Following a 15-year hiatus from the bond market, Argentina has raised up to $15 billion after selling its first sovereign bond.
Argentina Ends 15 Year Hiatus from International Bond Market
Demand for Argentina's bond issue was very strong and drew orders of up to $65 billion.
A portion of the money will be used to repay bondholders who have been strong opponents of the country’s debt restructuring since the default in 2001.
Finance Minister Alfonso Prat-Gay majestically announced Argentina’s return to the international bond market.
The generated money will be repaid over a period of between 3 to 30 years at an interest rate of between 6.4% and 8%.
The final details of the bond issue are yet to be announced but investors were optimistic about Argentina’s return from exile from the international bond markets.
John Baur, portfolio manager at Eaton Vance said, “It is great that Argentina is back in the market. This is certainly an important step in the direction of improving the economy of the country.”
An important aspect that needed to be agreed upon before closing the deal was agreeing with creditors who were in a long legal battle with Argentina after rejecting the terms of a previous debt-restructuring proposal.
In February, the government reached a deal worth $4.7 billion with its creditors including hedge funds Aurelius Capital and Elliot Management.
Argentina’s former president Cristina Fernandez de Kirchner refused to negotiate with bondholders. However, the country’s new president, Mauricio Macri, who came to power in December 2015, had as his campaign promise the urgency to settle Argentina’s debt.
Most of the funds generated from the bond issue will be used to boost the country’s economy, which has been struggling in recent years.
Agustin Carstens, head of the Monetary and Financial Committee at the IMF said the bond issue is a significant step forward given the importance of Argentina in the regional and global economy.