Argentine Beer Bonds Lose Fizz

Bonds from Argentine brewer Cerveceria y Malteria Quilmes have come off sharply over the last week, more because of Argentine risk in general than anything credit specific, according to analysts. Credit Suisse had the $120m 7.375% of March 2012 bid at 80 late last week, down 20% versus 100 the week before, and most other Argentine corporate bonds are quoted below 50. “Different refinancing options they had are really drying up due to the government’s nationalization of the pension system,” says Joe Bormann, corporate analyst at Fitch, speaking of Argentine corporates in general. Fitch, which rates Quilmes BB, put the beer maker and several other Argentina-based corporates on negative watch in late November, following news of the nationalization. Only a couple of Argentine names – in the energy and telecoms sectors – are trading above 80, Credit Suisse data shows. Analysts generally see the sovereign headed for disaster, with a negative impact inevitable for corporates.