BUENOS AIRES (Dow Jones)--Argentine bonds gained further Friday as the relative stability in global markets and Argentina's high yields tempted investors. The price of the dollar-denominated Global 2017 rose 1.05% to close at ARS384 ($97.64), to yield 9.81%. The government has said that it wants to issue about $1 billion in new debt as it returns to international credit markets. Those markets have been closed to Argentina since its massive 2001 default. The Global 2017 is the most likely vehicle and a yield below the 10% ceiling the government has set augurs well for the issuance.
Bond prices are likely to continue to edge higher on expectations of continued low interest rates in the U.S. and a more stable international scenario, said Silver Cloud Advisors analyst Javier Salvucci.
Earlier Friday, Goldman Sachs said weak economic growth in the U.S. will push the Federal Reserve to maintain a low interest rate policy. Goldman Sachs bond strategists expect the U.S.'s 10-year benchmark note's yield to fall to 2.5% during the fourth quarter, a level not seen since March 2009.
The high yields and the low chance of a default over the short-term make Argentine bonds a good bet right now, Salvucci said.
The peso-denominated 2033 discount bond shot up 3.38% in price to ARS122.50, yielding 11.19%.
Provincial bonds are paying even higher yields. Cordoba sold $400 million in seven-year bonds Friday at a yield of 12.375% in its debut in international capital markets, according to a person close to the deal.
Proceeds will be used to pay the $150 million principal amount of the province's 12% notes due 2017 to accepting holders, and to finance infrastructure investments at both the provincial and municipal levels, according to Standard & Poor's.
Meanwhile, stocks edged lower in line with Wall Street following a weaker-than-expected July jobs report in the U.S.
Argentina's Merval Index pared back losses suffered earlier in the day and finished just 0.3% lower at 2,425.33 points.
The peso strengthened, rising to ARS3.933 to the dollar from ARS3.935.
-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-20100806-715666.html
