Argentina’s YPF sells $1.5bn in bonds

24 April 2015, News Wires – Argentina’s state energy company YPF said it had sold $1.5 billion of new 10-year bonds at 8.5 percent on Thursday, raising its planned issuance from $500 million on the back of strong demand.

ypf headquarters buenos airesReuters’ IFR reported the issue had been launched earlier in the day at 8.625%, down from price talk of 8.75 percent.

“There was a lot of demand, about $4 billion, which is why the company decided to widen the offer,” a local market source, who asked not to be named, told Reuters.

YPF needs to raise cash to invest in its vast but barely tapped Vaca Muerta shale oil and gas formation in order to reverse Argentina’s energy sector trade deficit that is pressuring foreign reserves.

“It’s an energy company which is not that indebted that is offering paper with a coupon that is high compared with the rest of the world,” said Christian Reos, an analyst at Buenos Aires-based brokerage Allaria Ledesma.

In February YPF sold $500 million of bonds, a third less than it had offered, as many bids were for higher yields than it would accept.

Since then investor sentiment has improved as the October presidential election draws closer. The next government is expected to be more market friendly than that of outgoing leader Cristina Fernandez, whose government’s sweeping currency and trade controls are cited by economists as factors weighing on the economy.

– Upstream

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