Latin America

Argentina’s record-breaking return to international capital markets was priced much tighter than many investors would have liked. But the country's president Mauricio Macri is exactly the kind of leader EM investors have been looking for, so the exceptionally strong performance in the aftermarket is more than understandable.

Credit markets reacted positively after Brazil’s congress voted in favour of impeaching president Dilma Rousseff on Sunday.

Rating: B3/B-/B

Banco Nacional de Costa Rica’s decision to wait for Argentina’s gigantic bond comeback to be priced was proven to be wise on Wednesday as it notched a 5.5 times oversubscribed green bond.

All four tranches of Argentina’s new bonds outperformed on Wednesday as momentum from the huge order book the borrower build in the primary market spilled into secondary.

With all the panache of a world-class tango dancer or left-footed football superstar Argentina stole the show in bond markets this week with the largest ever order book and largest ever issue size for an EM credit.

Tightening pricing to well inside what many market participants had expected did not prevent Argentina holding onto the bulk of its $69bn book and printing more bonds than it had planned on Tuesday in one of the most remarkable trades in recent memory.

When Argentina went to market on Monday, many saw the 30 year as the hardest tranche to execute for a borrower with such a patchy debt history. Yet, after the sweet spot of the 10 year, the long-dated note was the one that attracted most demand.

Argentina’s record-breaking return to international capital markets will be priced much tighter than many investors would have liked. But President Mauricio Macri is exactly the kind of leader EM investors have been looking for, so expect the deal to receive strong support in the aftermarket.

Argentina could hardly have asked for more from Monday’s book building for its return to international bond markets as investors rushed into the largest ever order book for an emerging markets deal.

With Argentina expected to announce its return to international bond markets as soon as today, European investors appear to be more demanding on pricing than their North American counterparts — not that this is likely to derail the sovereign’s plans to raise $12bn-$15bn.

Argentina is set for an emphatic return to international bond markets next week after a 15 year absence. It is set to be the most exciting turnaround story in emerging markets, said investors. But the country’s capital market rebirth will depend upon triumphant deal execution, writes Oliver West.