Argentina, Venezuela Ready Bono del Sur III

Argentina and Venezuela are heard to be readying their third Bono del Sur tranche sometime in August. According to market sources, the size will be between $500m and $1bn, slightly less than the last issue. As with the first two tranches, this offering will combine Venezuela’s TICCs (título de interés y capital cubierto) and Argentina’s dollar-denominated Boden. Local investors can buy the packaged bond and then resell the Argentine paper element to obtain dollars. The bond sales are an attempt to control Venezuela’s foreign exchange rate on the black market by satisfying demand for dollars, which is otherwise restricted by tight capital controls.