Debt capital markets league table 2019: Argentina
Latin Lawyer gathered data on debt capital markets activity across Latin America during 2019. In the first of a series of league tables for key markets, we present our findings for Argentina. Tanoira Cassagne Abogados worked on more debt capital markets transactions and had a higher combined deal value for those types of deals than any other Argentine law firm in 2019, according to Latin Lawyer’s data.
Our findings are based on deals submitted to Latin Lawyer by law firms and that took place in 2019. Tanoira Cassagne worked on 23 debt transactions and helped companies raise a combined US$1.6 billion.
Law firms helped Argentine companies raise a total of some US$4 billion across 86 debt capital market deals in 2019.
According to deals submitted to Latin Lawyer, Marval O’Farrell Mairal was next in line for deal volume, with 22 transactions, while Tavarone, Rovelli, Salim & Miani and Pérez Alati, Grondona, Benites & Arntsen (PAGBAM) reported 13 deals each. Bruchou, Fernández Madero & Lombardi was the fifth busiest for deal volume, advising on 11 transactions.
According to Latin Lawyer’s data, the single largest Argentine debt deal in 2019 was state-run oil company YPF’s US$500 million issuance in July. The oil company became the first Argentine issuer to sell overseas bonds in more than 14 months mid-way through last year, after a plunge in borrowing costs opened a window of opportunity. Estudio O’Farrell advised YPF alongside international firm Milbank; while Tanoira Cassagne and Linklaters in New York helped the banks.
“This issuance was a real breath of fresh air,” comments capital markets partner Alexia Rosenthal from Tanoira Cassagne. “After 14 months with zero international bond issuances by any Argentine company, YPF tapped the market with an exceptional amount to help Argentine corporate indebtedness.”
But generally speaking, the Argentine market was under a lot of pressure last year – and continues to be.
Because 2019 was an election year, law firm partners describe it as a turning point for many companies that were waiting for the electoral outcome before selling their debt. After the country’s market-friendly President Mauricio Macri performed much worse than expected in primary elections held in August, the stock market plunged more than 30%.
“The election year had a huge influence on the structuring and timing of debt issuances. You can see a clear difference in the amounts issued before the elections and after,” says Rosenthal. “Most international investors took a ‘wait and see’ approach, and we have seen companies switching to short-term bank financings instead.”
Because of market uncertainty, corporates continue to rely on conventional means of raising capital as opposed to considering alternative modes of financing, such as crowdfunding (the practice of funding a venture by raising small amounts of money from multiple people, typically online). “Bank financings and capital markets continue to dominate access to funds in the country,” explains Marcelo Tavarone, managing partner at Tavarone Rovelli.
According to partners, trust securitisation – where an issuer merges numerous financial assets into one group, and then sells the group of repackaged assets as a financial trust to investors – remains a popular form of alternative investment due to its cost-efficiency and reliability. This is because assets transferred to a financial trust are not affected by the bankruptcy of the grantor or trustee, making investments in trust securities an attractive option for investors during times of financial crisis and higher financial risk.
“Securitisation transactions are more reliable because of their strong structure and lower and more balanced risk for issuers and investors,” says Juan Diehl, banking and finance partner at Marval, O’Farrell.
But the road ahead for Argentina’s capital markets is not without its challenges. Firstly, the delay caused by covid-19 to the country’s impending debt restructuring means many investors – like they were before the election – are awaiting the outcome of the restructuring. “The sovereign debt restructuring launched by Argentina takes centre stage for investors and issuers that are waiting to see if it will be successful,” says partner Sebastián Luegmayer of Estudio O’Farrell. “If successful, Argentina can deal with a more sustainable sovereign debt for years to come and attempt to recover from the economic recession.”
In a recent attempt to strike a deal with bondholders, Argentina extended the deadline to restructure most of its debt until 22 May. If no agreement is reached by then, the country risks descending into its ninth sovereign default.
A default would limit companies and local and federal governments’ access to the international capital markets. Without access to one of their most important sources of credit, many companies may see a serious negative impact on their operations if Argentina, unless the government restructures its debt after defaulting.
“The default of Argentina and the province of Buenos Aires’ debts places limitations on the international market for Argentine issuers. We believe that most deals will be placed in local markets and in local currency – making a lot of international capital inaccessible,” says Diehl.
Argentine companies have to contend with the country’s ongoing economic recession and high inflation rate, at the same time as protecting their balance sheets and refinancing debts from previous years. “It’s a perfect storm,” concludes Luegmayer. “Companies will have to restructure debt securities through tender or exchange offers, all while trying to address, amend and overcome the challenges.”
To see all Argentine debt capital markets deals that took place between July and December in 2019 and were submitted to Latin Lawyer, click here. To find information about deals that occurred during the first half of 2019, follow links here for January-February; March-April and May-June. To read our methodology for Latin Lawyer’s transactional league tables, click here.
Top Argentine firms for debt capital markets by total volume:
|LAW FIRM||TOTAL NUMBER OF DEALS|
|TANOIRA CASSAGNE ABOGADOS||23|
|MARVAL, O´FARRELL & MAIRAL||22|
|PÉREZ ALATI, GRONDONA, BENITES & ARNTSEN||13|
|TAVARONE, ROVELLI, SALIM & MIANI||13|
|BRUCHOU, FERNÁNDEZ MADERO & LOMBARDI||11|
|ESTUDIO O’FARRELL ABOGADOS||10|
|DLA PIPER (ARGENTINA)||5|
|ZANG, BERGEL & VIÑES ABOGADOS||5|
Top Argentine firms for debt capital markets by total value:
|LAW FIRM||TOTAL DEAL VALUE IN US$ MILLION|
|TANOIRA CASSAGNE ABOGADOS||1603|
|ESTUDIO O’FARRELL ABOGADOS||1236|
|MARVAL, O’FARRELL & MAIRAL||726|
|BRUCHOU, FERNÁNDEZ MADERO & LOMBARDI||685|
|TAVARONE, ROVELLI, SALIM & MIANI||400|
|ZANG, BERGEL & VIÑES ABOGADOS||389|
|PÉREZ ALATI, GRONDONA, BENITES & ARNTSEN||343|
|MARTINEZ DE HOZ & RUEDA||293|
|SALAVERRI, BURGIO & WETZLER MALBRÁN||256|
Practice area: Capital markets
Industry: Banking and Financial Services