Latin Finance - November/December 2011 - 62

argentina corporates

wide bid-offer spread of 101.50-103.50 or Short-term Only transactions, had reached around 18% in a yield of 10.51%-10.02% despite the post For now, however, raising money locally late October. summer sell-off in risk assets. to finance projects is near impossible, Yields have also spiked in the given banks’ reluctance to extend credit external dollar markets, with bonds Waning Demand beyond a few months. “People who go to like Edenor’s 9.75% 2022s trading at Francos points out that this has been the banks put their money in for 60 days. 83.00-84.00, or at around 12.50% on a Aeropuertos’ best year ever. yield basis. Meanwhile, the Indeed, this comes at a time sovereign five-year CDS was Argentine International Corporate Bond Issuance ($bn) when Argentina continues back at 1,017 basis points, Crisis may stall comeback to see high single-digit widening from the 662 basis growth. Market demand for points seen on February 25. 2.5 goods and services has been “The markets are going high, and shopping malls, to become a little bit more 8 supermarkets and airports hectic, and also funding will 2 have all been busy. be more expensive instead 3 An executive from a large of cheaper,” Pagano adds. company says although many A number of companies 1.5 3 Argentine issuers can cover that were planning to issue 10 their limited needs, it’s only shares through IPOs or a matter of time before some 1 secondary offerings are of them will have to raise likely to remain on the 9 money to finance growth. 12 sidelines, he says. This is 0.5 He is banking on investors the case for pulp and paper renewing their hunt for yield. name Celulosa Argentina, Once Brazilian companies which was forced to 0 0 return to the bond markets in postpone a $150 million 2005 2006 2007 2008 2009 2010 2011* force, he expects Argentine seven-year non-call four names to quickly follow suit. *2011 through Oct. 20 bond after investors pushed Source: Dealogic “You have very good back on yield guidance of companies in very good shape 10%-10.25% on the B2/B with low leverage ratios,” he says. “It Then the banks have no money for long credit in July. offers probably double the yield of Brazil, term loans,” says Raul Francos, CFO of At the time, investors had been so I know it has more risk than Brazil, but it airport operator Aeropuertos Argentina. asking for 11% plus, but the pulp and offers an interesting yield.” LF Even the government’s Fondo del paper credit cited regulatory constraints Bicentenario, which was created to help that prevented it from pricing north of companies apply for funding assistance 10.25%. The company has expressed an U.S. Postal Service STATEMENT OF OWNERSHIP, MANAGEMENT for up to five years, lacks the heft to satisfy interest in structuring a new bond for AND CIRCULATION (Required by 39 U.S.C. 3685) funding needs for most businesses, which up to $280 million once markets settle LatinFinance publication #004-662, is published at see it as a complement to international down, and Doug Albrecht, the company’s 1101 Brickell Ave, Suite N1200 Miami, FL 33131 financing rather than a true financing chairman, believes that investors will Publisher: Stuart Allen; Editor: Paul Kilby source in itself, say executives. see value in Argentina when and if there Owned by: EII Holdings, Inc. In the past when foreign investors is a clearer resolution to Europe’s debt 15, East North Street, City of Dover, County of Kent, Delaware fled Argentina to safe-haven assets, problems. Published bimonthly the country’s companies could rely on “We think once there’s more clarity on 6 issues published annually. some local market funding, but since the The annual subscription price is $495.00 U.S. Dollars. what happens in Europe, there are people Extent and Nature of Circulation: government nationalized the pension that actually find the Argentine corporate Average # Copies # Copies system in 2008 this option has become space quite interesting,” he says. “If the Preceding Sep/Oct. 2011 less viable. markets return to normalcy, we will go 12 months Luckily for Aeropuertos, it made its back to the markets.” Total # of copies (press run) 10,973 9,200 debut in the international markets in Gabriel Blasi, CFO of real-estate firm Total Paid and/or Requested Circulation 5,302 4,985 December 2010. At the time, the company IRSA, takes a similar positive view ahead Total Non-Requested Circulation 4,771 3,765 generated a $1.8 billion book before of a possible bond issue in the months Total Distribution 10,073 8,750 Copies not Distributed 900 450 pricing the $300 million 10-year bond at ahead. For now, markets may only be Return from News-Agent 0 0 par to yield 10.75%. The bond traded up open for investment-grade names, but Total 10,973 9,200 to 107.50 in mid-February and even in Blasi thinks appetite exists for high-yield Percent Paid and/or Requested Circulation 53% 57% late October was trading above par at a companies as well.

62 LatinFinance

November/December 2011

Latin Finance - November/December 2011

Table of Contents for the Digital Edition of Latin Finance - November/December 2011