GDP coupon zooms 4.10%

After several days of weakness, peso-denominated bonds have managed to rebound, in tune with positive climate in all global markets. GDP coupon soared 4.10 per cent, not only due to favourable market context, but also thanks to an economy growing 8 per cent in the first quarter of 2007.

Information revealed yesterday by Argentine Statistics and Census Institute (INDEC, in its Spanish acronym) was the excuse to resume positions in the most appealing instrument among Argentine assets. Investment banks keep on recommending it, since Argentina is expected to continue growing at high levels (7.5 per cent this year and 6 per cent in 2008).

Moreover, it's clear that government won't meddle in GDP growth data (it's better for it to show sharp rises). On the contrary, retail inflation keeps on being concealed, negatively affecting peso-denominated bonds' quotes. Therefore, when investors want to resume positions in Argentine assets, they choose coupons before papers.

The one benefiting the most from purchases was GDP coupon in dollars, which earned 4.14 per cent, while those denominated in pesos leaped 3.97 per cent. Great amounts of dollars came in yesterday, which was reflected in development of foreign currencies. They have increased more than $130 millions to end at $41.86 billions. Moreover, dollar was strongly offered during the entire day in wholesale market, closing at the best levels of the day (ARG$3.073).

Purchases of Argentine assets, which on Wednesday had not reacted to global stock and bond rebound, extended to peso-denominated papers. Discount in pesos rose 1.40 per cent, leaving behind almost ten days of consecutive drops, starting when May official inflation hit lower than expected (0.4 per cent).

It was followed by almost all peso-denominated papers adjusting by inflation. BOGAR 2018 earned 1.33 per cent, while Par in domestic currency climbed 1.37 per cent. However, dollar-denominated bonds did not react so strongly, since they are still affected by US yield rise. Nevertheless, country-risk slid more than 4 per cent yesterday, ending below 290 basis points (2.90 per cent annual) after touching 310 points on the previous day.

Buenos Aires Stock Exchange joined good international climate. Merval index climbed 1.13 per cent after earning 1 per cent on the previous day. In this way, it settles again close to 2,200 points and stocks come closer to records beaten two weeks ago. However, this rally of the last two days may disappear if US retail inflation data hits higher than expected.