Cry For Argentina! Issuing 100 Year Sovereign Debt As Fiscal Deficits Grow To Worst Since 2000

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Cry for Argentina. 

Argentina, which has defaulted on its debt seven times, is now faced with the worst fiscal gap since 2000.

(Bloomberg) Argentina is planning to sell its first 100-year bond a year after returning to global capital markets, as it grapples with a soaring budget deficit.

The bond, which will be used to shore up its budget and refinance debt, may be priced as soon as Monday and yield about 8.25 percent, according to a person with knowledge of the matter, who asked not to be named because the deal is private. Citigroup Inc. and HSBC Holdings Plc are managing the sale. The debt-issuance plan was announced on Twitter by the Argentine Finance Ministry, which hasn’t provided further details.

Argentina will join Mexico, Ireland and the U.K. in selling debt that matures over a century. While Argentina last year sold what was at the time the largest emerging-market bond on record, the move will test investor resolve on Argentina. As well as seeking to close its fiscal deficit, the south American country has defaulted seven times in 200 years.

Argentina currently has the second highest sovereign 10 year yield at 13.52% when denominated in their home currency the Argentian Peso. Their US dollar denominated 10 year yield is 5.99%. Venezuela, of course, has the worst 10 year sovereign yield in the Americas at 25.41% (and that is in US Dollar denomination!)

Here are the current Peso-denominated and US Dollar-denominated sovereign curves for Argentina. Since the Peso-denominated curve only goes out to 10 years and their US Dollar denominated curve extends out to 30 years, I assume that the new 8.25% 100-year sovereign bond will be US Dollar denominated.

Argentina is trying to get its act together under President Mauricio Macri.

Here is the Argentinian Peso spot rate relative to the US Dollar.

Hopefully the days of Juan and Eva Peron and their failed economic policies are long gone.

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