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forest444

(5,902 posts)
Mon Apr 18, 2016, 06:08 PM Apr 2016

More than $65 billion in orders for Argentina's first international bond offer in 15 years.

Argentina got an enthusiastic welcome back to the club of borrower nations on Monday, amassing more than $65 billion in orders for its first international bond in 15 years.

An international bond market exile since defaulting on its debt in 2001, the country clearly won over investors with a nearly $15 billion bond offer four times oversubscribed. The surge in demand for the bond, which will price on Tuesday, allowed Argentina to set pricing guidance close to its optimistic funding costs for the ground-breaking deal.

The proceeds will be divided between recent settlements with holdout bondholders ($8.5 billion) and local balance of payments deficit financing needs. Litigant bondholders who rejected the terms of Argentina's 2005-10 debt restructuring and filed suit for a better payoff will have first dibs on the proceeds of the transaction. These holdouts, led by Paul Singer's hedge fund Elliott Management (Cayman Islands) and Aurelius Capital (London), will get about 75% of what they had claimed under the agreement.

The $8 billion payout to holdouts (including $4.65 billion to four vulture funds, led by the two above) was touted by the Mauricio Macri administration as a way to put aside years of messy litigation and re-open the capital taps to help fund his ambitious overhaul of Latin America's third-largest economy.

The success of today's sovereign bond offer - the largest since Mexico's in 1996 - allowed Argentina to tighten pricing significantly across most of the four-tranche bond on the back of the order book.

It set guidance of 7.5%-7.625% on the 10-year tranche - the centerpiece of the offering - from initial price thoughts of 8%. The yield on the 30-year tightened at guidance to 8% from initial thoughts of 8.5% over the 10-year yield. At the short end of the curve, guidance on the three-year was set at 6.25%-6.50% and on the five-year at 6.875%-7.125%.

At: http://buenosairesherald.com/article/212823/more-than-us$65bn-in-orders-for-argentinas-first-international-bond-in-15-years

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More than $65 billion in orders for Argentina's first international bond offer in 15 years. (Original Post) forest444 Apr 2016 OP
Truly depressing. It will be interesting seeing how far the people will let this president take them Judi Lynn Apr 2016 #1
At 8% interest I expect you would get lots of attention. bemildred Apr 2016 #2
You're not kidding. forest444 Apr 2016 #3

Judi Lynn

(160,217 posts)
1. Truly depressing. It will be interesting seeing how far the people will let this president take them
Mon Apr 18, 2016, 09:11 PM
Apr 2016

into debt. People like him, people without consciences, shouldn't be allowed anywhere near the Presidency.

bemildred

(90,061 posts)
2. At 8% interest I expect you would get lots of attention.
Tue Apr 19, 2016, 09:14 AM
Apr 2016

Elsewhere in the world economy the talk is about negative interest rates, so I'll bet he can get all the money he wants at 8%. I wonder how much of that Macri plans to keep?

forest444

(5,902 posts)
3. You're not kidding.
Tue Apr 19, 2016, 06:45 PM
Apr 2016

This means an extra $1 billion+ in interest payments alone - and for what? By Economy Minister Prat-Gay's admisssion, $11 billion of the amount raised (70%) is going solely to settle holdout lawsuits - including Paul Singer's $2.2 billion (an 1,180% return). Talk about moral hazard.

That leaves $4 billion to cover Central Bank losses stemming from Macri's own devaluation four months ago.

So at best, it's really a mixed bag. Will this, as Macri hopes, lead to more international financing in the future? Perhaps.

But if so, will any of it go to anything other than paying interest on other debt? Probably not much, if the Menem years are any indication - and we all know how that turned out.

Thanks as always for your sharp insights, bemildred. Always comes in handy when examining Argentina.

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