Argentine Boden Bonds Extend Rally Amid Coupon Strip Auction

Thu, Jun 11 2009, 21:14 GMT
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Argentine Boden Bonds Extend Rally Amid Coupon Strip Auction Shane Romig Of DOW JONES NEWSWIRES BUENOS AIRES (Dow Jones)--Argentina's Boden bonds rallied again Thursday amid a government auction for a stripped coupon, extending a recent streak of sharp gains. The dollar-denominated Boden 2012 jumped 3.47% in price terms to ARS245.75, bringing the yield to 24.68%. The Boden saw yields climb as high as 60% in early April on fears of a possible default. But those fears have eased - in part because of some aggressive repurchases by the government itself - and bonds have rallied sharply. On Thursday, Argentina opened a two-day Dutch auction by holders of the Boden coupon strip who wish to receive payment ahead of its current scheduled date of Aug. 3.

The government will receive offers until 2 p.m. local time (GMT 17:00) on Friday, the Economy Ministry said in a press release Wednesday. However, it is unlikely that many holders of the $2.25 billion coupon strip will take advantage of the early payment option, as it is trading at a premium of about 1% in the marketplace. Analysts suggest this will make the prospects of anybody offering the government a price it would be willing to pay extremely slim. "With the move, the government intends to reiterate not only its capacity, but also its willingness to pay, and appease growing doubts about whether it would continue to service its debt after the June 28 midterm legislative elections," Goldman Sachs analyst Alberto Ramos said. "This is a positive development, as it established that the capacity to pay exists and conveys the important message that willingness to pay might not be as weak as generally perceived," he said.

The benchmark peso-denominated bond rose 0.5% in price terms to ARS60, yielding 18.78%. Meanwhile, stocks rose in line with Wall Street and higher oil prices, which boosted index heavyweights tied to the sector. Argentina's Merval Index rose 0.87% to close at 1,669.54. The peso was unchanged at 3.76 to the dollar. -By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=k2B7BV88GR%2B4xZrTQo8eNQ%3D%3D. You can use this link on the day this article is published and the following day

END) Dow Jones Newswires
June 11, 2009 17:14 ET (21:14 GMT)
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