Que bello es esto, que bello es....
Fernandez Yields at Post-Restructuring Low as GDP Surges: Argentina Credit
Yields on Argentine benchmark bonds are falling to the lowest level since they were issued in a defaulted debt exchange in June as forecasts for the fastest economic expansion since 1992 bolster investor confidence.
The yield on 8.75 percent dollar bonds due in 2017 dropped to 9.43 percent this week, down from a high of 13.08 percent on June 8, according to data compiled by Bloomberg. Argentine dollar bonds have returned 5.1 percent this month through yesterday, compared with a 0.4 percent advance for emerging- market debt, according to JPMorgan Chase & Co. indexes.
Yields fell to the lowest level on Sept. 20 as Royal Bank of Canada joined Goldman Sachs Group Inc., Morgan Stanley and Credit Suisse Group AG in ramping up its growth forecast for South America’s second-biggest economy.
RBC lifted its 2010 estimate to 9.2 percent from 6.5 percent amid surging commodity exports. In August, industrial production rose 1.6 percent from July, the biggest monthly gain in at least a year, the Latin America Economic Research Foundation said.
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Growth numbers coming out of Argentina, economic data, have been relatively strong,” said David Bessey, who helps manage more than $10 billion of emerging-market debt at Prudential Financial in Newark, New Jersey. “It seems like investors are feeling more comfortable with Argentina than they were a couple of weeks ago.”
Economy Minister Amado Boudou delayed a $1 billion sale of 2017 bonds as part of Argentina’s $12.9 billion debt restructuring in June, saying the country would wait for yields to fall below 10 percent. Finance Undersecretary Adrian Cosentino said Sept. 15 the country was in “no hurry” to return to international markets.
‘Magic Number’
“That magic number is now lower,” said Eduardo Suarez, an emerging-markets strategist at RBC in Toronto. The yield on the 2017 bond may fall to 8 percent by year-end, he said.
A new sale of the 2017 bonds, issued to compensate creditors for past due interest, would be Argentina’s first issue in international markets since it defaulted on a record $95 billion in debt in 2001.
Argentine bonds may slump if global growth flags and prompts investors to shun higher-yielding, emerging-market assets, according to Jim Craige, who helps manage about $17 billion of emerging-market assets at Stone Harbor Investment Partners in New York.
‘Double Dip’
“If there’s a hint of a double dip anywhere in the world and there’s a reaction to that, then Argentina” as a proxy for global growth will “definitely suffer,” Craige said.
The central bank forecasts Argentina’s economy will grow as much as 9.5 percent in 2010, the most since 1992.
Central bank President Mercedes Marco del Pont, who backed the government’s use of $6.6 billion in international reserves to pay debt, was nominated on Sept. 22 to remain in her post after her term was set to expire the next day. President Cristina Fernandez de Kirchner designated Marco del Pont to keep running the bank until a Senate vote on her nomination, according to a statement on the presidential website.
Fernandez plans to tap a further $7.5 billion of reserves to pay debt in 2011, Economy Minister Amado Boudou said when he presented next year’s budget to Congress on Sept. 16.
Buenos Aires, Argentina’s biggest province, plans to sell benchmark dollar bonds maturing in five years and officials will finish meeting with bond investors today, according to a person familiar with the transaction who declined to be identified because he’s not allowed to speak publicly. A benchmark sale is typically at least $500 million in size.
IMPSA Sale
Industrias Metalurgicas Pescarmona SA, an Argentine manufacturer of turbines and generators, issued $275 million of 10-year bonds to yield 10.75 percent, according to data compiled by Bloomberg.
The peso was little changed at 3.952 per dollar yesterday.
Five-year credit-default swaps tied to Argentine debt rose 20 basis points yesterday to 770. A basis point equals $1,000 annually on a contract protecting $10 million of debt. Credit- default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to debt agreements.
Warrants linked to growth in Argentina’s economy slid 0.09 cent to 11.66 cents, according to data compiled by Bloomberg.
The extra yield investors demand to own Argentine bonds instead of U.S. Treasuries rose 17 basis points to 700, according to JPMorgan. The spread is the biggest after Venezuela and Ecuador.
“As long as investors continue to feel comfortable about the credit and there’s a need out there for higher-yielding product, then I think Argentina will continue to do well,” Prudential’s Bessey said.
To contact the reporters on this story: Drew Benson in Buenos Aires at
abenson9@bloomberg.net; Ben Bain in New York at
bbain2@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at
papadopoulos@bloomberg.net
