BUENOS AIRES – Argentina sold $16.5 billion worth of sovereign debt at yields averaging 7.14 percent, $9.3 billion of which will be used to pay a group of holdout creditors stemming from a massive 2001 default.
President Mauricio Macri said Wednesday of the bond placement, the country’s first in nearly 15 years, that its success had left him and his economic team “shocked” and “amazed.”
Argentina received offers totaling $68.6 billion Tuesday but only opted to accept $16.5 billion due in part to hopes that interest rates will come down in future bond sales, Finance Minister Alfonso Prat-Gay said.
The country raised $6.5 billion through the sale of 10-year bonds, which offered a yield of 7.5 percent and attracted the most interest from investors, but most surprising was the interest Argentina attracted with its 30-year bonds, $2.75 billion of which were sold at a yield of 7.62 percent.
Prat-Gay said the success of the 30-year bond placement was a clear vote of confidence from the markets.
Around half of the $9.3 billion will be paid to four U.S. hedge funds, including Elliott Management Corp. founder and CEO Paul Singer’s NML Capital Ltd., that reached a settlement in late February with Macri’s business-friendly administration.
Those large holdout creditors had successfully sued Argentina in a New York federal court after rejecting debt restructurings in 2005 and 2010, in which 93 percent of bondholders accepted steep haircuts.
Macri’s predecessor, leftist Cristina Fernandez, who stepped down last December, had refused to settle with the hedge funds and slammed them as “vultures.”
The origins of Argentina’s late 2001 default, which was then the largest in history and occurred amid a financial meltdown and economic depression, go back to Argentina’s 1976-1983 military regime, which presided over a 465 percent expansion in public indebtedness.