Argentina Begins Sale of Dollar Bond Offering in Three Parts

(Bloomberg) -- Argentina is rushing to sell as much as $10 billion of debt on Thursday to meet its financing needs for the year as it seeks to get ahead of other regional economies tapping international debt markets.

The government will sell bonds with maturities of five, 10 and 30 years to yield between 4 and 7 percent, according to a person familiar with the matter. The sale is being led by Citigroup Inc., Deutsche Bank AG and HSBC Holdings Plc, the person said, asking not to be identified because the matter is private.

Argentina could end up selling $5 billion of debt, said another person with knowledge of the offering process. That would compare with an original proposal of selling at least $7.5 billion of bonds or as much as $10 billion, according to an earlier report by Bloomberg.

Argentina is in a race with other emerging-market economies to secure foreign capital. Mexico on Wednesday completed a debt sale totaling $3.2 billion. Other developing-nation issuers in 2018 include Sri Lanka, which said this week it aims to issue $5 billion in new debt, Ukraine, which will offer $2 billion, and Angola’s plan to sell $2 billion of Eurobonds in February.

Argentina is taking advantage of the lowest borrowing costs in nearly a decade. The average spread on government debt over U.S. Treasuries dropped to 346 basis points on Dec. 20, the lowest since July 2007, and has remained near that level into early 2018.

“Emerging-market countries have had an incredible rally this week and it is a perfect timing for debt sellers like Argentina to issue bonds,” Guido Chamorro, senior investment manager of Pictet Asset Management, said by phone from London. “The sooner they sell debt overseas, the better. I wouldn’t be surprised if they sell $10 billion.”

Last year, Argentina was also quick to tap its overseas bond program, issuing $7 billion on the eve of Donald Trump’s swearing-in as U.S. president on Jan. 20 to get ahead of potential political turmoil. The five- and 10-year bonds priced to yield 5.625 percent and 7 percent, higher than the 4 percent and 6.25 percent the government is seeking for those maturities now.

In June, Argentina sold $2.75 billion of 100-year bonds, to attract insurers and pensions funds seeking to lock in longer-term returns. Yields on the century bond have risen 12 basis points since the start of the year on concerns of a glut caused by the new supply.

President Mauricio Macri on Thursday authorized the government to issue as much as $15 billion in foreign currency bonds in 2018. Finance Minister Luis Caputo has said Argentina has financing needs of $30 billion for this year, of which about 40 percent will be issued in foreign currencies.

--With assistance from Rizal Tupaz Brian Smith and Carolina Millan

To contact the reporters on this story: Charlie Devereux in Buenos Aires at cdevereux3@bloomberg.net, Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net.

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Vivianne Rodrigues at vrodrigues3@bloomberg.net, Dan Wilchins

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