Argentina looks to address amortization hump

miércoles 13 de enero de 2016 13:36 GYT

By Paul Kilby

NEW YORK, Jan 13 (IFR) - Argentina is looking to issue an additional US$1bn of 8% Bonar 2020s as part of a debt exchange in an effort to address a spike in upcoming debt maturities.

The new finance team of recently elected president Mauricio Macri said on Wednesday that it intended to tap the existing 8% Bonar 2020s on January 20, while also offering holders the opportunity to exchange Bonar 2017s for the 2020s.

"This proactive debt liability management (operation) reflects the technical expertise of this administration," said Siobhan Morden, head of LatAm strategy at Nomura.

The country faces heavy amortization payments next year, especially for a country recovering from a balance of payments crisis, and any easing of that burden will help the sovereign, Morden said.

The government has issued about US$7.34bn in 7% Bonars that will mature next year, according to government statistics.

"The curve is steep so they can push investors along the curve for a pick up in yield," she said. "(But) the decision to extend duration may have less to do with yield and more about a concern in new supply."

Investors are bracing for a substantial amount of supply out of Argentina this year, especially if the government pays holdout investors in bonds that are likely to be sold into the market.

While they were trading about a 1/4 point lower at a mid-market price of 101.30 on Wednesday, the Bonar 2017s were outperforming the rest of the Argentina sovereign curve which has slipped about half a point today, said a New York based trader.   Continuación...