24 de abril de 2015 / 18:14 / en 3 años

Argentina reopens access to dollars

NEW YORK, April 24 (IFR) - Argentina won a small victory in its long legal war against holdout bondholders this week when it overrode litigant investors’ objections to raise US$1.416bn through a local tap of its Bonar 8.75% 2024s.

For the sovereign, the move marks a rare success story in its latest attempts to gain access to international capital, albeit through a local auction.

The Kirchner government appears to have learnt from past botched sales of the Bonar 2024s, which failed either because of poor pricing or exposure to legal risks.

Market-determined pricing in a local auction that helped ring-fence participants from legal claims in US courts allowed Argentina to score a victory on this occasion.

Holdout investors suing the sovereign - including billionaire Paul Singer’s NML Capital and Aurelius Capital - were quick to cry foul, asking US courts to force Argentina and banks involved in the deal (Deutsche Bank and BBVA) to disclose details of the bond sale.

“We are closely scrutinising this highly unusual transaction to determine what enforcement actions are appropriate,” Robert Cohen, an attorney for NML Capital, said in statement last week.

But the holdouts’ attempts to block the sale, which settled on April 23, have so far had little impact on the trade, potentially opening up market access for the sovereign in the future.

“It will be positive to the extent that Argentina can still issue paper,” said Jorge Piedrahita, CEO of broker Torino Capital, who noted that foreign accounts had expressed interest in the auction. “It is clear also that holdouts do not have the capacity to interrupt an issue like this,” he said.

Priced at 103, the deal may have come at a large concession to the recent highs of around 109.50, but nevertheless allowed Argentina to generate some US$1.8bn in demand and upsize the transaction from an initial US$500m.

“They had to give a huge concession,” said Siobhan Morden, head of Latin America strategy at Jefferies. “They took US$1.4bn but at a huge cost.”


This stands in contrast to a transaction in December, when the embattled South American nation tried but failed to carry out a reopening of the Bonar 2024s - along with a swap of its maturing Boden 2015s - after an underwhelming response from foreign accounts dissatisfied with the pricing set by the sovereign.

A second stab at selling the securities this year to international accounts also flopped when bookrunners Deutsche Bank and JP Morgan put the offering on hold after a US judge ordered them to produce documents.

This week’s deal - along with oil company YPF’s recent upsized US$1.5bn offering - was largely seen as credit-positive for the country, leaving it with US$32.675bn in reserves, the highest level since 2013, according to Piedrahita.

It provides some breathing room for a sovereign facing maturity payments close to US$6bn on outstanding Boden 2015s due in October.

The extent of foreign participation in the auction is important if the government wishes to raise US dollars without eating into foreign reserves. That’s because local investors will have to access dollar deposits to buy the bond.

“Gross reserves reflect private sector bank deposits,” said Jefferies’ Morden. “If you want to finance without reserve declines, you have to attract foreigners.” (Reporting By Paul Kilby; Editing by Matthew Davies)

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