JPMorgan Chase & Co. (JPM) agreed to buy Argentine government bonds from oil producer Repsol SA (REP) for $2 billion, bringing its purchases of the Latin American country’s securities to almost $5 billion in the past week.
The bank will buy Argentine bonds due in 2015, 2017 and 2033, Madrid-based Repsol said yesterday in a regulatory filing. The oil company agreed last week to sell new Argentine bonds due in 2024 to JPMorgan for $2.8 billion. Those bonds have since rallied 1.7 cents on the dollar.
The biggest U.S. bank is facilitating Repsol’s efforts to reduce ties with the Argentine government, which nationalized its 51 percent stake in local oil producer YPF SA in April 2012. Under an agreement reached with the government earlier this year, Repsol received bonds last week with a face value of $5.32 billion as compensation.
JPMorgan has now bought almost all of that. The New York-based bank, which has already sold some of the Argentine bonds received from the first purchase, is wagering that the remaining holdings will gain in value, a person with direct knowledge of the bank’s strategy said earlier this week.
Veronica Navarro Espinosa, a spokeswoman for JPMorgan, declined to comment.
Argentina’s bonds, rated seven levels below investment grade, have soared 46 percent in the past year, the most in emerging markets, as the country took steps to repair ties with international investors, including Repsol and the International Monetary Fund.
The country’s debt is still considered risky, with the cost of five-year protection in the credit-default swaps market at 1,567 basis points, according to CMA, the highest in the world. The country hasn’t sold bonds directly to international markets since a $95 billion default in 2001, and it’s locked in a dispute with some creditors in a case now before the U.S. Supreme Court.
The transaction disclosed yesterday is expected to be completed by May 16, according to the filing.
The sale included all of Repsol’s Argentine securities due in 2017 and 2033 and all except $117 million of those due in 2015, known as Bodens, according to the filing.
Boden bonds maturing 2015 gained 0.20 cent to 97.65 cents on the dollar at 9:31 a.m. in New York, according to data compiled by Bloomberg.
Repsol previously said it had $500 million of the 2017 securities, $1.25 billion of the 2033 bonds and $317 million of the 2015 debt. All the securities are governed by Argentine law.
To contact the reporter on this story: Katia Porzecanski in New York at firstname.lastname@example.org
To contact the editors responsible for this story: Brendan Walsh at email@example.com Bradley Keoun, Dennis Fitzgerald