Córdoba, the first Argentine jurisdiction to obtain external financing since 2017

Córdoba completed the issuance of U$S 725 million in the international market, becoming the first public institution in the country to access external financing since December 2017.

The new bond, issued under New York State Law, matures in 2032 and features an amortization schedule with three annual payments in the 5th, 6th, and 7th years of the instrument's life.

According to the government led by Martín Llaryora, interest will be paid semiannually.

The funds obtained will be allocated to strategic infrastructure projects and to the extension of amortizations through the repurchase of international bonds maturing in 2027 in a selective tender that will take place on Friday, June 27.

It also reported that, with a rate of 9.75%, it received offers for more than 1 billion dollars, an oversubscription, since it initially sought 500 million dollars.

The participation of local investors exceeded 40%.

Although the rate is not low, demand demonstrates the province's fiscal strength.

The bonds were rated by Moody’s and Fitch Ratings, which assigned ratings of Caa2 and CCC+, respectively.

What the market says about Córdoba's bond issuance

Market sources highlighted that the amount issued (U$S 725 million) makes it the third provincial issuance with the most outstanding, only behind the two Buenos Aires 2037 series A and B.

"The number of offers received is a very good sign (above U$S 1,000) and shows that appetite for provincial bonds remains very strong (at least in this segment of the asset class)," a consultant stated.

"Meanwhile, the 9.75% rate for a 7-year bond brings us back to reality. With the sovereign still yielding above double digits, and the not-so-distant memory of the latest restructurings, the fiscal solvency achieved by the provinces is not enough to return to the financing conditions they had during the last debt cycles," he added.

"During Macri's administration, Córdoba issued 3 bonds at 9, 10, and 12 years; all below 7%. The road ahead is still long, but we welcome the market reopening its doors to the sub-sovereign segment," he exemplified.

"We see CABA or Neuquén, and perhaps Santa Fe with its huge liquidity cushion, as the only clear candidates to match or slightly improve Córdoba's conditions should they go to market. For the rest of the provinces, we find it logical that they should opt to issue at somewhat more conservative terms and volumes if they want to remain outside the double-digit rate zone."