(Bloomberg) -- The City of Buenos Aires is looking to return to international capital markets for the first time since 2016.
City officials were set to start meeting with investors on Tuesday to gauge appetite for a benchmark-sized bond, according to people familiar with the transaction who asked not to be identified as they’re not authorized to speak on the matter. BofA Securities, Deutsche Bank Securities, JPMorgan Chase & Co. and Santander are arranging the meetings, they added.
A spokesperson for the city’s finance ministry declined to comment. Spokespeople for Deutsche Bank and Bank of America also declined to comment while representatives for JPMorgan and Santander didn’t immediately respond.
Officials started pitching the deal in May when the extra yield investors demanded to hold Argentine debt over comparable US treasuries hovered around 1200 basis points, according to JPMorgan data. As that figure dropped to levels not seen in five years, strategists see an opportunity for the city to come to the market.
“Given their cash position and robust fiscal performance, there was no reason for them to tap markets at higher rates,” said Santiago Resico, a strategist with brokerage TPCG Valores SA. “Now, with sovereign spreads at tighter levels, it makes sense to extend maturities, and look for cheaper financing.”
It would mark the first time an Argentine province or municipality has tapped global bond markets since President Javier Milei took office last year. His election sparked investor optimism, prompting some of the country’s largest companies to rush to issue dollar debt as yields tumble.
Buyback
The city also announced Tuesday it planned to buy back some notes, adding that it will pay cash for up to $550 million of its 7.5% bonds due 2027. The same banks are handling the buyback offer, which expires on Dec. 9.
The city’s dollar bonds returned some 7.2% this year, underperforming a broader index for Latin American government debt, which delivered gains of 11.5%, according to data compiled by Bloomberg.
All three major ratings firms score the municipality deep into junk territory. But Argentina’s richest city touts one of the strongest credit profiles of any of the nation’s sub-sovereign bond issuers, avoiding the defaults that have hammered South America’s second-largest economy.
--With assistance from Ignacio Olivera Doll and Michael Gambale.
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