Most impressive EM deal of all time
A $69bn order book, the largest EM bond issue in history, a 10 year note that has traded up more than 10 points since re-offer. The numbers speak for themselves, but Argentina’s stunning return to capital markets in April to raise $16.5bn was about more than breaking records.
“What made the Argentina transaction really interesting was its unique nature,” says Matt Dukes, director in LatAm DCM at Deutsche Bank. “It was not just a capital-raising exercise for Argentina but a way for the country to settle its dispute with the holdouts.
“Gaining the ability to bring in foreign capital will have a direct impact on the growth of the economy and therefore Argentine citizens’ lives.”
Although Mauricio Macri had pledged to negotiate with the holdouts, few expected the finance team to achieve such a swift solution. Just four months after Macri took office, Argentina was back in the market.
The financing team led by former trader Luis Caputo, ably assisted by former DCM banker Santiago Bausili, has complementary skills, say bankers. Caputo is known for his great market sense and Bausili is an expert deal structurer. But even they will have been tested.
“To carry out such a transaction with everything that was going on in the background — being in technical default and the legal risks involved during pricing and settlement — is even more impressive,” says Dukes. “This was arguably the most impressive EM bond issue of all time.”
Dukes said that the fact Argentina used a standard format of doing a roadshow, bookbuilding and pricing was particularly important after spending so long out of the market.
Argentina’s sovereign bond was also an unqualified success in opening up capital markets for other borrowers, with more than $10bn of sub-sovereign and corporate issuance since the April deal.