Argentina Companies Wait While Investors Plead for Their Bonds

  • It’s taking time for companies to get used to the new scenario
  • Meanwhile, yield-hungry investors want ‘real companies now’

Companies worldwide are selling bonds at a record pace, but issuers from Argentina aren’t rushing in even after the end of that country’s exile from international markets.

What’s holding them back? Executives want to make sure they learned from past mistakes, like loading up on the kind of cheap borrowings that led to a distressed debt crisis in Brazil, Marcelo Mindlin, chairman of Pampa Energia SA, said in an interview on Sept. 20 at Bloomberg’s headquarters.

“After 10 years of disconnection or isolation from the world, companies are not ready,” Mindlin said. “It takes time for the corporates to get used to the new scenario.”

Yields are at the lowest in decades for Argentine companies after the government ended a 15-year fight with bondholders in April. That reopened the door to international debt markets, allowing the country to issue debt in the biggest one-day sale by an emerging market.

But Argentine companies aren’t taking following their country’s lead much to the chagrin of yield-starved investors.

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"A lot of Argentina’s corporates haven’t really been taking advantage of the falling yields," said Ray Zucaro, chief investment officer of Aventura, Florida-based RVX Asset Management. "Comparatively, you’ve seen a lot more on the municipal side than the corporate side. As an investor, I’m tired of all the provincial stuff and the city stuff, especially once you start seeing some of the more unwieldy provinces. Come on, give me real companies now."

Argentine companies have 30 percent less net leverage than their counterparts in Brazil, but their issuance has grown at a slower pace than the rest of Latin America this year, according to data compiled by Bloomberg.

But for now companies are choosing patience, according to Miguel Angel Gutierrez, chairman of Argentina’s biggest oil company YPF SA.

“We have to be conservative,” Gutierrez said in an interview on Sept. 21. “The country is going through adjustments, our industry is going through adjustments. Hopefully the day we want to do something more aggressive we can capture better interest rates.”

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