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Argentine bonds dropped by as much as 3%, this time because of the US
El Cronista
September 05, 2008

The payment has still not been made but the Paris Club news appears to have been forgotten. The increasingly complicated international context hit all the emerging markets hard and Argentina in particular.

This time the blow struck from outside. Even among those who judged it positive, the payment to the Paris Club was moved off on the back burner, and fears for the deceleration of the internaitonla economy once more took its place at the top of the list of concerns for investors. After the Government's weekly figures showed an unexpected hike in the number of requests for unemployment subsidies, the US market had one of its worst days in months and all the emerging markets were punished. Although, as has recently been the case, the markets with a greater risk profile such as Argentina were harder hit. Local bonds dropped by over 2%, such as Discount in pesos, while country risk rose by 3.4% to 721 pints. Only the peso remained stable, operating in the wholesale market at $ 3.04, the same as Wednesday, but only because the Central Bank intervened strongly in the futures market to discourage any speculation of a devaluation in the exchange rate

But despite the major adjustments which all the emerging assets markets underwent, once again, there were not so many investors who came out to sell their bonds to Economy, which yesterday held its second tender to buy back bonds for up to 200 million pesos. The Finance Secretariat informed that they received market offers to the tune of $ 438.9 million, although only 20.1 million were adjudicated as the prices requested by the investors were well over the quoted value of the bonds in the market. The Government recovered Boden 2012, 2013 bonds and GDP-tied coupons.

The Finance secretariat considered that the buy-back was "a success" as the scant participation showed that although investors keep talking about an Argentine default "nobody is prepared to give the bonds away". The Government will continue next week (Thursday) with this tendering scheme. The idea is to keep doing this until year-end to "generate credibility in the market and eradicate any fears of a cessation in payments in the next 18 months".

In his statements to news agencies, Hern n Lorenzino, secretary of finance, denied that the announcement made by the president to pay off the Paris Club had affected the operation "Today, the markets moved for external reasons rather than issues related to the country" the official affirmed.