Argentina Issues $1 Billion of Twenty-Year Global Bonds With Warrants Via J.P. Morgan
NEW YORK–(BUSINESS WIRE)–Feb. 17, 1999–The Republic of Argentina today placed $1 billion of twenty-year global bonds due 2019 with one-year detachable European warrants. Argentina’s deal represents an innovation for emerging market issuers, as it is the first emerging market bond issue with detachable warrants on the underlying bond. It is also Argentina’s first dollar benchmark issued in 1999.
The transaction, marketed for $750 million, was increased to $1 billion due to strong investor demand that totaled more than $2 billion. The new global bond was priced at 99.613 with a semi-annual coupon of 12.125%. The warrants on the 2019 global bond, which have a strike price of 103.113, will become detachable from the new 20-year bond on March 25, 1999. If the warrants are exercised, $500 million of the new 2019 global bond may be issued and will be fully fungible with the 2019 global bonds issued today. The new issue was placed with a broad group of investors in the United States, Europe, and Latin America.
Argentina’s deal represents investors’ continued confidence in the Argentine economy and demand for Argentine securities despite ongoing volatility in emerging market bond prices. The success of Argentina’s 2019 global bond issue follows momentum created by meetings this week in the United States between Argentina’s top officials and investors to discuss the outlook for Argentina’s economy. The Argentine officials leading the meetings included Dr. Roque Fernandez, Minister of Economy; Dr. Pablo Guidotti, Secretary of the Treasury and Vice Minister of Economy; and Dr. Miguel Kiguel, Undersecretary of the Treasury and Chief Economic Advisor. With this transaction, Argentina will have raised over $1.7 billion in the U.S. and European bond markets in 1999 and will have pre-funded its financing needs well into the third quarter of 1999.
This transaction follows the success of the first emerging markets benchmark deal with warrants led by J.P. Morgan for the Republic of Argentina last November. That $1 billion 7-year transaction included warrants on the outstanding Republic 2027 global bonds. The new transaction also follows on J.P. Morgan’s recent success in leading sovereign issues despite a volatile market. This year J.P. Morgan has led a $1 billion two-tranche issue for the Philippines, a 500 MM Euro-denominated bond for Hungary and reopenings of global bonds for Argentina and the Philippines.
J.P. Morgan was sole bookrunner on this transaction. The deal was lead managed by J.P. Morgan, Chase Securities, and Deutsche Bank Securities.
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