A small Argentinian property company has issued
high yield despite its size and developers’ typically
unsteady cash flows.
The offering circular for Raghsa’s $100
million of senior notes omitted a fundamental covenant.
“The big difference is there wasn’t a ratio for debt
incurrence,” said Juan Mendez from bookrunners’ US
counsel Simpson Thacher & Bartlett.
The family-owned company has two business lines:
building-to-sell residential space, and building-to-lease
commercial space. The time lag between building and selling
affects any developers’ revenue, but this is amplified
when the developer operates on such a small scale.
“That played a big role in how we structured the
covenants...