Local companies returning to international capital markets after more than a year may find their window to sell debt is already closing.
With borrowing costs dropping globally, companies are rushing to raise about US$1 billion before the country’s presidential election race starts. Primaries are scheduled for August 11 and may give the first indication of whether Argentines have tired of President Mauricio Macri’s market-oriented reforms.
State-run oil company YPF SA ended a 14-month drought for Argentine corporate issuance last week by selling US$500 million of 10-year notes. That served as an icebreaker for top energy producer Pampa Energía SA and agricultural company Cresud, which are tapping the market this week.
However, the return to global bond markets is coming at a price. Country risk is still high after a tumultuous 12 months that saw Macri turn to the International Monetary Fund for a record US$56-billion credit line.
YPF sold debt at a yield of 8.75 percent. On Tuesday, Pampa issued US$300 million of debt at a yield of 9.375 percent. Pampa is taking advantage of the window to boost liquidity before Argentines go the polls, Florencia Mayorga Torres, an analyst at TPCG Valores in Buenos Aires, wrote in a note on Wednesday.
Cresud, meanwhile, will sell up to US$200 million of two-year, Argentine-law notes on Wednesday. The company may consider a yield of about nine percent, two people involved in the deal said. Cresud’s press department declined to comment.
In comparison, Transportadora de Gas del Sur SA, the last blue chip company to sell before the crisis in Argentina accelerated, issued seven-year securities at 6.8 percent in May 2018.
Other cash-needy companies like Telecom Argentina SA, which cancelled a US$1 billion bond sale in August after two months of failed attempts, Albanesi SA and Metrogas SA may sell before the August 11 primaries, according to people familiar with the matter, who asked not to be named discussing private deals.
A Telecom Argentina representative declined to comment. Albanesi didn’t reply to calls and emails seeking comment. Metrogas is considering issuing new bonds, but it first needs to progress in its talks with creditors to restructure existing debt, a company official said.
Primary voting will pave the way to the general election scheduled for October 27. Macri is running for re-election against a ticket that includes his populist predecessor, Cristina Fernández de Kirchner. Investors are concerned that if the former president returns to power, this time as vice-president to Alberto Fernández, the two will work to unwind Macri’s pro-business policies. Macri tore up Fernández de Kirchner’s interventionist model when he took office in 2015.