Argentina’s state-backed energy company YPF said it plans to sell up to $150 million in three classes of bullet bonds, the latest company to turn to the local market as capital controls increase liquidity and demand for assets.
The company will offer an initial $30 million in auction on Monday, a deal led by Galicia, Santander, Macro, HSBC, BBVA, Grupo SBS, Allaria y Ledesma, Balanz and TPCG, according to a series of securities filings.
Two of the bonds are denominated in US dollars and will pay a fixed rate of interest to be set at the auction based on the offers. One of the bonds will mature in 12 months; the other in 20 months, YPF said. The third note, maturing in July 2021, is denominated in pesos and will pay a variable rate of interest of Badlar plus 600 basis points.
The one-month Badlar deposit rate, a widely used reference rate for peso bond issues, has tumbled to 29.81% from a peak of 62% in September, according to data provider Refinitiv, spurring companies to tap the bond market to refinance debts and raise funds for working capital and investments.
The decline in the Badlar rate has also led investors to seek better returns outside the banks. The tight controls on buying dollars — $200 per month — and the sovereign and some provinces mired in debt problems is increasing demand for corporate bonds in the primary market.
Companies including the energy producers AES Argentina, Pan American Energy, Tecpetrol, Vista Oil & Gas, as well as telecommunications company Telecom Argentina, agribusiness company Cresud and lemon producer San Miguel have all sold bonds over the past month, while food processing company Arcor is preparing an issue.
The Argentine unit of John Deere Financial, the financial arm of the US-based agribusiness equipment maker, said Friday it raised $25.3 million with the sale of 18-month and 20-month dollar-denominated bonds paying between 9% and 9.75% interest.
YPF said it will use the proceeds of the sale for working capital and investments. It is the biggest oil and gas producer in Argentina, and is seeking to develop the country’s huge shale deposit, Vaca Muerta, as a source of long-term production and export growth.