The government issued a USD 1 billion bond at a rate of 9.26%.

On Wednesday, the government placed USD 1 billion at an annual rate of 9.26% in what was the first issuance of a dollar-denominated bond in almost eight years, not counting the 2020 restructuring. “Although this is a bond under local law, the team of Economy Minister Luis Caputo considered it a new step in Argentina's return to the voluntary foreign currency debt markets.” The Finance Secretariat reported that it received offers for USD 1.4 billion from a total of more than 2,500 investors for the bond, which matures on November 30, 2029, and has an annual coupon of 6.5%. "The yield at the cut-off price resulted in an annual rate of 9.26%, equivalent to a spread of 550 basis points above U.S. Treasury bonds of equal duration, or about 100 basis points below the yield on existing bonds of similar duration. This reflects the value assigned to the market structure, with full repayment at maturity and demonstrated investor confidence in improvements in economic fundamentals," the Finance Secretariat said in a statement. The government had announced that the funds raised in the auction would be used to repay the principal of the AL30 and AL29 bonds maturing on January 9, totaling approximately USD 1.2 billion. This is part of the USD 4.2 billion in commitments that the country will face on that day with bondholders holding bonds under local and foreign law. The remainder will be covered, in part, by a loan from international banks and another alternative that “will be announced in the coming days,” as anticipated by Economy Minister Luis Caputo. "The economic team has recently adopted a series of measures to strengthen demand for the new bond. Last week, leverage requirements on dollar collateral were relaxed, thus enabling insurers to participate in the primary subscription. In turn, the Central Bank (BCRA) authorized individuals to reinvest coupons, even if they purchased official dollars within the previous 90 days. At the same time, arbitrage between the official dollar and the MEP was restricted, as those who subscribe to the new bond must hold it for a period of 15 days before selling it against pesos. In addition, the monetary authority established a minimum period of 90 days for banks to dispose of bonds acquired on the primary market in pesos, thus blocking the same arbitrage between the official and financial exchange rates. The last time Argentina had placed debt in dollars, not counting the 2020 restructuring carried out by then-Minister Martín Guzmán, was in 2018, when Caputo held the position of Minister of Finance under then-President Mauricio Macri. Almost eight years passed. It amounted to USD 9 billion in three bonds under international law with maturities of 5, 10, and 30 years. The official announcement of this placement highlighted that the rates were “the lowest in history” for dollar-denominated issues on the international market: 4.625%, 6%, and 6.95%, respectively. The country risk at that time was 350 basis points, while currently the indicator exceeds 600 basis points. “Developing story.”