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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.
"It was primarily targeted at holders of the 2016s," said a second investor. "Clearly there wasn't much new money given they only did a US$200m size."
At 9.75%, Banco Hipotecario is offering about 100bp pick up over the Province of Buenos Aires, which has a June 2021 trading at 8.625%.
That was more or less in line with what leads were telling accounts earlier this month, though the whole Argentine complex has rallied considerably since then, said the second investor.
It also provided a pick-up to state-controlled oil YPF, which has been one of the more frequent Argentine issuers of late, with its 2018s and 2024 trading at 7.5% and 8.95%, respectively.
The bank is 58.4% owned by the national government, with another 30% controlled by real estate firm IRSA, which holds 46.6% of the voting shares and appoints the majority of the board, according to Moody's,
Arcos Dorados, the largest McDonald's franchiser in South America, held a Swiss roadshow in the week ended November 6 via Credit Suisse. The Argentina-based, NY-listed company is rated Ba3/NR/BB+.
Mexican white-goods manufacturer Controladora Mabe has finished investor meetings through Barclays, Bank of America Merrill Lynch, Citigroup and JP Morgan. Ratings are BB+/BB+.
Mexican REIT Fibra Uno completed meetings with investors through Bank of America, Credit Suisse, HSBC and Santander.
Brazilian airline Gol (B3/B-/B-) has completed roadshows with Morgan Stanley, Credit Suisse and Citigroup. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)