Templeton's Hasenstab shuns Argentina for Mexico, Brazil
By Davide Scigliuzzo
SAN MATEO, Calif. March 28 (IFR) - At least one large fund manager is not buying into Argentina's turnaround story and believes the country's first international bond in over 15 years may not offer as much value as local debt in Mexico and Brazil.
In an interview with IFR, Franklin Templeton's Michael Hasenstab, known for making large bets in out-of-favor sovereigns like Hungary and Ukraine, said the risk the government may fall short on its ambitious plan made the Argentina story less attractive.
In coming weeks, Argentina is expected to start taking orders on a blockbuster bond worth US$12bn or more, which would allow the country to settle a decade-long dispute with holdout creditors and cure its 2014 default.
The move to regain international debt market access comes amid optimism about the country's outlook after newly elected President Mauricio Macri moved to address economic imbalances by depreciating the exchange rate, normalizing relations with creditors and lifting utility tariffs.
Large funds like Templeton, many of which have stayed out of Argentina's non-performing bonds over the past year and a half, are expected to provide strong demand for the multi-billion deal, which will lift the country's weight in global indices.
Assuming a US$12bn new issue, the country's weight is expected to increase from 2.58% to 3.25% on the EMBI Global Diversified and from 1.71% to 3.25% on the EMBI Global, according to a JP Morgan report in February.
Argentina - whose component on the EMBI Global Diversified returned over 26% in 2015, the second best performing credit behind Ukraine - is attracting accounts looking to buy into an economy on the mend.
But Hasenstab, the chief investment officer of Templeton Global Macro, is not rushing to buy. Continuación...