Argentina's Bonds Jump Higher; Peso Declines To ARS3.7125

BUENOS AIRES (Dow Jones)--Argentine bond prices rose Wednesday on renewed optimism about the U.S. economy and on speculation the government is buying back its own debt.

The benchmark peso-denominated bond rose 7.31% in price terms at ARS55, yielding 19.92%, while the Boden 2012 dollar-denominated bond rose 6.94% at the dollar equivalent of ARS227.80 ($61.36), putting its yield at 41.87%.

Bonds rose because of better prospects for the U.S. economy and because of speculation regarding a possible government buyback of its own debt, said Sabrina Corujo, a trader at Lopez Leon Brokers.

On Tuesday the economic consulting firm Bein & Asociados said the Argentine Central Bank and the social security agency, Anses, were jumping into the market to buy government bonds at discount prices.

A Central Bank spokesman wasn't immediately available for comment.

Corujo said investors also have been increasingly attracted to local debt because of diminishing expectations that the government may default in the near future.

"Prices have been rising since April as rumors of a default subside," she said. "Nobody is speculating that the government will default in the near term. Meanwhile, yields are very attractive and prices are cheap, making this a risk worth taking for many investors."

Argentine stocks also rose, with bank Banco Macro (BMA) leading the gains by rising 9.62% to ARS5.01.

It was followed by the power distributor Edenor, which rose 6.19% to ARS0.908.

The Merval stock index rose 3.42% to 1,409.91.

The only stock on the Merval index to decline was Petrobras Energia Participaciones (PBE.BA), the local unit of the Brazilian oil giant Petroleo Brasileiro SA, or Petrobras (PBR).

Earlier Wednesday PBE reported a first-quarter net loss totaling 205 million Argentine pesos ($55.4 million), versus an ARS261 million profit a year earlier.

PBE cited lower sales of oil, refined oil and petrochemicals as well as lower sales prices for the decline.

Net sales fell to ARS2.666 billion, compared with ARS3.206 billion a year earlier.

Volume totaled 56 million pesos ($15 million).

The peso weakened to ARS3.7125 to the U.S. dollar versus ARS3.7 the previous day.

Volume totaled $494 million in the exchange market.

-By Taos Turner, Dow Jones Newswires; 54-11-4103-6728; taos.turner@dowjones.com

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