Argentina backs off $1b bond sale plan as yields surge
Thursday, 13 May 2010
NEW YORK, May 12 (Bloomberg): Argentine Economy Minister Amado Boudou said last week's jump in bond yields may prompt the government to shelve plans to sell as much as $1 billion of bonds, its first international offer since defaulting in 2001.
The government aimed to price new 8.75 per cent dollar bonds due in 2017 on May 14, part of its proposal to restructure $20 billion of defaulted debt left out of a 2005 settlement. Any sale would set a benchmark rate and isn't needed to raise funds, Boudou said at a press conference last night in New York.
"If the conditions are not acceptable to our country, we won't do it," Boudou said. "Argentina can change the deadline. We can postpone it because it is a very complex week."
Argentine bonds tumbled last week, pushing up the yield on dollar bonds due in 2015 by 236 basis points, or 2.36 percentage points, in three days as concern that Greece's financial crisis would spread reduced demand for riskier assets.
The securities rallied as European leaders unveiled an almost $1 trillion bailout plan, cutting yields by 166 basis points since May 7 to 12.55 per cent.
The government faces a financing gap of about $4 billion this year and is drawing on central bank reserves to meet those needs, Eurasia Group analyst Daniel Kerner wrote in a report from New York last week. Boudou, 47, said there is no financial need for the bond sale.
"For us, this is basically a symbolic act," he said. "The goal is to have a benchmark for a security issued in the market after many years. It doesn't have a fiscal goal."
Boudou, in New York to meet with creditors ahead of today's deadline for institutional investors to tender their defaulted bonds without penalty, said the government is convinced its restructuring proposal is "the last opportunity" for investors.
Argentina officials say a settlement with remaining creditors will help the country regain access to international credit markets and restore credibility among investors nine years after the defaulting on $95 billion of debt.
The government aimed to price new 8.75 per cent dollar bonds due in 2017 on May 14, part of its proposal to restructure $20 billion of defaulted debt left out of a 2005 settlement. Any sale would set a benchmark rate and isn't needed to raise funds, Boudou said at a press conference last night in New York.
"If the conditions are not acceptable to our country, we won't do it," Boudou said. "Argentina can change the deadline. We can postpone it because it is a very complex week."
Argentine bonds tumbled last week, pushing up the yield on dollar bonds due in 2015 by 236 basis points, or 2.36 percentage points, in three days as concern that Greece's financial crisis would spread reduced demand for riskier assets.
The securities rallied as European leaders unveiled an almost $1 trillion bailout plan, cutting yields by 166 basis points since May 7 to 12.55 per cent.
The government faces a financing gap of about $4 billion this year and is drawing on central bank reserves to meet those needs, Eurasia Group analyst Daniel Kerner wrote in a report from New York last week. Boudou, 47, said there is no financial need for the bond sale.
"For us, this is basically a symbolic act," he said. "The goal is to have a benchmark for a security issued in the market after many years. It doesn't have a fiscal goal."
Boudou, in New York to meet with creditors ahead of today's deadline for institutional investors to tender their defaulted bonds without penalty, said the government is convinced its restructuring proposal is "the last opportunity" for investors.
Argentina officials say a settlement with remaining creditors will help the country regain access to international credit markets and restore credibility among investors nine years after the defaulting on $95 billion of debt.