Argentina bonds steady as investors brace for long fight

jueves 21 de agosto de 2014 12:36 GYT

By Paul Kilby and Davide Scigliuzzo

NEW YORK, Aug 21 (IFR) - Argentina's latest debt swap proposal may have made resolution of its default mess an even more distant prospect, but the sovereign's bond prices still remain surprisingly robust.

Indeed the latest gambit in the long-running Argentine saga - a complicated swap that risks running afoul of US law and that most believe can't work - has hardly hit prices at all.

Argentina's dollar bonds dropped two points Wednesday when the debt swap plan was announced, but that was a far cry from the freefall that many in the market were expecting.

Discounts were trading Thursday at 79.50-81.00, down from the 83.25 seen at the Tuesday close, while Pars were quoted as low as 46.50-47.50 before actually rebounding to 49.75-50.25.

"The reality hasn't hit bond prices," said Claudia Ribeiro de Castro, a senior analyst at Oppenheimer Funds. "To see Discounts with an 80 handle seems strange."

One reason may be that most major holders of the sovereign's debt are now hedge funds and distress players who have already accepted that the Argentina fight will be a long one.

With a longer-term view, and being less worried about short-term fluctuations, they may now see no hope of a resolution until perhaps 2016, months after the next presidential election.

Until then, there may be little to do but wait.   Continuación...