Buenos Aires to Issue International Dollar Bonds After Eight-Year Hiatus

Key Takeaway

• Buenos Aires plans to issue international dollar bonds, first time in eight years, aiming to refinance its $890 million bond due 2027.
• The move reflects growing investor confidence in Argentina's economic reforms under President Javier Milei, boosting corporate and municipal debt sales.
• U.S. municipal bond market sees a surge with $142.8 billion issued in early 2024, indicating strong demand for high-yield debt opportunities.

Buenos Aires Eyes International Bond Market

The city of Buenos Aires is preparing to engage with global investors in a significant move to issue overseas dollar bonds for the first time in eight years. A delegation from Argentina's capital will embark on a non-deal roadshow to New York and London starting Monday, organized by HSBC Holdings Plc. This initiative aims to provide a credit overview and assess the demand for a potential bond sale. Buenos Aires is considering this step to refinance its $890 million bond due in 2027, with a notable $330 million payment on principal and interest looming in June 2025. Despite the challenges faced by Argentina and its provinces, Buenos Aires maintains a strong credit profile, distinguishing itself from other sub-sovereign bond issuers in the nation.

Argentine Corporate Debt Sales Surge

The context of Buenos Aires' move is a broader trend of increasing corporate debt sales from Argentine entities, such as YPF SA and Pan American Energy LLC. This flurry of activity reflects growing investor confidence in President Javier Milei's economic reforms, which have propelled sovereign bond prices to heights unseen since the last restructuring. The city's exploration of the international bond market coincides with a surge in municipal bond sales in the United States, where states and municipalities have issued $142.8 billion in long-term bonds in the first four months of 2024, the highest in nearly a decade.

Municipal Bond Market Dynamics

The municipal bond market has witnessed a significant uptick in sales, defying concerns over high interest rates fueled by persistent inflation. This surge is attributed to pent-up financing needs and a capitulation to the reality of enduring high rates. The market has seen a record number of billion-dollar-plus transactions, including notable deals by the Los Angeles Unified School District and Jefferson County, Alabama. The strong demand for municipal bonds, including high-yield investments like those issued by Florida's private rail operator Brightline, highlights the market's appetite for riskier debt opportunities.