energia went back to the cross-border bond market in
January, raising $750m from the sale of 10-year notes at 7.5%,
Genneia sold $350m in five-year paper to yield 8.75%.
The administration of President Mauricio Macri has
drafted legislation to Congress to reform the local capital
markets and Congress could pass the bill before the end of the
year, Caputo said. Proposed reforms include lifting
restrictions on mutual funds and foreign investments in the
Credit to private sector borrowers equals roughly
15% of GDP in Argentina, Caputo said, compared to 66.8% in
Brazil and 111% in Chile.
"We need to make the local capital markets grow as
much as possible. Our capital markets are probably a third of
the size of the rest of Latin America," he said. But retail
investors are starting to buy local treasury notes, or letes,
in dollars, he added.