Argentina’s YPF sells $1.5 billion in bonds

Argentina’s state-owned exploration and production company Yacimientos Petrolíferos Fiscales (YPF) announced it has sold $1.5 billion of new 10-year bonds at 8.5 percent. Owing to strong demand, the company’s planned issuance was raised from $500 million.

“There was a lot of demand, about $4 billion, which is why the company decided to widen the offer,” a local market source was reported as saying by Reuters.

In a bid to reverse the trade deficit of Argentina’s energy industry that has pressured foreign reserves, YPF is seeking to invest in the large but relatively untapped Vaca Muerta shale oil and gas formation, but needs the funds to do so.

“It’s an energy company which is not that indebted that is offering paper with a coupon that is high compared with the rest of the world,” Christian Reos, an analyst at Buenos Aires-based brokerage Allaria Ledesma, has said.

YPF sold $500 million of bonds in February 2015, a third less than it had offered as many bids were for greater yields than it deemed acceptable. However, with the October presidential elections approaching and the new government expected to be more market friendly than its predecessor, investor sentiment has since improved.