Market shrugs off Argentina US$6bn debt payment
By Paul Kilby
NEW YORK, Oct 5 (IFR) - Argentina had to dip into its dwindling reserves to make an almost US$6bn payment on its Boden 2015 bonds, which did little to boost confidence Monday in its troubled finances.
The country, locked out of the foreign capital markets after a pair of messy defaults, is set to price new bonds on Tuesday - but its debt picture is anything but rosy.
Argentina hopes to price a new local law 8% Bonar 2020 on Tuesday, amid some reports that its net reserves were down to just US$10bn in August before this weekend's US$5.9bn payment.
But many see no reason for investors to buy in.
"No creditor would lend money to an issuer to finance the continuation of unsustainable policies," said Sebastian Vargas, a strategist at Barclays.
Locals, who held approximately 40% of the Boden 2015s, will likely recycle the debt payments bank into bank deposits and keep vital dollars at home.
But it is a different story for the approximately US$3.5bn of Boden 2015s that Barclays calculates is still in foreign hands.
That money will leave the country unless those accounts decide to buy new Argentine debt issues - something that many see as unlikely. Continuación...