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Argentina’s Pampa Energia increases share buyback plan

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    4 September 2019
    Published by

    Earlier this week, Pampa Energia S.A., one of Argentina’s largest and better-diversified energy and power company, announced that it is increasing the maximum amount of investment under the current share buyback programme to US$65mn (from US$50mn).

    The company is also considering a capital reduction through the cancellation of its treasury shares, which will allow it to continue buying back its own shares in the open market. In terms of bonds, the company said that it had repurchased:

    1. US$8.7mn of its bonds maturing in 2023 at an average price of US$77.8;
    2. US$50.1mn of its bonds maturing in 2027 at an average price of US$73.3, which, in addition to those the company held in treasury, amounted to a total value of US$60mn; and
    3. US$7.3mn of its bonds maturing in 2029 at an average price of US$78.6.

    We believe that these actions demonstrate the company’s solid financial situation and suggest that Pampa Energia could be in a favourable position to avoid a default if the Argentine economy continues to deteriorate and/or if there is a sovereign default.

    Although we do not rate Pampa Energia (PAMPAR) bonds, we like the company’s fundamentals, strong and professional management, business lines diversification, strategic importance for the country’s energy and power sectors, and proactive approach.