Sept. 17 (Bloomberg) -- Arcos Dorados SA, Latin America’s biggest restaurant operator, tapped Bank of America Merrill Lynch and Morgan Stanley to arrange the first Argentine corporate bond sale in international markets in almost two years, according to a person familiar with the transaction.

The bond offering will be benchmark in size, which typically means at least $500 million, said the person, who declined to be identified because terms aren’t set. The overseas bond sale is the first for Buenos Aires-based Arcos Dorados, the owner and operator of all McDonald’s 1,750 restaurants in 19 countries in Latin America from Mexico to Argentina.

Arcos Dorados’ bond sale is part of a push by Latin American companies to sell debt in international credit markets as growing demand for higher-yielding assets lowers borrowing costs. The offering is the first Argentine corporate bond sale overseas since Empresa Distribuidora y Comercializadora Norte SA tapped markets in October 2007, according to Deutsche Bank AG.

Arcos Dorados’ “revenue comes from different countries, so it is not a pure Argentine play,” said Anne Milne, head of Latin America corporate bond research at Deutsche Bank in New York. “The market has been opening up for new issuers, as we have seen in the case of Javer and Petrotemex in Mexico.”

Mexican homebuilder Servicios Corporativos Javer S.A.P.I. de C.V. sold $180 million of five-year bonds last month, while Grupo Petrotemex SA, the chemical unit of Alfa SAB, sold $200 million of five-year bonds.

Argentine Bond Rally

Arcos Dorados is seeking to sell bonds abroad amid a rally in Argentine debt that has slashed the country’s borrowing costs in the past five months. The extra yield investors demand to own Argentine dollar bonds instead of U.S. Treasuries has shrunk to 7.30 percentage points from 19.60 percentage points on March 25, according to JPMorgan Chase & Co. indexes.

Debt swaps aimed at pushing out maturities and rising demand for higher-yielding assets have eased concern Argentina may default for the second time this decade. The country’s bonds tumbled last year on concern the government would be unable to service its debt as the global financial crisis crimped commodity-export revenue.

Lawsuits from some investors who rejected Argentina’s 2005 debt restructuring have prevented the country from selling bonds in international markets to meet its financing needs. Argentina’s $95 billion debt default in 2001 was the biggest ever by a sovereign.

Axtel, CSN

The Arcos Dorados bond sale follows a pickup in issuance in the past week. Axtel SAB, Mexico’s second-largest fixed-line phone operator, sold $300 million of 10-year bonds today. Cia. Siderurgica Nacional SA, Brazil’s third-biggest steel producer, issued $750 million of 10-year bonds earlier this week.

Last week, Petroleos Mexicanos, the largest oil producer in the region, sold $1.5 billion of 5.5-year bonds, while Brazilian iron-ore miner Vale SA sold $1 billion of 10-year bonds.

Borrowing costs for emerging-market companies dropped to 4.11 percentage points yesterday from 9.59 percentage points on Dec. 31, JPMorgan indexes show.

Diego Pace, a corporate finance manager at Arcos Dorados in Buenos Aires, said the company is considering financing alternatives including a possible bond sale.

For Related News and Information: Top Stories:TOP<GO>

Last Updated: September 17, 2009 15:10 EDT