The
success of Argentina’s record-breaking cross-border issue is expected to open doors for the country’s provinces to tap the international bond markets, followed by some corporate issuers, bankers told LatinFinance.

Argentina raised $16.5bn from the largest emerging market bond ever this week, and the notes have traded well in the secondary market since then, said Katia Bouazza, the head of debt capital markets at HSBC.

“To
get this number of investors, over 2,000, in the order book shows the high
quality,” she said. “Top orders were the buy-and-hold investors and a variety
of fund managers, including hedge and pension funds.”

With high demand allowing the sovereign to tighten the yield inside of early price talk coupled with the solid performance in the secondary market, the jumbo trade creates
opportunities for future issuers from Argentina, as well as the rest of Latin America and
emerging markets as a whole, Bouazza said.

“It
touches a lot of important points,” she said. “The market has been open for
Argentine issuers, but now the appetite has been reinforced after the reception
Argentina’s bonds received.”

Sub-sovereigns, such as the provinces of Cordoba or Mendoza, could look to issue
cross-border bonds, while corporates like energy company Pampa
Energia could evaluate possible deals. Sources said a sub-sovereign issuer could tap the cross-border market in the next two weeks.

Dan
Vallimarescu, the head of debt capital markets at Santander, said a lot of
potential Latin American issuers were monitoring the Argentine
sovereign trade, and some were concerned a deal that size would
absorb liquidity and reprice the asset class. After the bond priced, however, their worries proved unfounded. “Everything
seemed to rally in sync with Argentina’s deal,” he said.

“Argentina is very optimistic and has identified a path to
investment grade,” he said. “You’re going to see more issuance and also some
high-yield deals.”

Bouazza
said the economic backdrop is changing. More liquidity is available
for emerging market credits and investors have a bigger appetite
to take on more risk and pick up yield, she said.

With
the order book nearing $70bn, Argentina is understood to be confident that its
curve will tighten, said a debt capital markets banker. In future bond issues, it could look at different maturities, where it
makes sense to them, he added.

Daniel Pollack, the mediator appointed by Judge Thomas Griesa to preside over negotiations between Argentina and the holdout creditors, said last week that the country had paid all the bondholders who had reached
agreements in principle as of February 29.

US
Treasury Secretary Jacob Lew said last week that Argentina had turned a page on a difficult period in its history. “Argentina’s
return to the international capital markets and reintegration with the global
economy represent a major milestone not only for Argentina but for the entire
global financial system,” he said.

Argentina’s Finance Ministry said it will use the remaining proceeds from the bond issue to cover part of this year’s fiscal deficit.

The
sovereign last week priced
three-year, five-year,10-year and 30-year notes with yields ranging from 6.25% on the shorter end of
the curve to 8% on the longer end.

Deutsche Bank, HSBC, JPMorgan and Santander were global coordinators on the deal, while BBVA, Citi and UBS were joint bookrunners.