Morning Commentary: Argentina gets lift from IMF talks; Papua New Guinea guides pricing

By Rebecca Melvin

New York, Sept. 27 – Buyers stepped in to scoop up Argentina’s bonds early Thursday on the heels of news that it has renegotiated its International Monetary Fund bailout to increase funds, increase the amount of near-dated disbursements, and to adjust certain fiscal policy behaviors, a New York-based market source said.

The Argentina-IMF news came late in the day on Wednesday. On Thursday Argentina’s bonds were up 1.4% in terms of total return for the sovereign early in the session, and that had dipped just slightly to 1.2% total return at late morning.

“A feature of today is the details of the program made available late in the day yesterday,” a market source said. Argentina’s sovereign bonds made a stronger finish yesterday on news of the deal, after dropping and recovering somewhat on Tuesday on news of the replacement of its central bank head.

The details of the IMF package are a catalyst pushing Argentina up, and the larger deal size of $57 billion from $50 billion is probably less so, the source said.

Elsewhere, Papua New Guinea guided pricing on a 10-year note for $500 million to yield 8 3/8%. Final pricing was expected later Thursday.

The 10-year senior unsecured notes (expected rating: B2/B), announced Sept. 4, were heard in the gray market ahead of pricing at 100.375 to 100.5, according to a market source.

Proceeds will be used primarily to refinance existing short-term domestic debt and finance government spending on infrastructure and development projects and operational expenses for the Asia-Pacific Economic Cooperation Summit to be hosted by Papua New Guinea in November.

Citigroup and Credit Suisse are bookrunners for the Rule 144A and Regulation S notes, which were expected to have a tenor of five to 10 years.

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