Argentina Bonds Jump On Swap Talk; Stocks Up, Peso Down

Wed, Aug 12 2009, 21:12 GMT
http://www.djnewswires.com/eu


Argentina Bonds Jump On Swap Talk; Stocks Up, Peso Down
By Shane Romig Of DOW JONES NEWSWIRES

BUENOS AIRES (Dow Jones)--Argentina's inflation-linked bonds posted sharp gains Wednesday after the economy minister said the government was working on a new debt swap. The government is studying a new swap which would push back about $1 billion in debt payments due next year, Economy Minister Amado Boudou told local daily La Nacion late Tuesday.

The swap will focus on debt whose value is tied to inflation, according to La Nacion. The government has come under heavy criticism amid accusations of inflation underreporting and the consequent underpayment on the debt. Earlier Wednesday, Argentina's statistics agency Indec reported a July consumer price index of 0.6% on the month and 5.5% on the year.

But most economists charge that Indec's data don't accurately reflect real inflation. The median forecast of analysts polled by Dow Jones for real month-on-month inflation in July was 0.95%. As for what economists dubbed "true" annual inflation, July's year-on-year increase was likely around 14%, with estimates ranging from 13.5% to 15%.

Boudou recently announced plans to review the agency and its methodology. Local media reports indicated that Boudou has even asked the International Monetary Fund to participate. The inflation-linked benchmark peso-denominated bond jumped 3.54% in price terms to ARS87.75 ($22.88), cutting the yield to 13.33%.

The dollar-denominated Boden 2012 fell 1.05% in price terms to ARS277.30, to yield 19.48%.

Local stocks got a boost from the strong gains on Wall Street. U.S. stocks rose following the Fed's decision to leave interest rates near zero and comments suggesting the economy is on more stable ground.
Argentina's Merval Index rose 0.78% to close at 1,773.29 points.
The peso fell to 3.8350 to the dollar from 3.8325 Tuesday.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com

END) Dow Jones Newswires
August 12, 2009 17:12 ET (21:12 GMT)
Copyright 2009 Dow Jones & Company, Inc.