Government Finishes Placing Bonar 28, Secures About US$4 Billion

Argentina's government has successfully concluded the placement of its Bonar 2028 bond, securing an additional US$97 million from the market. This issuance, part of a larger offering, saw overwhelming demand, with bids totaling US$691 million, nearly seven times the US$100 million available in the secondary auction.

By tomorrow, the government will have US$354 million in hand from this operation, adding to its reserves. These funds are crucial for meeting an upcoming payment of approximately US$4.3 billion to investors holding bonds from Argentina's last voluntary debt restructuring. The payment is due in 10 days, on July 9.

The bond was issued at US$967 for every US$1000 in face value, reflecting the highest price investors have validated for this security since its issuance in late March. While this represents a slight discount to face value, the price indicates growing investor confidence. The bond's structure, mirroring its predecessor the AO27 but with a maturity date falling within the next presidential administration, was initially designed with a higher financing cost.

However, this premium has significantly decreased in just three months, with the yield rate dropping from 8.82% to 7.73%. This reduction is seen as a positive sign by market observers. With the funds from the Bonar 2028 placement, along with anticipated international loans, Argentina is poised to cover the majority of its upcoming debt obligations.

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Financing in dollars at that rate seemed impossible months ago.