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Markets again give the nod to the country to emit a bond abroad
El Cronista
July 23, 2010

The external climate continues to bring the country closer to going out in the coming weeks to emit a bond at the international level. Yesterday was a clearly positive day for the U.S. markets as well as in Europe, and this rising trend pushed on by the rebound in oil ended up with another rising trading session for Argentine bonds.

In particular the Global 2017 the bond that the Economy Ministry plans to place abroad rose again and as a consequence of it, its interest rate fell to 10.4%. This way, it is only 40 basis points away from the goal of one digit that the Finance Secretariat, led by Hernan Lorenzino, imposed on itself as a condition to contemplate the emission of a bond abroad.

"It's extremely difficult to find assets in the world which offer such attractive risk-return ratios, especially when interest rates are very low and also the solvency of many sovereigns is even placed in doubt before high fiscal deficits and debt levels. The high appetite for yields, still with continued elevated external volatility, together with a domestic macro that continues adding promising signals, makes it ever more possible to open a window to return to the international markets, as seen with the Global 2017 that is 40 basis points away from one digit," said Estudio Ber in its daily report.

On the other hand, official sources quoted by the Reuters news agency said that they hope to start formal negotiations this year with the Paris Club to normalize the debt in default that is held with this organization for US$6.5 billion. In the government they are hoping that after that sources for financing will reopen for the country. Today the main public banks and investment agencies of countries making up the Paris Club are impeded from lending to Argentina. As such, the last two thermoelectric centers of the country were constructed with funds given out by some of these agencies, like the German ExImBank and the Japan Bank for International Cooperation (JBIC).

"We are going to restructure the debt with the Paris Club in the measure that it would be beneficial to Argentina, which would be a solution for the creditors but also one that would bring a benefit to Argentina," said a source quoted by Reuters. But he warned that it is still very early to define what would be a source of financing for those payments. President Cristina Fern ndez de Kirchner had announced that she's pay the Paris Club debt with reserves in 2007, but the plan was blocked when the international crisis was set off.

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