MercoPress. South Atlantic News Agency

Argentina tempting money markets with new bond issues

Argentina is feeling international money markets with the objective of issuing a bond in US dollars but submitted to Argentine legislation.

"It won't be specifically a global bond; we're trying to see how in can be issued with minimum risk" in international markets, said an Argentine Finance Ministry source.

Apparently the idea is to issue a ten year sovereign bond, covered by Argentine legislation, which would come under the BODEN category that is traded in the domestic market.

Argentina fears it could again run into trouble with the "vulture funds" if the issue is done under non Argentine legislation (most probably US law).

Since May Argentina has floated the equivalent of a billion US dollars in local currency, adjusted to inflation, with a demand stronger than expected mainly because of the excellent yield of 15%.

The Central Bank also issued bonds in US dollars for 792 million US dollars with a yield below 8%, and the government of Venezuela acquired directly 500 million US dollars of these bonds when the recent visit of President Hugo Chavez.

The original plan a billion US dollars but to keep interest rates in line, it only accepted bids for 792 million US dollars.

During the last quarter of the year Argentina must return capital equivalent to 3,87 billion US dollars and work out a new agreement with the International Monetary Fund.

Argentina last February ended the largest sovereign debt restructuring in history involving over 72 billion US dollars, following the 2001/02 default.