When considering options for financing, issuing securities seems a rather sophisticated and complicated choice. To shed light on this issue, we analyze the issuance of negotiable obligations (debentures) for the first half of 2017, showing that a diverse array of enterprises did finance themselves with these instruments.
With the objective of spreading knowledge about the capital markets as a means to channel savings into investment, we analyze the financing of different companies through negotiable obligations (or debentures) over the first half of 2017.
As was introduced in the previous edition of this weekly newsletter (N° 1,820), companies who issue negotiable obligations (NOs from now on) can adapt the securities to their financing needs and repayment capacity. For this same reason, NOs issued in the first half of 2017 are extremely diverse: maturities from 6 months to 10 years, face values from ARS 180,000 to USD 750 million, both ARS and USD denominated issuances, and even UVA denominated issuances (UVA or Unidad de Valor Adquisitivo, a unit of value which stays constant in real terms similar to Chile’s UF or Unidad de Fomento).
How many NOs have been issued over the first half of 2017?
Over the first half of 2017, 104 Negotiable Obligations have already been issued, 9 of which were Short-term securities (maturities of less than un year). Over the first half of 2016, 78 NOs were issued, resulting in a year-over-year increase of 26 listings.
61 different companies, 7 of which were small and medium enterprises (SMEs), issued these 104 NOs.
We must highlight that over the past two years, the number of issuances increased considerably over the second semester, with 45% and 60% rises in 2015 and 2016 respectively.
What are the characteristics of most recent NOs?
Companies that issued NOs over the first six months of 2017 preferred securities with medium to long-term maturities, with 3 years being the most commonly chosen maturity. At the same time, short-term securities were more commonly denominated in pesos.
Interest repayments will be done on a quarterly basis for 78% of NOs, 13% will be pay interest on a semestral basis, and 6% will pay interest on a monthly basis. At the same time, capital on almost 70% of these securities will be returned in a single payment at maturity.
Most ARS denominated issuances (77 out of 80) featured variable rates based on the BADLAR reference. Most fixed rate issuances were denominated in USD.
One recent novelty was the appearece of Simple RGS (or reciprocal guarantee society) Guaranteed Negotiable Obligations, which aim to simplify access from SMEs to these instruments. On August 15, the National Securities Commission authorized the first issuance from a company located in the province of Jujuy.