Argentine country-risk dips 8% as bonds soar

Peso-denominated Discount in September

Global markets' hike also reached Argentina. Bonds climbed up to 6 per cent and trading doubled.

Domestic instruments opened with a rising trend and, as soon as US rate trim was disclosed, investors, instead of taking profits, kept on buying. For that reason, Argentine market ended at the highest values of the day and stayed really firm with purchase orders coming after close.

Between the Electronic Over-the-Counter Market (MAE, in its Spanish acronym) and Buenos Aires Stock Exchange, ARG$2.12 millions were made in bonds, as in the best days. Dollar inflow was crucial to achieve such amount. At least $100 millions came in to buy peso-denominated bonds, an event not observed for some months now.

The most sought bonds were debt swap's, which were at really low levels. Peso-denominated Discount climbed 6.10 per cent and GDP coupon, around 5 per cent, with strong trading.

In New York, debt swap bonds in dollars climbed 3.70 pre cent and caused country-risk to fall as much as 8 per cent to 405 points in JP Morgan EMBI+ index.

Among post-default bonds, BOGAR 2018 stood out, but, as opposed to the rest, it started to trade strongly after US rate low was revealed. By the end of the day, it had soared 5 per cent.

This bond yields 21 per cent or more in pesos. The other instruments showing a good performance were BOCON PRE9, which leaped 2.10 per cent, and BODEN 2014 in pesos, with 2 per cent. The remaining post-default bonds in pesos rise as much as 1 per cent.

Dollar was a supporting actor yesterday in market. Trading was poor and the American currency remained unchanged. Argentine Central Bank (BCRA, in its Spanish acronym) did not intervene and reserves stayed at $43.05 billions.

Dollar

Dollar opened in Forex-MAE at ARG$3.1360 and ended at that price at close. In exchange agencies, the American currency continued at ARG$3.17 for sale, though some boards showed it at ARG$3.16. Dollar ended well-balanced for today, since purchase orders coming in after close equal sale ones.

Argentine Statistics and Census Institute (INDEC, in its Spanish acronym) is the biggest problem bonds have. Compulsive debt deduction government makes when failing to measure real inflation may lead to serious lawsuits against the State as well as no credit for Argentina.

It's not clear the deal government is making by avoiding, through this fraud, payment of a debt falling due within 30 years, leaving the country without credit and reliability. This is a completely unfavourable swap, unless government wants to make us believe that Argentina is a country without inflation.

This issue, which, according to officials, worries only a few, has turned bond market into a purely speculative one and has forced savers to abandon it. At the beginning, small- and medium-sized savers went to buy dollars, forcing banks to increase time deposits' interest rates so as to hold them. With hiking rates, consumption, which is the flag of official economic plan, runs the risk of collapsing and a percentage of personal loans may suffer moratoriums and irrecoverableness. Consumers are paying the cost of INDEC indexes' juggling.