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Bonds fall more than 2% over the embargo
Clarin
April 08, 2010

The most affected ones are GDP coupons, which had been hitting highs

by Candelaria de la Sota

"Griesa watered down the party" said a trader yesterday that had begun the week celebrating the rise in bonds. Thus it was clear for the market that the embargo that the emblematic federal judge in New York placed on US$105 million from the Central Bank was what set off the drop in bonds, which in recent days had registered strong gains. Yesterday, some bonds suffered losses larger than 2%.

Among the bonds most affected by the decision of Judge Thomas Griesa to embargo the funds were the coupons attached to GDP: the units in dollars fell 2.61% and those in pesos lost 2.43%. As such, the Par in pesos retreated 2%, the Bogar fell 1.65% and the Discount in pesos dropped 1.58%.

The drops were produced shortly before the close of the trading day. And while it's clear that earlier there were rumors circulating around that the government's swap proposal would be worse than predicted and that would have been the real motive for the sell-off, analysts consulted by Clarin agreed in saying that the embargo was the real cause of the drop yesterday in the financial market.

"It was Griesa", said an expert analyst from the market in a blunt manner. And he said that "beyond the noise caused by this embargo, we don't see any large obstacle for the swap to come together as planned."

It's that, as much outside as inside the local market, Argentina going through the process of definitively exiting the default is seen with good eyes. And they think that, after the swap, the government will be able to get fresh funds abroad thorugh the voluntary debt markets.

But yesterday, it was not a good day in the markets, and not only for bonds registering losses, but also in the Buenos Aires stock market, where the Merval retreated 1.3%. "Many were taking advantage of profit-taking," said a trader.

Only in the currency exchange market was there a climate of calm and the dollar showed a light exchange trend: the wholesale rate fell four one-thousandths and closed at 3.876 pesos, while in the main exchange houses of the City, the price stayed stable at 3.89.

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