Argentina is set to sell its first 100-year bonds

Courtney Goldsmith
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Argentine bank notes pictured on Decembe
Yep, Argentina just launched the sale of debt maturing in 100 years (Source: Getty)

About a year after emerging from default, Argentina has surprised investors by offering a 100-year bond.

The US-dollar-denominated bond is offered with a potential 8.25 per cent yield.

This move comes stunningly soon after the nation ended a more than a decade-long dispute with creditors over its most recent default in 2001. It reached a settlement in 2016 which allowed it to re-enter the global credit markets.

“The decision to tap the 100-year sector is unusual for a credit with a chequered history, but the absolute yield level of these bonds will attract a certain type of investor. Price guidance, as well as the final size, which hasn’t been confirmed yet, will determine the ultimate success of this new bond issue," said Alexis De Mones, head of fixed income at Ashmore Group.

Argentina, South America's second-largest economy, is trying to tap demand for sovereign bonds as well as low treasury yields to lock in cheap term funding, De Mones said.

The country has repeatedly defaulted on its sovereign bonds in the past, but in 2015 President Mauricio Mari was elected to "normalise" Argentina's economy and financial markets by making market-friendly reforms.

"It's awfully premature for Argentina to issue 100-year bonds," said Jorge Piedrahita, chief executive officer of Puma Investments, according to Reuters. "When you look back in history, I'm not sure we can find a 20-year period where Argentina has not defaulted."

Citigroup and HSBC are acting as lead book runners on the deal, while Nomura Securities and Banco Santander are co-managers, according to Reuters.

Read more: Argentina comes in from the cold with first local float in six years

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