BUENOS AIRES (Dow Jones)–Argentina’s capital Buenos Aires has put off plans to sell a half billion dollars in new bonds due to the turbulence in global credit markets, Nestor Grindetti, the city’s finance minister, said Tuesday.
The city legislature has approved $500 million in new borrowing, but «we’re going to wait a little, keep monitoring the market and see if we can come back to the market towards the end of the year if things have settled down,» Grindetti told reporters after presenting the city’s 2012 budget to lawmakers.
In September, the legislature approved the new bonds for infrastructure and to refinance existing debt. In an interview with Dow Jones Newswires at the time, Grindetti said that he hoped to issue the bonds with an interest rate under 10%.
About $300 million of proceeds from the bond sale will be used to refinance debt, with the other $200 million going to infrastructure projects like an extension of the city’s subway line, Grindetti said.
However, with investors stampeding away from risk in recent weeks amid fears of a default in Greece and signs that global economic growth is slowing, the interest rates the city could expect have soared.
On Tuesday afternoon, Buenos Aires’s 2015 U.S. dollar-denominated bonds were trading with a yield of 14.78%. The city’s 2028 dollar bonds are yielding 31.3%.
In March, the city issued $475 million in five-year bonds, paying an annual rate of around 12.5%.
The city government originally wanted to sell bonds during the first half of the year, but it put those plans on hold until after city hall elections in July. Mayor Mauricio Macri of the center-right PRO party won by a landslide.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com
Source: Dow Jones