Argentina’s pension fund piles on company bonds as locals baulk

Argentina’s largest investment fund, part of state pension manager ANSES, is quietly becoming the biggest buyer of long-term local company debt.

The fund manager arm of ANSES bought as much as 80 percent of recent local dollar-linked sales by YPF SA, a unit of Albanesi SA and Pan American Energy LLC, according to people with knowledge of the matter who asked not to be identified because the fund’s participation in auctions is private. The bonds are also some of the longest-dated local issuances by Argentine companies over the past two years, with PAE’s dollar-linked note maturing in 2031 and YPF’s in 2032.

ANSES’ Fondo de Garantia de Sustentabilidad (FGS), which only discloses its public holdings quarterly, is buying the bonds partly to comply with a local rule known as “inciso L” that states it must invest five percent of its total assets in infrastructure-related investments by the end of 2023, up from two percent currently. Bonds by oil and gas companies and utilities, which are considered to have “production projects,” qualify for the rule.

That means the fund manager has US$2 billion more to invest in the next two-and-a-half years to meet its goal, said one of the people. The value of ANSES’ total assets reached US$40 billion in the first quarter. Officials have started talks with companies including Vista Oil & Gas to encourage them to issue similar debt this year, two people said.

Representatives for ANSES and YPF didn’t immediately reply to a request for comment. An Albanesi spokesman declined to comment on ANSES’ participation but said that the bonds will finance an expansion of its Ezeiza power plant. A PAE spokesman said several institutional investors participated in the sale, declining to comment on specific participation. A Vista spokesman declined to comment.

Other local fund managers were reluctant to purchase the notes because of the relatively long maturity dates, according to Mariano Calviello, head portfolio manager at Banco Galicia, who said Galicia didn’t participate in either of the sales. Bonds that come due in more than 24 months are viewed as too volatile, especially amid low prospects for the economy’s growth and before November congressional elections, he added.

Almost a year after the country restructured US$65 billion of overseas debt, its sovereign bonds have remained under distress. The economy is set for its third year of recession and Argentines confront inflation topping 50 percent and high rates of unemployment.

Here are some of the recent sales ANSES participated in:

• A US$384-million bond from Argentina’s flagship energy producer YPF due in 2032
• A US$260-million bond sold by driller Pan American Energy due in 2031
• A US$99-million bond sold by Generación Mediterránea SA, a unit of power generator Albanesi