Argentine bonds up as US stock gains feed demand

Argentine bonds advanced for the first time in three days as gains in US stocks fuelled investor appetite for the South American nation's high-yielding debt.

The yield on Argentina's 7% bonds due 2015 slid two basis points, or 0.02 percentage point, to 11.41% at 12:08 p.m. New York time, according to reports. The bond's price rose 0.1 cent to 82.85 cents on the dollar.

Bonds slid for two days after Economy Minister Amado Boudou on April 15 unveiled the general terms of the country's plan to restructure US$20 billion in defaulted debt held out of a 2005 settlement. Some investors were disappointed by the government's decision to exclude past payments on warrants linked to gross domestic product, traders said.

Argentina will offer investors 33.7 cents on the dollar for securities due in 2033, warrants linked to gross domestic product, and pay past due interest with 8.75% bonds due in 2017. The government will also open the exchange to bondholders who participated in the 2005 settlement.

Italian regulator Consob is likely to delay until next week a decision on whether to approve Argentina's offer after Argentina made changes to it last week, according to reports.

Meanwhile, the government believes a settlement with remaining creditors will help Argentina regain market access and credibility among investors nine years after the government defaulted on US$95 billion of debt.

Holders of defaulted Argentine debt including Greenwich, Connecticut-based investment fund Gramercy, and Stone Harbor Investment Partners in New York, said they haven't made a final decision on whether to participate in the exchange.

However, Argentina's peso slid 0.2%, the most this month, to 3.8713 per US dollar, from 3.8632 earlier. The peso headed toward its first winning month this year on dollar inflows to soy and soyoil exporters amid the annual harvest, which is projected to be a record.

Argentina is the world's biggest soyoil exporter and the third-biggest soy exporter.