Chubut Clinches Oil ABS

Argentina’s Chubut province has priced a $150m 2020 bond backed by oil and gas royalties. A $104m global piece priced at 91.87 with a 7.75% coupon to yield 9.75%, and a $46m domestic tranche came at 93.00 with the same 7.75% coupon to yield 9.46%. Demand was heard at about $160m. The province had been pitching since June the bond primarily backed by hydrocarbon royalties to be paid by Pan American Energy, which has been awarded the production concession for certain areas in the province. It was heard initially aiming for 9.0%-9.5% yield. The transaction has a 5.5-year average life. US-based BCP Securities managed the international placement, rated Ba3, with Banco de Valores and Banco de Chubut on the domestic portion, rated Aa1 on a national scale. Other sub-sovereign Argentine credits waiting in the wings include Cordoba province. While the recent federal debt exchange is seen helping these issuers lower yields, many had previously already been able to access international markets, including Cordoba and the City of Buenos Aires.