Argentina issues $1 billion of seven-year global bonds with warrants.

NEW YORK--(BUSINESS WIRE)--Nov. 18, 1998--The Republic of Argentina today placed $1 billion of seven-year global bonds with one-year detachable European warrants on the Republic's 9.75% global bonds due 2027. The transaction is the first emerging market benchmark issue of $1 billion or more since the international debt crisis this summer, and the first Latin American issue at $1 billion or more since May.

The transaction was launched with at $750 million and was increased to $1 billion due to strong investor demand. The new global bond due 2005 was priced at par with a semi-annual coupon of 11%. The warrants on the 2027 global bonds, which have a strike price of 93.30, will become detachable from the new seven-year bond on December 18, 1998. If the warrants are exercised, new 2027 global bonds may be issued and will be fully fungible with existing 2027 global bonds. The new issue was placed with a broad group of investors in the United States, Europe, and Asia. The Republic of Argentina is rated Ba3 by Moody's Investor Service and BB by Standard and Poor's. J.P. Morgan and Deutsche Bank were joint bookrunners on this transaction.

Argentina's deal represents an innovation for emerging market sovereign issuers, as it is the first time that an emerging market issuer has launched a bond with detachable warrants on outstanding bonds. Federico Molina, Director of Public Credit for Argentina, commented that the size and success of this deal signal the reopening of the market to large, liquid benchmark issues.

The Republic's transaction also builds upon the recent success of J.P. Morgan in reopening the markets for Latin American issuers following the recent market turmoil. In early November, J.P. Morgan led a $100 million, three-year bond for YPF S.A., Argentina's largest oil and natural-gas producer, a transaction that effectively reopened the Latin American corporate debt market.