Would You Buy 7 Percent Bonds From This Guy?

LUIS CAPUTO IS GETTING frustrated with the bond market.

- Camila Russo

He’s guarded about it—he has to be. After all, he’s the finance minister of Argentina, the biggest bond issuer in the developing world, which means he’s constantly hitting up investors for cash. But the tension comes out deep into an hour long interview in his Buenos Aires office. Why is it, the former Wall Street banker wants to know, that the investing community doesn’t appreciate all that the country has achieved?

Eighteen months have passed since Argentina shed its status as an international pariah mired in bond default litigation. There was the elimination of currency controls, the stabilization of the peso, the revival of the mortgage market, the reduction of the budget deficit. Sure, investors have given some measure of respect to the government—after all, they were willing to fork over $2.75 billion in a sale of 100-year bonds with a 7.1 percent coupon in June—but the yields they demand remain high, the credit rating is low, and the country’s stock market is still in the same class as far-flung places such as Mauritius, Tunisia, and Bangladesh.

“I don’t understand why people aren’t more conscious of the big change that’s going on here,” Caputo, 52, says. And then he flashes a bit of that swagger that Argentines are so well-known for throughout South America. “I’m convinced Argentina will be the star of emerging markets for the next 20 years,” he says. “I don’t mean to be cocky, but it’s very evident.”