Argentina

Argentine province Neuquén launched an exchange offer for its existing senior secured 2021s on Monday, the same it began a three day roadshow with fixed income investors ahead of a potential new 12 year deal backed by oil and gas royalties.

Investors said the Argentine province of Neuquén would be feeling lucky that it had postponed a bond issue last September after the issuer this week announced a second roadshow in less than a year.

Argentina fever has gripped financial markets after the sovereign’s record breaking return to international bond markets this week, with sub-sovereigns likely to be the first to take advantage of the clamour for bonds.

Argentina’s record-breaking return to international capital markets was priced much tighter than many investors would have liked. But the country's president Mauricio Macri is exactly the kind of leader EM investors have been looking for, so the exceptionally strong performance in the aftermarket is more than understandable.

Rating: B3/B-/B

All four tranches of Argentina’s new bonds outperformed on Wednesday as momentum from the huge order book the borrower build in the primary market spilled into secondary.

With all the panache of a world-class tango dancer or left-footed football superstar Argentina stole the show in bond markets this week with the largest ever order book and largest ever issue size for an EM credit.

Tightening pricing to well inside what many market participants had expected did not prevent Argentina holding onto the bulk of its $69bn book and printing more bonds than it had planned on Tuesday in one of the most remarkable trades in recent memory.

When Argentina went to market on Monday, many saw the 30 year as the hardest tranche to execute for a borrower with such a patchy debt history. Yet, after the sweet spot of the 10 year, the long-dated note was the one that attracted most demand.

Argentina’s record-breaking return to international capital markets will be priced much tighter than many investors would have liked. But President Mauricio Macri is exactly the kind of leader EM investors have been looking for, so expect the deal to receive strong support in the aftermarket.

Argentina could hardly have asked for more from Monday’s book building for its return to international bond markets as investors rushed into the largest ever order book for an emerging markets deal.

With Argentina expected to announce its return to international bond markets as soon as today, European investors appear to be more demanding on pricing than their North American counterparts — not that this is likely to derail the sovereign’s plans to raise $12bn-$15bn.