Law Firm of the Year: Argentina: Bruchou, Fernández Madero & Lombardi
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With Argentina facing growing sovereign risk in the second half of 2018, issuers knew they had to move quickly if they planned to issue new debt. Two of the most notable transactions during this period--Tecpetrol’s inaugural bond offering and the Province of Buenos Aires’ local currency issuance--were advised by Bruchou, Fernández Madero & Lombardi.
“The Tecpetrol deal was difficult because it was the company’s first time in the capital markets so not only did we have to put together all the documents and negotiate the terms of the notes, but we also had pressure from the banks to do the deal quickly,” says Carlos Lombardi, the managing partner of Bruchou.
In addition to the timing, the pricing was particularly noteworthy. “The pricing of the deal was below 5% which was incredibly good then and unheard of now,” Lombardi says. In fact, the $500 million international bond was issued at the lowest yield ever by an Argentine corporate issuer, with a yield compression of 62.5 bps from initial pricing thoughts (IPTs).
The proceeds from the bond sale are largely being used to finance a significant portion of fixed assets in the Vaca Muerta shale basin in the country, a key resource in Argentina’s future oil production.
Meanwhile, the Province of Buenos Aires’ ARS30 billion ($1.5 billion) issuance wasn’t only sizeable, but the offering was switched to pesos from dollars, reflecting demand for local currency issues. This required underwriters “to change the structure in real time,” Lombardi says.
Looking ahead in 2019, Lombardi says much hinges on the outcome of the August presidential primaries and the October run-off. But Argentina’s first public private partnership program is attracting attention. The government has awarded six projects, each with $1 billion in capital expenditure. “We are working on the six of them so for us it is an interesting challenge, it will definitely keep us busy,” he says.