Argentina printed a CHF400m ($403m) 3.5-year bond with a 3.375% coupon, pricing within state-owned energy company YPF’s existing Swiss franc notes.
Leads priced the new paper at 383bp over mid-swaps, after it set initial price talk between 3.125% and 3.375%, or 358bp to 383bp over mid-swaps, sources in Zurich told LatinFinance.
The B3/B-/B rated sovereign could have printed up to CHF500m, but demand reached a little more than CHF400m, according to two bankers following the transaction.
When state-owned peer YPF priced CHF300m in 2019s last September, it paid 438bp over mid-swaps on issue day. The notes tightened to as much as 338bp earlier this week, debt capital markets sources said.
Talks of an impending trade from the sovereign, however, saw YPF’s notes widen to 385bp yesterday, providing an ample yardstick for Argentina’s new paper.
“This is the first time in almost 20 years that Argentina has come to Switzerland,” one banker said. “So to price within YPF’s notes was a good result for [Argentina].”
Typically conservative Swiss investors seldom entertain sub-investment grade credits, but the yield on offer for the Argentine paper was a good opportunity to pick up higher-yielding emerging market (EM) debt, a second banker said.
“As long as there are negative rates [In Switzerland], then there will be appetite for EM debt,” he said.
BNP Paribas, Credit Suisse and UBS coordinated the trade.
Argentina raised CHF300m in 1996 and added an additional CHF100m two years later. The sovereign is expected to raise between $1.5bn and $2bn in the currency this year.