Only GDP coupon survives bond plunge

Argentine bonds continue with a falling trend and trading plummeted to half the amount. They are marked by Argentine Statistics and Census Institute (INDEC, in its Spanish acronym) and its new inflation index.

On Tuesday, trading in the Electronic Over-the-Counter Market (MAE, in its Spanish acronym) only added up to ARG$817 millions, but half of those transactions were made in NOBAC and LEBAC (Argentine Central Bank's Bills of Exchange and Securities). In other words, only ARG$400 millions were traded in debt bonds, a quarter of trading posted before INDEC intervention.

Bond market has today a difficult outlook, which means that Argentine government has no credit to renew its debts. For example, peso-denominated Discount (main debt swap bond) lowered 1.15 per cent, to ARG$107.75. It's only ARG$3 above the day it started quoting at the beginning of 2005, and below price at which government sold it to ANSES (Argentine Social Security Administrative Bureau) a few days ago so as to have funds to pay debt.

Peso-denominated Par

The other debt swap bond, Par in pesos, plummeted on Tuesday 0.75 per cent and its prices are close to its all-time low.

GDP coupon (created by president Néstor Kirchner and former economy minister Roberto Lavagna) was luckier and recovered part of sharp fall of the previous day. Yesterday, peso-denominated coupon climbed 2.63 per cent.

Meanwhile, swap bonds in dollars did better, zooming 0.54 per cent in New York, which helped lowering country-risk by 3.6 per cent to 454 points.

Post-default

Post-default instruments in pesos continue adrift. On Tuesday, they alternated between highs and lows, with poor trading. With post-default bonds in dollars, something similar is happening. Investors pay no attention to them. They do not want Argentine risk in their portfolios.

Meanwhile, wholesale dollar jumped and Argentine Central Bank boosted its rise by buying around $30 millions. With these acquisitions, reserves climbed to $44.57 billions.

The American currency opened firm in Forex-MAE (main wholesale market). Dollar quoted at opening at ARG$3.1450. Yet, after 1 p.m., it became really firm and Central Bank left market because genuine buyers came up. Dollar ended at ARG$3.15, highly demanded for Wednesday.

Futures

In future market, dollar also rocketed. For the end of the month, it closed at ARG$3.1470 (+0.16 per cent) and for the end of December, at ARG$3.1580 (+0.10 per cent). The longest positions had few changes. Even dollar for the end of January and February lowered 0.35 per cent.

For Wednesday, investors' mood keeps on being negative. US indicators mirror tough times, which may entail lower economy growth. If that happens, the blow may hit Argentina, which is highly vulnerable, because everything, even fiscal surplus, depends on commodities' price.