JPMorgan’s Big Bet on Argentina Is Paying Offby
Bank predicts debt sales will soar to $30 billion in 2016
JPMorgan is tripling Argentina staff to make it regional hub
JPMorgan Chase & Co.’s bid to become Argentina’s top banker started back in early 2015, long before the country became the investor favorite it is today.
The nation was mired in default and home to a thicket of currency controls that had long repelled many investors when the New York-based bank announced plans in May of that year to triple its staff in Buenos Aires to 1,000 and make the city its hub for Latin America. With presidential elections later that year, JPMorgan was betting that change was on the way.
The wager has paid off as President Mauricio Macri has restored investor confidence in the country by ending a decade-long legal battle with disgruntled creditors and jettisoning most of the restrictions on the peso. The moves have helped turn Argentina into the biggest bond issuer in emerging markets this year with almost $25 billion of sales from the nation’s borrowers. JPMorgan has been in prime position to capitalize on the surge, becoming the biggest underwriter of the country’s debt sales in 2016.
“Even when the situation in Argentina was difficult, JPMorgan continued to bet on Argentina,” Lisandro Miguens, the head of Latin American debt capital markets said. “We’ve been preparing for this change over the past year. We added employees, analyzed the situation with the holdouts and spent more time visiting clients.”
JPMorgan is in the process of increasing its Argentina staff from its 2015 levels as part of a three-year plan to make the country its regional hub. It had hired approximately 450 employees in the country as of the end of June.
Miguens, an Argentina native, predicts Argentina bond issuance will climb to $30 billion by year-end.
The bank is coordinating investor meetings this week for companies including power generator Albanesi SA and bank Banco de Galicia y Buenos Aires SA, said people familiar with the plans who asked not to be identified because the talks are private.
JPMorgan was one of four global coordinators in Argentina’s record $16.5 billion bond sale in April, which marked the country’s return to overseas credit markets for the first time since its 2001 default. It was also one of the foreign banks that together lent Argentina $5 billion to bolster its reserves in January, a month after Macri took office.
Several of Argentina’s top finance officials have also worked at JPMorgan. The list includes Finance Minister Alfonso Prat-Gay, Finance Secretary Luis Caputo, Finance Undersecretary Santiago Bausili and Finance Ministry chief of staff Vladimir Werning.
“When the new government took office, they called us immediately and we had everything planned out, presentations -- numbers, strategies,” Miguens said. “This gave us great credibility with them. It also helped that we already knew them well.”