4 de septiembre 2008 - 00:00

The day after

· In spite of Kirchner's announcement that Argentina will pay off its debt to the Paris Club, bonds fell again yesterday. Country-risk climbed 3 per cent.

· US dollar zoomed, but only slightly: it closed at AR$3.06 at exchange agencies. Argentine Central Bank has the dollar under control.

· Xavier Musca, head of the Paris Club, stated that "it's a good decision, as long as it's implemented."

· Creditor nations will meet on Monday 15 to define the way in which Argentina will pay off its debt.

· Yesterday, the Economy Ministry held intense meetings with the Argentine Central Bank.

· They are trying to make the total less than $6.7 billion, as some debt interests are not due yet.

· What is worrying -also for markets- is the legality of the use of central bank reserves. Cristina de Kirchner would have to issue another decree.

· Argentine Central Bank started to watch closely the purchase of dollars by banks and companies.

The day after
The hope that settling the Paris Club debt would lead to the end of Argentine investment and financial isolation lasted just one day. Now investors think the goal was more selfish: to make easier the building of the high-speed train. From the economic point of view, paying $6.7 billion so that France finances a building work that may cost half this figure is more than arguable.

If no agreement is reached with bond holders who did not accept the swap, and the INDEC statistics institute does not restore its credibility, Argentina will receive no financing and, in 2009, it will have to use more money to pay major debts due. If this happens, the weakening of reserves will be worrying.

The market showed no enthusiasm. Few business transactions were carried out and some bonds fell over 2 per cent, such as the Par in pesos, one of the debt-swap bonds.

AR$690 million were traded at the Over-the-Counter Electronic Market (MAE), half the amount that is traded in a bad day. It has been a while since the volume of bonds traded is so low.

Discount in pesos lost 1.15 per cent and GDP Coupon was the only one to climb (0.30 per cent), but with such low volume that the closing price was not representative.

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