The pipeline for new bond issues from Argentine credits
seemingly has “no end”, one fixed income investor told LatinFinance earlier this week. After new issues from the sovereign,
sub-sovereigns and corporates, one investor said they were “a bit full” with
Argentine credit.
Argentina’s Santa Fe province was the latest to pick banks
for a proposed bond sale and the sub-sovereign could sell notes before the
Labor Day holiday in the US, one debt capital markets banker said. Citi, HSBC
and JPMorgan were mandated to coordinate the trade.
Other provinces such as La Rioja and Chaco are rumored to
be assessing the market for potential cross-border bond sales, but investor
sentiment may thin in time for these sub-sovereigns to issue, investors said. BNP
Paribas and UBS are said to have won the mandate for the Chaco province, a
source away from the bank said. BNPP and UBS declined to comment.
Throughout July, investors showed strong appetite for
emerging market debt as they searched for yield and took advantage of a positive
market window, whilst global interest rates remain low. Uncertainty over US
inflation should maintain a low rate environment in coming months. LatAm
credits also wanted to beat the inevitable summer lull throughout August in the US, one investor said.
Argentine credits have racked up the bulk of LatAm credit so
far in 2016, with almost $30bn in new issues. Despite
the wave of new trades however, a DCM banker said investors were starting to be
more selective with investments.
“Investors are looking for yield, but some of the new
trades from Argentina may struggle,” he said. “Even the last few like Albanesi
and Clisa needed to offer significant yield to tap investor appetite.”
In July, infrastructure firm Clisa
sold $200m in 9.75% 2023s, while B3/-/B+
rated energy firm Albanesi sold $250m in 9.625% notes that offered yield of
9.875% on issue day.
Despite some skepticism, Argentina’s re-entry into the
cross-border bond markets this year has played out as most expected, a DCM
banker in Buenos Aires said. After the
sovereign sold $16.5bn in new paper, the higher-rated provinces returned,
followed by the corporates, piggy-backing on investor optimism for Argentina,
he said.
While August is
traditionally quiet, bankers and investors are confident the next wave of
issues, albeit smaller-sized, will emerge in September.