April 1, 2011 / 4:44 PM / 6 years ago

Argentina's IRSA mulls debt sale

<p>Eduardo Elsztain, Chairman of the Board and Chief Executive Officer of IRSA Investments and Representations, is interviewed during the Reuters Latam Summit in Buenos Aires, March 31, 2011. REUTERS/Enrique Marcarian</p>

BUENOS AIRES (Reuters) - Argentina’s largest real estate company, IRSA, is considering selling global bonds this year to finance expansion plans at home and abroad, Chairman Eduardo Elsztain said on Friday.

Last year, IRSA (IRS.BA)(IRS.N) became one of the first Argentine companies to sell foreign debt since a massive 2002 sovereign debt default, which battered private companies’ credit ratings and sent lending rates soaring.

“The market is much keener about investing in Argentina, and we could explore opportunities to raise capital,” Elsztain told the Reuters Latin America Investment Summit in Buenos Aires. “We’ll probably go ahead with a transaction in the capital markets this year.”

Government efforts to swap defaulted sovereign debt have sought to restore investor confidence in Latin America’s No. 3 economy and lower borrowing costs for private companies.

About 92 percent of the $100 billion in debt that Argentina stopped servicing in 2002 has been exchanged, at a steep loss for bondholders, during swaps in 2005 and 2010.

IRSA sold $150 million in 10-year bonds at a rate of 11.5 percent in July 2010 and earlier this year its farmland unit Cresud sold $62 million in debt in several trenches.

Elsztain said that if IRSA were to issue debt this year it would probably pay about 7.5 percent.


IRSA’s holdings include many of Argentina’s leading shopping centers, office buildings and hotels, and the company owns a stake in Manhattan’s Lipstick Building, known for its unusual shape.

Elsztain said IRSA plans to step up its investments in the United States, where in 2009 it bought interests in two buildings and a stake in Hersha Hospitality Trust, a hotel chain with some 10,000 rooms on the U.S. East Coast.

“I estimate that (the value) of our portfolio in the United States will increase to $250 million this year,” from $220 million today, the executive said.

Elsztain also said Cresud could decide to increase its stake in BrasilAgro, a company it created with other investors in 2005, from 35.75 percent at present.

As well as growing crops and raising cattle in Argentina, Brasil, Bolivia and Paraguay, Cresud also buys and develops farmland that it later sells at a higher price.

Elsztain said the company plans to increase its productive farmland portfolio in South America to about 240,000 hectares from 181,000 hectares at the moment.

“By diversifying geographically we lower weather risks, and there are also less political risks and the chances of facing (tax) hikes is reduced,” he said.

Elsztain said his company will shortly open four more shopping centers in addition to the 12 malls it already has in the country, and could build more in large urban areas in Argentina or in Brazil.

“The retail sector could be described as IRSA’s cash cow,” he said.

Writing by Eduardo Garcia, editing by Dave Zimmerman

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