Argentina, for so long judged by so many to be on the verge of a devaluation, has taken its boldest move yet to prove the doubters wrong by issuing an international bond denominated in pesos: its first investment-grade issue.
In December, without much fanfare, it launched its first Europeso note a Ps250 million ($250 million) two-year issue carrying a coupon of 8.75%, payable six-monthly. The issue was led and, as far as is known, bought up in its entirety by Goldman Sachs International.
Argentina's decision to begin issuing Europeso notes something it plans to do more of in 1997 is partly "just to show we can do it," says finance under-secretary Miguel Kiguel. Until recently, few buyers would have been willing to take on Argentine currency risk, let alone at such a tight spread over dollar issues with similar maturities.
"It's very positive for Argentina to have done this," says Joyce Chang, emerging markets debt strategist at Merrill Lynch. As recently as August, she says, clients' questions on Argentina were about whether the sacking of Domingo Cavallo from the economy ministry in July would bring down the banking system or lead to a massive capital outflow.