Argentine President Cristina Fernandez de Kirchner’s growing confrontation with the country’s largest newspaper is exacerbating the biggest tumble in its dollar bonds in two months and prompting JPMorgan Chase & Co. to recommend investors cut holdings.
The yield on the South American country’s benchmark 7 percent securities due in 2015 increased 74 basis points, or 0.74 percentage point, since Aug. 23, the biggest two-day jump since June 7, according to data compiled by Bloomberg. Emerging- market bond yields climbed an average of 18 basis points during the same period, according to JPMorgan indexes.
The New York bank advised investors to sell holdings of the securities, citing concern that “domestic political conflicts are escalating” and global growth is slowing, after benchmark yields fell to their lowest since November 2007 this month.
Mrs Kirchner asked a court this week to review the 1976 purchase of a newsprint producer by Grupo Clarín SA, a move opposition leaders say is an attempt to silence critics in the media.
The cost of protecting Argentine debt against non-payment for five years with credit-default swaps jumped 47 basis points to 891 Wednesday, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to debt agreements.
Mrs. Kirchner said Aug. 24 the sale of paper maker Papel Prensa SA to Clarin, La Razon and La Nacion was illegal because the owner, Grupo Graiver, was under pressure by the country’s military dictatorship to agree to the transaction. Buenos Aires- based Clarin now holds a 49% stake in Papel Prensa after buying La Razon’s share.
Clarin and La Nacion, in a joint statement, said that in court testimony made after the country returned to democracy in 1983, the Graiver family said it had sold Papel Prensa and other assets to settle large amounts of debt.
Isidoro Graiver, a member of the family that sold Papel Prensa, said in a statement published in both newspapers that the transaction was voluntary.