EM LATAM CREDIT: Argentina's Vista Energy New Issue Announcement- Fair Value

Vista Energy Argentina (VISTAA; Caa1 /NR /BB-)

IPTs 8Y Final, 7Y WAL: Mid 8s
FV 8Y Final, 7Y WAL: 8.125% Area

• Mexico based Vista Energy’s Argentina subsidiary proposed a potential USD benchmark senior unsecured 8-year final, 7-year weighted average life (WAL).

• VISTAA 2035 amortizing notes with a 9.5-year WAL were last quoted 8.22%, 23 bps higher QTD and 53bps higher YTD. We think this new issue could reprice the existing VISTAA 2035s as we may see a generous new issue concession.

• We like Vista’s improving credit profile with the recent large acquisition of Malaysian energy company Petronas Vaca Muerta assets and reasonable balance sheet leverage.

• Within the past two weeks the market has absorbed three new Argentina corporate bond issues. Investors have become more optimistic about Argentina’s prospects given the recent IMF agreement, lifting of most capital controls, economic reforms and declining inflation rates.

• Broad-based acceptance for Argentina corporate bonds is still limited so healthy concessions will still be required prior to the legislative elections in October.

• As an estimate for what the curve is worth going from the outstanding VISTAA 9.5-year WAL notes to the potential 7-year WAL notes we can look to the bond curve for Argentina government-controlled energy company YPF (YPFDAR; Caa1/B-/CCC+). YPFDAR 2034s vs 8.75% 2031 is about a 40-bps yield differential for a two-year WAL difference. That theoretically should put a new Vista 7-year at about 7.8% without a new issue concession to absorb the added supply of bonds.

• We also consider Argentina oil and gas exploration company Pluspetrol (PLUSPE; B3/NR/BB) 7-year notes recently issued at 8.75%, quoted 8.45%. We can also look to Brazil based independent oil and gas exploration company Brava Energia (RRRPBZ; NR/BB-/BB-) with 2031 notes at 10.1%.

• The Brent oil price is down 12% this year and was down almost 20% YTD a few weeks ago so investors are understandably cautious; however, Brent has bounced back in past days which may help sentiment for energy bonds.

• Please see our post on Vista’s first quarter 2025 earnings:
https://mni.marketnews.com/3T5g0lc

• We also posted on Vista’s acquisition of Malaysian Petronas Vaca Muerta assets: https://mni.marketnews.com/42EI6bn