Argentina will begin meeting investors Monday as it returns to the international bond market for the first time in 15 years and closes the book on a long, bitter battle with creditors.
A market pariah since a US $100 billion default in 2001, Argentina has made peace with litigant investors under the administration of new President Mauricio Macri, who took office in December.
Now it will hold a five-day roadshow in the U.K. and the U.S. as it prepares a new bond expected to raise $12 billion or more to help pay off holdouts who had rejected a debt restructuring.
Finance Secretary Luis Caputo and Undersecretary Santiago Bausili will each lead teams meeting with investors in London, Boston, New York, Washington and Los Angeles.
Deutsche Bank, HSBC, JP Morgan and Santander are arranging the meetings, but few other details were immediately available.
"The dealers on it are keeping it hush-hush until they are ready to come to market," said Sean Newman, a senior portfolio manager at Invesco Fixed Income.
At $12 billion, the transaction would be the largest ever from an emerging-markets borrower, according to Thomson Reuters data.
"It does mean something really huge for Argentina," said Bianca Taylor, a senior sovereign emerging-markets analyst at investment management firm Loomis, Sayles & Company. "They are back in the game with the curing of this long-standing issue with the holdouts, and they once again have access to the foreign capital markets."
One trader in New York said he had heard yields whispered in the 7.5 percent range, but said 8.5 percent on a 10-year bond was a more feasible target, given the current climate.
But Taylor said a useful comparable would be a Brazil 10-year currently trading at 6.13 percent.
"The talk of 7.5 percent seems rich for a country still in a balance-of-payments crisis and just coming out of default," she said.
Lengthy court fight
NML Capital, a unit of Paul Singer's Elliott Management, and Aurelius Capital led a decade-long U.S. court fight that rejected the debt restructuring and demanded a far larger payout.
The administration of previous President Cristina Fernandez de Kirchner vowed never to pay, and the standoff kept the country locked out of the international debt markets for years.
But the election of the pro-business Macri changed all that, and the new president made reaching a deal with the holdouts a top priority of his nascent administration.
Argentina reached the agreement in March and now has until April 14 to pay $4.65 billion to the main investors who were fighting the sovereign, though that deadline could be extended.
But the country has also reached other agreements with different investors, and it will need even more cash to pay those bondholders.
In addition, after being unable to raise debt abroad for so long, Argentina might well come to market with a debt sale larger than $12 billion in order to replenish its coffers and plug at least some of its fiscal deficit.