As Petrobras Exits Argentina, Bond Traders See a Windfall Gain

  • Local unit’s $300 million of notes have outperformed peers
  • Pampa Energia is set to complete purchase of unit in August

Petrobras’s exit from Argentina has fueled gains in the local unit’s bonds as traders bet on a potential buyback.

The $300 million of bonds issued by Petrobras Argentina SA have returned 9.4 percent since Jan. 23, when Pampa Energia SA said it’s considering buying the company. That outpaces the gain for comparable emerging-market debt. If a deal goes through -- and Pampa has said it could complete the acquisition by August -- the company would be required to redeem the notes for 101 cents on the dollar, and it said in a filing it may offer as much as 103 cents. In January, they were trading at about 93 cents.

“The bonds have surged because investors are betting Petrobras will buy them back at the guaranteed price with a sweetener or call them," said Santiago Wesenack, a Raymond James analyst in Buenos Aires.

The notes are now priced at 100.4 cents on the dollar, yielding 5.45 percent as of 3:12 p.m. in New York.

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