BUENOS AIRES (Dow Jones)--Argentine bonds and stocks posted solid gains Thursday, buoyed by a rally on Wall Street and speculation that the government may be close to selling new debt overseas for the first time since the country's massive 2001 default. Argentina's Merval Index added 1.39% to close at 2,359.73 points.
The gains were led by index heavyweight Tenaris (TS), which surged 3.14% to close at ARS77.20 ($19.63). The company sells pipes to the oil sector and benefited from a spike in international crude oil prices Thursday. Crude rose amid signs that a storm is forming in the Atlantic basin and heading towards the important oil producing area in the Gulf of Mexico.
Wall Street's buying streak came after a number of big U.S. companies reported strong earnings. Also helping were better-than-expected data on U.S. existing home sales and encouraging data from the euro zone.
Meanwhile, Argentine bonds added to the gains posted this week, fueling speculation that the government was considering the sale of new 2017 bonds overseas.
The benchmark peso-denominated bond rose 2.79% in price terms to ARS110.50, to yield 12.33%.
The dollar-denominated Global 2017, which is the most likely candidate for a new debt issuance, added 1.65% in price terms to close at ARS370, cutting the yield to 10.52%.
The government has said it hopes to sell new debt but will only do so when the interest charged falls below 10%. Recent gains in bond prices have brought yields closer to that benchmark and spurred speculation that a new sale is near.
However, the country still faces legal challenges from the holders of about $7 billion in defaulted bonds, who have sued and sought to seize Argentine assets overseas.
A Swiss Supreme Court ruling this week shielded from creditors $1.2 billion in central bank reserves deposited at the Basel-based Bank for International Settlements, or BIS. However, the lawsuits are likely to continue in the U.S. and other countries, complicating efforts to sell new bonds overseas.
The peso strengthened against the dollar again Thursday, spurring the central bank to step in with dollar buying to rein in the gains. The peso strengthened to ARS3.933 to the dollar from ARS3.935 on Wednesday.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Source: http://online.wsj.com/article/BT-CO-20100722-719580.html
