Ar dollar bonds selling cheaper then after the default in 2001, default priced in.
Argentine Bonds Look Cheap on Default Play, Credit Suisse Says.
By Drew Benson.
Oct. 30 (Bloomberg) -- Argentina's dollar-denominated par and discount bonds 'look cheap to likely recovery values'' if the nation defaults on its debt, Credit Suisse said.
'Par and discounts are trading at prices at or below the recovery rates in most other previous sovereign defaults, including the 2001 Argentina default,'' Credit Suisse said in a report from New York by analysts Igor Arsenin, Paul Fage, Sophia Guo, and Helen Parsons.
A 'sensible assumption'' on the recovery rate for these bonds should be similar to that seen in Argentina's last default in 2001, which restructured in 2005, 'I. E. 20 percent to 30 percent,'' the report said.
Argentina's pars and discounts were issued in the 2005 restructuring.
To contact the reporter on this story: Drew Benson in Buenos Aires at [email]abenson9@bloomberg. Net[/email].
Last Updated: October 30, 2008 08:30 EDT
$1 billion to protect falling Argentine peso
BUENOS AIRES -- The Argentine Central Bank spent nearly $1 billion Wednesday to support its precipitously falling currency as fears of a pension fund takeover drove the peso to its lowest level in nearly six years.
The peso closed Wednesday at 3.39 to the dollar after plummeting to 3.44 in the early afternoon amid concern that nationalizing at least $23 billion in private pension funds could drain capital from Argentina's stock markets.
[url]http://www.miamiherald.com/news/americas/story/747217.html[/url]
[Edit: Wow! May as well just flush it down the toilet, although that would take longer than the 1-day that it took to ineffectually support the peso with a cool b-b-b-Billion dollars. The bonds are now trading at a spread that is WORSE than post-default 2001? Certainly much of this is caused by the macro, world economic environment and by the fact that they have no access to capital, but still, this is rather breathtaking. When it goes, it's going to go quick. I'll be there in 10 days. Hope it doesn't happen until after I leave.]
$25 Billion less $554 million
U. S. Judge orders freeze on Argentine pension investments.
NEW YORK (Reuters) – A U. S. Judge ordered the freezing of Argentine pension fund investments in the United States to satisfy a prior $554 million judgment against the South American country on behalf of holders of its defaulted sovereign debt.
Judge Thomas Griesa of U. S. District Court in Manhattan on Wednesday granted a request by bondholders to freeze the assets. Griesa asked representatives of Argentina to respond in court on Nov. 6.
The judgment applies to 10 private pension fund management companies in Argentina that hold more than $1.4 billion in foreign assets including investments in the United States.
[url]http://news.yahoo.com/s/nm/20081031/ts_nm/us_argentina_pensions_us_2[/url]
1 billion the other day, now 500 million,
The central bank bolstered the currency today by offering to sell up to $500 million at 3.38 per dollar, according to two currency traders including Carlos Lizer at Buenos Aires-based brokerage Puente Hermanos.
A central bank spokesman declined to comment. People lined up for dollars at exchange houses in Buenos Aires, where retailers sold them for as much as 3.42 pesos per dollar.
Argentine peso bank deposits fell by 6.5 percent between Sept. 30 and Oct. 17, RBC Capital Markets said in an Oct. 29 report.
'Although the central bank will seek to contain declines in the peso, it will likely weaken further as people continue to take their deposits out of banks,'' said Alberto Bernal, an emerging markets strategist for Bulltick Capital Markets in Miami. Bernal forecasts the peso will weaken to between 3.50 and 3.60 by year-end.
Whole article.
[url]http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aM_NboSlOaAo[/url]
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Guess central bank is trying to keep people for panicking, if the peso falls too fast. If the CB does not intervene, then the peso would fall faster, people might panic, try to buy more and more dollars, forcing the peso lower and lower. But their using up reserves and the peso going to weaken anyway. They cannot replace these reserves once spent. AR going to need this money in the near future. On the other hand, a big panic can be really bad too. It can feed on itself. I think a panic going to happen at some point anyway. once people see the peso going down and down, more and more people will be trying to change out of peso and take money out of banks.
