Argentina Returns to Euro Bond Market For 1st Time Since ’10

  • Offering 1.25 billion euros each of bonds due in 2022, 2027
  • Deal will be Argentina’s third foreign-bond sale in 2016

Argentina returned to international markets with its first euro-denominated bond in six years as the biggest issuer in the developing world this year looks to broaden its investor base.

The government raised 2.5 billion euros ($2.8 billion), split evenly between notes due in 2022 that yield 4 percent and securities maturing in 2027 that pay 5.125 percent, according to a person familiar with the matter who asked not to be identified because the information is private. The sale was Argentina’s third overseas this year and the first in euros since 2010.

“It makes sense that they access not only the dollar and peso market but also the euro market and potentially any other currency available to them,” said Guido Chamorro, a senior investment manager at Pictet Asset Management Ltd. in London. “I wouldn’t be surprised if they issue in Swiss francs.”

Argentina has raised about $20 billion from the sale of dollar-denominated bonds this year, tapping a surge in interest from investors after a reform-driven government scrapped most currency controls and reached a milestone settlement that pulled the country out if its 15-year sovereign default. A $16.5 billion sale in April was the biggest ever from a developing nation and was met with $70 billion worth of offers from international investors, a record at the time. Today’s sale generated 7.6 billion euros in offers, the government said.

“The country still has not much debt after issuing little over the last 15 years,” said Lutz Roehmeyer, who helps oversee about $12 billion in assets at Landesbank Berlin Investment.

Banco Bilbao Vizcaya Argentaria SA, BNP Paribas SA and Credit Suisse Group AG managed the bond sale.

Yields on Argentina’s dollar debt have fallen almost 1.5 percentage point since May to 6.13 percent, according to JPMorgan Chase & Co.’s emerging market bond index. Interest rates on euro-denominated bonds are typically lower than on dollar-denominated securities amid an asset-purchase program by the European Central Bank that has created negative yields on some government securities.

“A lot of Latin American issuers have been printing paper in the euro market,” Chamorro said. “They can say that they are issuing at very, very low yields but of course there is some risk in terms of the potential volatility between the euro and the dollar.”

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