MercoPress. South Atlantic News Agency

Venezuela once again Argentina's last resort lender

“We have great trust in the Argentines” Chavez added following a meeting with Mrs. Kirchner

Venezuela again acted as lender of last resort for Argentina having acquired a billion US dollars in sovereign bonds, at “close to market rates” according to Argentine financial sources.

"Venezuela bought a few days ago, or a week ago, one billion US dollars in Argentine bonds" President Hugo Chavez revealed on Tuesday during his brief visit to Buenos Aires for a summit with Argentine president Cristina Fernandez de Kirchner and Brazil's Lula da Silva. "We have great trust in the Argentines" he added following a meeting with Mrs. Kirchner at Government House. A high-level source at the Argentine Economy Ministry said late on Tuesday that Venezuela had once again purchased Argentina's dollar-denominated Boden 2015 bonds, adding this latest deal went through "in the last few hours." "The amount is the same as before, Venezuela paid one billion to buy these bonds" the source said, adding that the direct placement to Caracas was part of the Argentine government's financing plan. The official said the government would reveal the yield and terms of the sale in the coming day. Venezuela bought 1.36 billion US dollars of Argentine paper last May, putting purchases over the last few years at well over 6 billion US dollars. The amount that Venezuela actually paid in this last operation was one billion, meaning the yield was 12.9%. Since Argentina is fearful of legal actions from bond holdouts that did not accept the 2005 restructuring of the country's sovereign debt, these operations are only announced after they have been closed. Venezuela has therefore become the lender of last resort for Argentina since the 2002 default because the country is unable to float bonds in global markets. According to Argentine financial sources the government is in need of 6.1 billion US dollars to face payments this year and has managed to collect so far 4 billion, and it is forecasted that before the end of the year Chavez Venezuela will make a similar operation. Sources also point out to the fact that the interest rate on the bonds is ten points higher that the cancelled debt with the International Monetary Fund which at the moment was hailed as a "liberation operation" by the administration of former president Nestor Kirchner.