BUENOS AIRES (Dow Jones)--Argentine stocks edged lower Monday in line with Wall Street, while bonds got a boost from post-swap optimism and signs of continued strong economic growth.
Bond buying was spurred by hopes that the relatively high acceptance rate of Argentina's bond swap would lead courts to dismiss claims filed against Argentina in the U.S. made by the holders of the country's defaulted bonds, said Alejandro Bianchi, an analyst at brokerage InvertirOnline.
The swap closed last week with about 66% of the remaining defaulted bonds being exchanged for new debt at about a 65% discount. Together, investors have agreed to swap about 92% of around $100 billion in debt that the government defaulted on in 2001 during Argentina's historic economic meltdown.
The government hopes the new restructuring will allow it to once again tap international lending markets, but litigation by the holders of the remaining defaulted bonds and credibility problems may make it difficult for Argentina to issue new debt with affordable rates.
Stability in overseas markets and solid growth so far this year, added to the positive investor sentiment, Bianchi said.
Late Friday, the national statistics institute, Indec, reported robust economic growth in April, with proxy gross domestic product jumping 9.7% on the year. That beat expectations of analysts polled by the Argentine Central Bank, who had predicted 6.6% growth.
Bumper crops, strong consumer spending and high government expenditure have fueled a rebound from last year's slowdown, with GDP during the first quarter rising 6.8% on the year and 3% on the quarter.
Based on those strong figures, Roubini Global Economics revised its 2010 GDP growth forecast to 6.5% from 4.5% on Monday, but kept its 2011 forecast unchanged at 3.5% growth. "Overall, economic growth is benefiting from highly accommodative macroeconomic conditions, strong growth in Brazil, sharply undervalued currency and a rebounding agricultural sector," RGE said.
The benchmark peso-denominated bond rose 0.8% in price terms to ARS100.50 ($25.55), while the dollar-denominated Boden 2012 fell 0.75% in price terms to ARS370.50.
Meanwhile, stocks fared worse amid a mild selloff in New York. Argentina's Merval Index fell 1.11% to close at 2,292.21 points.
The peso closed unchanged at 3.933 to the dollar.
-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-20100628-712388.html
