Source: Wall Street Journal
By: Ken Parks
BUENOS AIRES--Argentina's benchmark bonds and stocks rallied Monday, thanks to gains on Wall Street and improved investment sentiment in Buenos Aires.
Adrian Mayoral, a trader at a brokerage carrying his family's name, said some investors have been tempted back into the market ahead of a mid-April deadline in a high-profile court case pitting the Argentine government against creditors.
"For now the market has some breathing room and some securities have recovered to previous highs," Mr. Mayoral said.
A U.S. federal appeals court has given litigating creditors until April 22 to respond to a proposal by the Argentine government to swap their holdings of defaulted bonds for new bonds at a steep discount. The so called holdout creditors are trying to collect on about $1.33 billion in judicial awards.
The court is widely expected to issue its ruling on the payment plan during the second quarter. An adverse ruling could put Argentina in the position of either refusing to pay holdouts and defaulting on its current bonds issued under New York law, or paying holdouts with the risk that investors who participated in the debt swaps also sue the government for similar treatment.
Turnover on the local fixed-income market was 1.1 billion pesos ($223 million), accounting for about 85% of the total volume of securities traded on the Buenos Aires Stock Exchange during the session.
Among bonds issued under New York law, the Global 2017 closed 0.7% higher at ARS689.00, while the dollar-denominated 2033 Discount bond rose almost 1% to ARS684.50.
Among domestic-law bonds, the Bonar 2017 rose 0.9% to ARS732.50, and the Boden 2015 closed 0.7% higher at ARS753.95.
Argentina's Merval index of leading shares rose 2% to close at 3379.39 on volume of ARS50.3 million.
Banking concern Grupo Financiero Galicia SA (GGAL, GGAL.BA) rose 4.7% to ARS4.86, phone company Telecom Argentina SA (TEO, TECO2.BA) rose 4.3% to ARS25.30, and steel-tube maker Tenaris SA (TS, TS.BA) closed 1.5% higher at ARS171.50.
State-run YPF SA (YPF, YPFD.BA) closed 1.7% lower at ARS116.50 on heavy volume after the company said it will have to import more fuel after a fire that damaged its largest refinery.
The Argentine peso firmed to close at ARS5.1330 to the U.S. dollar on the regulated MAE foreign-exchange wholesale market, compared with ARS5.1340 at Friday's close.
The government strictly rations the sale of foreign currencies such as the dollar to businesses and individuals to protect the central bank's international reserves from capital flight.
The central bank also intervenes in the exchange market on an almost daily basis as it tries to buy dollars to build its reserves, while gradually weakening the peso to help exporters.
Strict capital controls that limit the amount of foreign currency Argentines can legally purchase have led some people to seek dollars through informal channels.
On the black market, the peso strengthened to about ARS8.33 against the dollar Monday, from around ARS8.40 in the previous session, according to the newspaper El Cronista, which publishes an average of rates collected from black-market traders.
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