Messi World Cup Fervor Lifts Billionaire’s Airport Bonds

Photographer: Juan Mabromata/AFP via Getty Images

Argentian forward Lionel Messi, right, and defender Jose Basanta train at the squad's training complex in Buenos Aires, on May 28, 2014, two weeks ahead of the FIFA World Cup Brazil 2014 kick-off. While the fervor of Argentines such as Aszpis will support the World Cup ambitions of a national team led by the record four-time world soccer player of the year Lionel Messi, it also stands to enrich bondholders of Aeropuertos Argentina 2000 SA -- the country’s biggest airport operator. Close

Argentian forward Lionel Messi, right, and defender Jose Basanta train at the squad's... Read More

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Photographer: Juan Mabromata/AFP via Getty Images

Argentian forward Lionel Messi, right, and defender Jose Basanta train at the squad's training complex in Buenos Aires, on May 28, 2014, two weeks ahead of the FIFA World Cup Brazil 2014 kick-off. While the fervor of Argentines such as Aszpis will support the World Cup ambitions of a national team led by the record four-time world soccer player of the year Lionel Messi, it also stands to enrich bondholders of Aeropuertos Argentina 2000 SA -- the country’s biggest airport operator.

Carlos Aszpis, a market strategist at Schweber & Cia in Buenos Aires, likes soccer so much he plans to charter a flight to watch the Argentine national team in the World Cup in Brazil and fly back the same day so he doesn’t have to miss work.

“The idea is to go and come back the same day to save on hotel costs and working days,” said Aszpis, 29, adding that the cost would be about 5,000 pesos ($619) plus $40 in airport fees. “The only problem is that if Argentina goes to the final we may feel tempted to go to all seven games.”

While the fervor of Argentines such as Aszpis will support the World Cup ambitions of a national team led by the record four-time world soccer player of the year Lionel Messi, it also stands to enrich bondholders of Aeropuertos Argentina 2000 SA -- the country’s biggest airport operator. After receiving government approval to boost the fees it charges airlines just in time for the tournament that starts next month, borrowing costs for the Buenos Aires-based company run by billionaire Eduardo Eurnekian have plummeted.

Interactive Graphic: Bloomberg Visual Data

Interactive Graphic: Bloomberg Visual Data

Yields on Aeropuertos’s $261 million of bonds due 2020 have tumbled 0.66 percentage point to a two-year low of 10.09 percent since April 8, when the higher fees were decreed. That exceeds the 0.29 percentage point drop in the Bloomberg USD Emerging Market Corporate Bond Index.

Sovereign Aversion

State-run airline Aerolineas Argentinas SA, which represents 80 percent of traffic from Aeropuertos airports, plans to boost flights 14 percent during the tournament while chartering planes on game days, spokesman Jose Luis Hirtz said.

With Argentina’s government debt lagging behind emerging-market returns this year and falling 3 percent in May, Aeropuertos’s bonds are a lucrative way to invest in the nation’s debt securities, according to Bevan Rosenbloom, a credit strategist at Mitsubishi UFJ Securities in New York.

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“It’s a solid stand-alone credit,” he said.

Aeropuertos’s notes are shielded from some of the economic and currency risks of operating in Argentina because the company collects fees in dollars that are received in offshore trusts to be used to pay principal and interest on the debt, according to the amended structure of the bond.

The bonds rose 0.22 cent to 102.07 cents on the dollar at 2:16 p.m. in Buenos Aires, the highest price since March 2012.

The company received a 19 percent fee increase last month that is paid in U.S. dollars. The higher airport fees will come into effect in June, coinciding with the event, Chief Financial Officer Raul Francos said in an interview.

Goldman Prediction

Macair Jet SA, which rents private airplanes, has already sold three charters to Brazilian cities Rio de Janeiro and Rio Grande do Sul for the world’s largest sporting event, saleswoman Corina San Martin said.

Traffic is likely to increase the further Argentina advances in the World Cup, according to Francos. Goldman Sachs Group Inc. said in a note yesterday that Argentina has a 14.1 percent probability of winning the tournament, second only to the host. The investment bank forecasts a 3-1 victory by Brazil in the final over Argentina.

Can Brazil Compete in the International Economy?

Eurnekian’s Corporacion America’s airport unit is the largest private operator in the world by contracts and controls the Brasilia and Natal airports in Brazil.

A decline in international traffic this year may offset any World Cup-related boost in revenue, according to Alejo Costa, a strategist at Buenos Aires-based brokerage Puente Hnos Sociedad de Bolsa SA.

‘Continue Falling’

“The expected figures for international tourism show it may continue falling,” Costa said by phone from Buenos Aires.

About 50 percent of Aeropuertos’s income comes from fees charged to airlines and passengers. The remainder comes from rental, parking and retail, which are all expected to increase on flights added for the event, Francos said.

The World Cup, the first in Latin America since 1986, may attract more foreign travelers to Argentina as well, he said.

“We are expecting many foreigners visiting Brazil for the World Cup will take advantage of Brazil’s proximity to visit,” Francos said by telephone from Buenos Aires. The fee increase “arrived right on time.”

To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net; Michael Tsang at mtsang1@bloomberg.net Daniel Cancel, Lester Pimentel

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