Argentine Economy Ministry has confirmed that it will launch a peso-denominated bond at fixed rate tomorrow. The new BONAR AR will have a 5-year term and the aim is to collect a total of ARG$1.5 billion. Government seeks to obtain a lower-than-12-per cent annual rate.
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This issue is included within a ARG$4.5-billion program, though future placements will depend on this first experience and, obviously, on markets' pace.
This is not the best moment to come on to the market: US benchmark 10-year rate has climbed 4.99 per cent annual (the highest value of the year) and May's inflation data (0.4 per cent) has led traders to get the jitters, triggering quote fall.
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Argentine Economy Minister Felisa Miceli's administration has always issued dollar-denominated bonds in five, seven and ten years. Therefore, this is the first placement in domestic currency.
Different investment banks had been suggesting peso-denominated financing, given huge appetite for this kind of instruments. For example, Banco Macro has paid 10.75 per cent annual in pesos for a five-year paper. Of course, such issue was made in international market, under New York rules, which offers greater protection to investors.
This placement is expected to be oversubscribed several times, particularly because of foreign investors interest in taking positions in domestic currency. They are attracted by a high peso-denominated rate, which, if dollar continues stable, also constitutes a very appealing yield in hard currency.
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