Off The Wire
UPDATE 1-Argentina announces surprise sale of 100-year bonds
(Adds comments from analysts, background)
By Luc Cohen and Dion Rabouin
BUENOS AIRES/NEW YORK, June 19 (Reuters) - Argentina has offered a 100-year bond in U.S. dollars with a potential 8.25 percent yield, the finance ministry and Thomson Reuters' IFR said on Monday, just over a year after the nation emerged from default.
The issuance came as a surprise as Finance Minister Luis Caputo has said Argentina would meet the rest of its financing needs in non-dollar currencies after selling $7 billion in dollar bonds in January. The country plans to sell $10 billion in foreign currency bonds this year.
The finance ministry tweeted a confirmation of the 100-year-bond issuance, expected to be priced later on Monday, but did not give details on the amount of bonds to be sold.
Such long-term bonds are unusual in Latin America. Mexico issued a 100-year bond in 2010, and Chile's Embotelladora Andina sold one in 1997, according to IFR. Still, it is a surprising decision in a country that has repeatedly defaulted on its sovereign bonds.
"It's not that uncommon for the less risky economies in the region such as Chile or Mexico," said Edward Glossop, Latin America economist at Capital Economics in London. "For the higher-risk countries in the region, it's less common."
Argentina does not have an investment grade rating. S&P and Fitch rate the sovereign a B with a stable outlook, while Moody's has the debt at B3.
Citigroup Inc and HSBC are acting as lead book runners on the deal, while Nomura Securities and Banco Santander are co-managers. Caputo said on June 7 that Argentina would issue peso and euro bonds later this month. Argentina has repeatedly defaulted on its sovereign bonds. It battled for years with creditors before reaching a settlement in 2016 that allowed it to re-enter the global credit markets.
President Mauricio Macri was elected in late 2015 on the promise of normalizing Argentina's economy and financial markets after years of heavy state intervention and non-payment of international debt obligations under the previous government.
"I think the government is trying to demonstrate the ability to put such a maturity on the market," said Alejo Czerwonko, director of emerging markets investment strategy at UBS.
(Reporting by Luc Cohen in Buenos Aires and Dion Rabouin in New York; Writing by Caroline Stauffer; Editing by Lisa Von Ahn and Bernadette Baum)