JPMorgan Chase & Co., the biggest U.S. bank, bought $2.8 billion of Argentine bonds at a discount from Repsol SA two days after the oil company received them as compensation for the government’s seizure of its local unit.
The bonds, due in 2024, have a nominal value of $3.25 billion, the Spanish oil producer said in a regulatory filing in Madrid. The transaction is expected to close by May 13, and for seven days Repsol will refrain from selling its remaining Argentine bonds to other parties except under certain unspecified conditions, according to the filing.
Repsol, Spain’s largest oil producer, is reducing its ties to Argentina after receiving $5.32 billion of bonds as payment for the government’s April 2012 nationalization of the company’s 51 percent stake in local oil producer YPF. JPMorgan probably believes it can resell the bonds to investors in the market, said Fernando Recalde, portfolio manager at Galileo Argentina SG FCI SA in Buenos Aires.
“This was a way for Argentina to sell bonds indirectly,” Recalde said. “It shows there’s appetite for Argentine risk.”
Argentine bonds have returned 11.7 percent this year, double the emerging-market average. South America’s second-biggest economy hasn’t sold bonds in international markets since its $95 billion default in 2001, and is locked in a dispute with some creditors in a case that is now before the U.S. Supreme Court.
Veronica Navarro Espinosa, a spokeswoman for New York-based JPMorgan, declined to comment on Repsol’s announcement.
Argentina’s global 8.75 percent bonds due 2017, the closest in maturity to the 2024 notes, rallied 2.8 cents on the dollar today to 93.66 cents, bringing yields down to 11.26 percent.
Earlier this week, Repsol disclosed that it had sold its remaining 12 percent equity stake in YPF for $1.3 billion through Morgan Stanley, another New York-based bank.
Antonio Brufau, who was Repsol’s chief executive officer, said Feb. 26 said that the company probably would sell the Argentine bonds after receiving them, though it was in no hurry to do so. In addition to the 2024 bonds, the Madrid-based company received bonds due in 2015, 2017 and 2033. Brufau stepped down as CEO last week and is now executive chairman.
The company said yesterday in a filing that the bonds have a market value of $4.67 billion, or $650 million below their nominal value.