21 de febrero de 2014 / 13:13 / hace 4 años

Argentina lines up US$5.5bn bond for Repsol

* Argentina to issue bonds to Repsol under local law

* Tap of existing dollar bonds, plus 10 year amortiser

* No issuance before April, after AGM and Congress approval

By Alex Chambers

LONDON, Feb 21 (IFR) - Repsol is close to completing negotiations with Argentina which will result in the sovereign issuing a US$5.5bn nominal bond as part of a US$5bn settlement over the 2012 expropriation of the Spanish oil firm's stake in YPF.

In an exclusive Reuters report it emerged that Argentina and Repsol will sign a definitive settlement over the seizure of YPF within days, a source involved in the talks said on Thursday, ending a bitter two-year bilateral dispute.

On Friday, Repsol said it would book a 1.28bn impairment in 2013 results after writing down shares in YPF and revaluing its remaining stake at US$5bn.

The agreement of a bond settlement to Repsol still needs approval from Argentina's Congress as well as Repsol's board of directors and shareholders, a source involved in the talks told Reuters. The board is due to discuss the matter on Tuesday, and sources said an AGM could be scheduled by the end of March.

No issuance will happen before then.

Sources said payment would likely take the form of bonds governed by local law. This would in theory avoid any attachment risks posed by holdouts seeking to seize coupon payments as part of their ongoing battle with the sovereign in US courts, but local law instruments carry their own risks, namely exposure to a legal system heavily influenced by local politics.

NUMBERS GAME

Argentina's bond curve has no security with a coupon higher than 9% - sources said the sovereign would be loathe to issue a security that yields more than this.

Assuming the deal involves market rate yields, Argentina would have faced a problem funding US$5bn with an entirely new security, as the coupon would have to be within the range of 11.25% to 14.62% in which its various bonds currently trade. Argentina will get around this by issuing to Repsol more than one bond; tapping outstanding securities both long and short-dated, but also selling a new US$3bn amortising 10-year bond. A major factor for Argentina and the company is how Repsol will monetise the bonds.

Selling US$5.5bn of Argentine debt could prove tricky for Repsol and expose the company to potential further losses. A lump sum sale would impact on Argentina's sovereign curve and may not be possible at all, leaving Repsol with no alternative but to sell the paper in drips and drabs.

There is a view that the company may want to take a risk and hold the paper longer term.

Next year's presidential elections could result in considerable upside should a market-friendly government take the reins of power from President Cristina Kirchner.

A spokeswoman for Argentina's economy ministry told Reuters the government would not unveil any details on the deal until it is signed. The government will abide by the confidentiality clause, it said.

At the end of 2013 local Spanish press reported that Deutsche Bank was advising Repsol on the matter. Market sources said Citigroup had also been talking to the oil firm. (Reporting by Alex Chambers; additional reporting by Paul Kilby; editing by Christopher Langner, Luzette Strauss)

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