Province of Buenos Aires sees strong demand in up day for LatAm

martes 2 de junio de 2015 16:57 GYT

By Paul Kilby

NEW YORK, June 2 (IFR) - The Province of Buenos Aires, rated Caa2/CCC-, rode a wave of strong demand for Latin American credits on Tuesday to print its long-delayed bond issue and address looming refinancing risks.

The Province enjoyed over US$2bn in demand on a US$500m six-year bond as investors took a liking to the double-digit yields and any potential upside from a change of government come the elections in October.

The offering also arrived on a positive day for Latin American credits, whose prices were holding firm despite US Treasuries selling off Tuesday amid expectations of improving jobs data on Friday.

"People are suddenly seeing value in LatAm compared to the US high-grade space, where there has been a ton of supply," said a syndicate official.

In the end, the Argentine issuer priced the deal at 98.764 with a 9.95% coupon to yield 10.25%, the tight end of 10.25%-10.35% guidance and inside initial price talk of mid 10% area.

At the final yield, the amortizing bond with a 5.5 year average life was seen coming inside its own curve, where its existing 2021s had been trading at 10.35%.

"It came through its curve, which is not surprising," said the syndicate official. "People are looking at headline yield. It is hard finding any asset class that will pay that much and there is a lot of upside down the road."

In an effort to address upcoming maturities, the Province of Buenos Aires will also offer investors the opportunity to exchange up to US$500m of its outstanding 11.75% 2015 for additional amount of the new bonds.   Continuación...