Argentine energy companies Compañía General de Combustibles (CGC) and Genneia said Thursday they maxed out bond sales in the local market, a sign of investors’ appetite for the US dollar-linked notes.
CGC, an oil and natural gas producer, raised $150 million in a sale of 20-month bonds after demand surpassed $156 million, allowing it to price the notes at 3% over currency depreciation, it said in a securities filing.
Demand for dollar-linked bonds have grown over the past few weeks as the parallel exchange rate depreciates at a faster clip than the official rate, widening the spread to 35% on Thursday from 17% at the start of the year.
The government took advantage of investor appetite to sell $221 million worth of dollar-linked bonds maturing in December 2025 after demand surpassed $1.2 billion, amid expectations that Economy Minister Luis Caputo will sustain a crawling-peg policy of devaluing the official exchange rate by 2% per month.
The black-market rate has been rising on concerns that international reserves are not increasing as quickly as expected. Though reserves have grown 26% to nearly $30 billion since the start of the year, the $6.5 billion gain is less than the government’s target of $10 billion to $15 billion, a level it says is a prerequisite for removing the capital controls that are driving demand for dollars on the black market.
In the CGC deal, which was managed by Santander, Galicia and ICBC, investors bought about $105 million of the notes in cash and exchanged the rest for 0% dollar-linked notes maturing in March 2025, the company said. It sold $150 million of those notes in March 2023.
Santander, Galicia and ICBC also provided bookrunning services in the deal along with BACS, Max Capital, Banco Comafi, Allaria, Banco Capital, Cocos Capital, Banco Patagonia, Banco Provincia, Banco Mariva, IEB Invertir en Bolsa, Facimex, Balanz and Macro.
CGC is controlled by Corporación América, a conglomerate owned by Argentine billionaire Eduardo Eurnekian.
GREEN BONDS
Genneia, for its part, said it sold $60 million worth of green bonds after demand hit $86 million.
All of the demand was for a two-year dollar-linked note paying a 2% margin over currency depreciation, Genneia said. A parallel offer of a three-year US dollar bond didn’t prosper due to weak demand, it added.
The bonds have been classified as green because 100% of the proceeds will go toward investments in renewable power projects, helping to reduce greenhouse gas emissions, the company said.
Macro Securities was the deal manager and provided bookrunning services along with Balanz, BACS, BBVA, Banco Provincia, BST, Banco Hipotecario, Banco Mariva, Banco Patagonia, Santander, Facimex, IEB Invertir en Bolsa, Parakeet Capital, TPCG and Banco Supervielle. The legal advisers were Bruchou & Funes de Rioja for Genneia and Pérez Alati, Grondona, Benites & Arntsen for the deal manager and bookrunners.