Argentina is back in the bond market spotlight this week, but not for any controversial reasons. It has joined the U.K, Ireland and Mexico as countries which have issued sovereign bonds which mature in 100 years or more.
The bonds are denominated in U.S. dollars and they were issued at a yield-to-maturity of 7.917% after reportedly receiving $9.75 billion worth of bids. Argentina’s bonds are well below investment-grade status and that is after Standard & Poor’s raised Argentina’s credit rating one notch in April from B- to B. However, indicative pricing on the USD$2.75 billion worth of bonds was at 8.25% and the value of bids suggests there was no shortage of demand.
Argentina has been a problematic sovereign bond issuers in its 200 year history. Its first bond default was in 1827, just 11 years as after it was founded in 1816 as a modern state. Its last bond default was in 2014, but that was a legal hangover from its default in 2001/2002. Depending on your definition of default, in that 200 years it has defaulted either seven or eight times. In other words, about every 25 years on average.