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Argentina companies list on U.S. exchanges ahead of expected rate hikes

Published 01/31/2018, 04:35 PM
Updated 01/31/2018, 04:40 PM
© Reuters. Traders work on the floor of the NYSE in New York
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By Walter Bianchi

BUENOS AIRES (Reuters) - Argentine companies are rushing to list shares on U.S. exchanges beginning this week to beat an expected hike in interest rates by the U.S. Federal Reserve, analysts said, while taking advantage of an improved investor climate under President Mauricio Macri after years of populist rule.

Airport operator Corporación América Airports (N:CAAP) and power generator Central Puerto SA (BA:CEPU) are expected to raise $1.4 billion between them in listings this week.

Biotech firm Bioceres is expected to raise some $140 million with a listing next week, while food processor Molino Cañuelas (BA:MOLC), energy producer Genneia [EMGSD.UL] and real estate developer TGLT (BA:TGLT) also have both local share sales and international IPOs in the pipeline.

"There is still plenty of money available in global markets. They are taking advantage of the moment ahead of the Fed's promised interest rate hike," said Héctor Scasserra, head of brokerage Arpenta Valores and a board member of Argentina's Bolsas y Mercados Argentinos (BA:BYMA) stock exchange.

An increase in rates by the Fed would likely dampen investor interest in equities. Companies are also seeking to take advantage of a positive outlook for growth in Argentina and investor enthusiasm for Macri's business-friendly policies.

The Fed kept interest rates unchanged on Wednesday, but it is expected to raise borrowing costs in March under incoming central bank chief Jerome Powell.

While many of their Latin American peers have listed on international exchanges in recent years, Argentine companies largely held back, as investors were weary of former President Cristina Fernandez's interventionist policies.

Since taking office in December 2015, Macri has sought to attract foreign investment and develop capital markets. He ended a holding period of foreign capital, passed a reduction of corporate tax rates in an overhaul of Argentina's tax system, and is pushing reforms to labor and capital markets laws.

"The table is set and there are optimistic growth expectations for these companies," said Joaquin Bagües, an analyst at Balanz Capital in Buenos Aires.

© Reuters. Traders work on the floor of the NYSE in New York

Central Puerto could price its 35.5 million share offering at $1.85 per share, while Corporacion America will likely price at the upper end of its $19-$23 per share range to strong demand from funds with exposure to emerging markets, according to consultancy Delphos Investment.

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