Argentine entities’ access to capital markets was limited even before the onset of Covid-19. More than a year-and-a-half on, the situation continues to be difficult for issuers in the country.
The winner of the award for Investment Bank of the Year in Argentina was, however, able to nab a quarter of the activity in the market during the pandemic year.
According to Dealogic data, Citi led the Argentine investment banking market with a 25% share of total revenues from July 2020 to June 2021.
It is a hard-won award, according to Julio Figueroa, CEO of South America at Citi.
“The market has been very challenging in Argentina,” he says. “The pandemic has not helped, but the current market situation is mostly related to local complexities. Other countries that have also gone through the pandemic were able to do new transactions.”
The sparse placements of securities in the global market by Argentine companies in the past year and a half can be split in two main groups. The first is composed of companies that are based in Argentina, but whose businesses do not depend on the whims of the local economy.
One example was the $1.1 billion worth of 5- and 10-year bonds issued by Mercado Libre, an e-commerce giant, in January, which included a tranche of $400 million in sustainability notes. It was the first time Mercado Libre raised money by placing debt in international markets.
“It is one of the best-known companies in Argentina and in Latina America, and we led their inaugural bond,” Figueroa says.
Another is Globant, a digital technology group, which announced a follow-on equity deal in May after a similar transaction in June 2020. Citi acted as a joint bookrunner for Globant.
“The follow-on transaction went really well, generating significant investor interest,” Figueroa points out.
Among Argentine entities whose cash flow is reliant on the embattled local market, the emphasis has been mostly on liability management, he adds.
The most significant transaction in this group was the $7 billion debt restructuring deal closed by the government of the province of Buenos Aires, which was closed in August after several months of negotiations. Citi was one of the banks hired by the province to manage negotiations.
Companies like oil group YPF and dairy group Mastellone have also come to the market in search of debt reprofiling. And Pan American Energy’s issuance in April of $300 million in 6-year bonds was a rare occasion of an Argentina-focused issuer raising new money in global markets.
“We hope more Argentine entities will go back to international capital markets when the situation improves,” Figueroa says.