LATAM WRAP-Hipotecario tests post-election appetite

martes 24 de noviembre de 2015 16:19 GYT

By Paul Kilby

NEW YORK, Nov 24 (IFR) - Banco Hipotecario became the first issuer to test appetite for Argentine risk on Tuesday following a brief bout of euphoria over Mauricio Macri's victory in the presidential elections on Sunday.

Leads Itau and Bank of America Merrill Lynch announced initial price thoughts of 10% area on a five-year bond on Monday following an initial bounce in secondary prices.

Since then, however, the market has given back some gains as investors seek to lock in profits from the rally leading up to the elections.

Against that backdrop, some observers thought the issuer was perhaps a bit too quick to pull the trigger on a bond when the buyside was still assessing the multiple challenges faced by the incoming administration, and the time it will take to right the economy.

"You know that whatever happens, inflation will be higher and you will have to have an FX depreciation," said one investor. "You will have a time lag before it goes back to being a healthy economy."

Investors are also aware that Hipotecario is likely to be the first of many issuers to tap as the new government mends relations with holdouts and sets a more market friendly course for the economy.

The issuer, nevertheless, benefited from a simultaneous tender for about US$250m in outstanding 9.75% 2016s, creating an underlying bid from investors seeking to switch out of the old securities into the new ones.

In the end, the deal was priced at par to yield 9.75% with a size of US$200m, the lower end of the US$200m-US$500m that Moody's had estimated.   Continuación...