EM LATAM CREDIT: Province of Cordoba: Investor Meetings Mandate
(PDCAR; Caa2/-/CCC+)
“MANDATE: Province of Cordoba Plans FI Meetings Starting Monday” – Bbg
IPTs 6Y: N/A
FV 6Y: 9.5% Area
• The Province of Cordoba has mandated investor meetings that may be followed by a USD benchmark senior unsecured 6-year weighted average life deal which Fitch expects to be up to USD800mn in size. The use of proceeds will be to tender for 2027 notes, pay for infrastructure projects and repay existing liabilities.
• PDCAR has 2029 amortizing notes with a 3-year average life yielding 9.07%. Among other Argentina provinces we see the oil rich Province of Neuquen (NEUQUE; -/B-/CC) has 2030 notes with a 2.5 year average life yielding 8.71%. Province of Mendoza (MENDOZ; Caa2/B-/-), one of the top Latin American wine producing regions, has 2029 amortizing notes yielding 8.45% to the 2-year average life.
• The industrial Province of Santa Fe (PROVSF; Caa2/-/B-) has 2027 amortizing notes yield 8.37% to the 1.4-year average life. Province of Chubut (CHUBUT; Caa3/-/CC), an oil producing region but with a weak debt service coverage ratio according to Fitch, has 2030 notes yielding 9.69% to the 1.7-year average life.
• Argentina sovereign (ARGENT; Caa3pos/CCC/CCC+) benchmark 2035 notes with a 7.5 year average life were last quoted 11.22%.
• The Province of Cordoba is the second most populous province in Argentina according to WorldAtlas and contributes about 8% to the country’s GDP according to Fitch.
• Fitch rated the prospective new notes CCC+, same as the sovereign, and had favorable comments regarding debt service coverage, liquidity and budget management. The province used to be rated above the sovereign until recently when the sovereign was upgraded to CCC+.
• The rating agency noted that 86.2% of Cordoba's debt is international issuance denominated in USD with total direct debt of ARS2,155.6 billion (USD1.8bn).
• Province of Cordoba restructured its debt in early 2021 to avoid a default.
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JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US FISCAL: Total Tariff Income Jumping In May As New Rates Hit
Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
- For the fiscal year as a whole so far, customs duties have totaled just under $93B, per the Treasury Daily Statement.
US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
Treasury's latest estimate of the size of "extraordinary measures" available to use "in order to prevent the United States from defaulting on its obligations as Congress deliberate[s] on increasing the debt limit" is down to $67B on May 21 (of an available $299B), vs $82B a week earlier.
- The amount hit the 2nd lowest level since the debt limit impasse started, at $46B, on May 20 (the low was $34B on Feb 24).
- With $476B in cash in the Treasury General Account on May 21, that left the total resources available to Treasury at $543B, the least since April 14 - the day before the annual April 15 tax deadline.
- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
