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Bonds rise and country-risk falls: closer to emitting debt
Clarin
July 21, 2010

Bonds rose as much as 4%. The interest rate on the Global 17 is approaching 10% annual.

The local financial market and the international one as well are newly aligning in favor of the government's financial plans. The strong rise in Argentine bonds is carrying the yield rate of the Global 2017 bond to 10%, the "ceiling" that Minister Amado Boudou fixed at the time for emitting new sovereign debt under foreign legislation.

Yesterday that bond, which was delivered to those who accepted entering the last swap, gained 1.5% and closed with a yield of 10.7% to quote at US$90.75.

It already rose almost 10 dollars since it debuted on the secondary market and its yield rate has fallen from 13%.

A good part of this recovery is due to the calming of the European markets. Yesterday, there was positive impact from the fact that Spain managed to place 6 billion in debt as an interest rate that reflected a strong tightening of Spanish country-risk (in that case, the interest spread that Spanish debt pays over German debt), which was interpreted as a clear sign that the financial panorama, at least for now, is calming down in the euro zone.

In Argentina, there has been registered a heavy inflow of currency, from exporters and those seeking to bet on high-yield paper.

It is the scenario that Boudou was waiting for to emit debt in favorable conditions.

On Friday, the minister said that a kind of "symbolic" emission could take place to help private companies emit debt.

For now, the Treasury is counting on abundant financing from two huge coffers: the Central Bank reserves and the funds administered by ANSeS. For that, Boudou says that he is in no hurry to go out to the market.

The market is interpreting this as a good sign. The same about the growth numbers for the economy, which guarantee the collecting of profit from coupons linking to GDP. They are bonds that have been called, from afar, as the best investment of the year, since there is already a guaranteed payout for December 2011 and almost assuredly also for 2012. Yesterday, those bonds rose between 3 and 4% and, in the case of the coupon in pesos, are accumulating a gain of 85% for the year. The coupon in dollars is rising 44%. And experts say that its ceiling, at the rate that the economy is growing, is far from being reached.

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