‘At least cockroaches would pay off the debt’ – Argentina sells 100-year bonds

Over the last 12 months, a significant number of governments have hopped on the long-term bond bandwagon. Rather than tackling their debt levels head on, the likes of Mexico and Ireland are kicking the can down the road.

The latest country to begin selling 100-year bonds is Argentina.

A year after emerging from its default, the Argentine government commenced issuing $2.75 billion worth of 100-year bonds, according to Reuters (via CNBC). The bond experienced 3.5x overscription and the government received nearly $10 billion in orders for the bond, which helped slash the yield from 8.25 percent to 7.9 percent.

Because of the high demand, Argentina’s Ministry of Finance declared it as a success and further evidence that the South American nation has regained the confidence of the international markets and the credibility to move forward.

Not so fast. Financial experts are already warning that Argentina will not eradicate the endless spend, borrow, default, repeat cycles. Others also note that investors shouldn’t park their money in a 100-year bond, especially in a country like Argentina where there is so much volatility.

Ultimately, public officials, when they pass away, are leaving 10 generations of Argentines with debt.

According to ZeroHedge, Argentines are taking everything in with a bit of humor:

As for the locals, their reaction to the bond issue was bittersweet: many Argentines, with memories of the severe economic crisis following a 2002 default, took to social media to express their surprise, some with a touch of humor. One asked if Argentina would exist in 100 years, and another said at least cockroaches would pay off the debt.

It is inevitable that investors will be saddled with billions of dollars worth of junk bonds, a bubble that will eventually pop.

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