Bono Sur Launched

Venezuela and Argentina have finally launched the much-heralded “Bono del Sur”. In the end, it was not so much a jointly issued bond as three bonds grouped together. After much prior speculation regarding its structure, the details of the $1 billion issue as given by Venezuela’s finance ministry seem to show little benefit for Argentina, said market commentators. The bond – which was issued in dollars in Venezuela – is made up of 50% newly issued Venezuelan TICCs (título de interés y capital cubierto) maturing in 2017; 30% of Argentina’s dollar-denominated Boden 2012 and 20% of Boden 2015 (already held by Venezuela). Argentina’s finance ministry confirmed that it had sold a further $420 million of Boden 2012 to Venezuela at “market prices” to make up the issue. Despite talk before the launch that the new Bono Sur would benefit Argentina because of Venezuela’s lower yields, in the end analysts say Argentina effectively sold more dollar-denominated Boden 2012 at 7.7% to Venezuela. In Venezuela the bond can be bought via banks using local currency exchanged at the official rate and, the government hopes, will mop up some excess liquidity.