Argentine bonds and stocks firm on possible deal to cure default

jueves 7 de agosto de 2014 14:36 GYT

By Richard Lough and Jorge Otaola

BUENOS AIRES Aug 7 (Reuters) - Argentine bonds and stocks extended gains on Thursday, with news that international banks may be close to a deal to buy debt from holdout creditors, bolstering investor optimism that Latin America's No.3 economy would soon cure its default.

The creditors are considering an offer from Citigroup, JP Morgan, HSBC and Deutsche Bank of 80 cents on the dollar for their roughly $1.66 billion holdings of Argentine debt, Thomson Reuters IFR revealed on Wednesday.

Argentina defaulted for the second time in 12 years last week after the government said it could not cut a deal with the New York hedge funds demanding face value on bonds they bought on the cheap after the country's economic crash in 2002.

Argentina's Economy Ministry declined to comment but has said previously there was nothing to prevent private parties reaching an agreement.

Dollar-denominated Par bonds traded 0.9 percent higher on the over-the-counter market at a bid price of 53.75, while Discount bonds were up 0.9 percent at 86.50. On Argentina's blue chip Merval index, stocks traded up 1.70 percent at 8,228.13.

Gustavo Ber, an analyst at the Buenos Aires-based financial consultancy Studio Ber, said "renewed hopes of a deal with international banks" were driving Thursday's asset gains.

Which banks would ultimately purchase the debt remained unclear, a source close to the negotiations told IFR.

"It could turn out to be only two banks that go in for the final deal with all the jockeying and various simultaneous talks going on," said the source close to the situation.   Continuación...