Argentina's battered bonds were driven still lower on Friday after a credit...
LONDON/BUENOS AIRES - Argentina’s battered bonds were driven still lower on Friday after a credit rating cut from Standard & Poor’s triggered automatic selling mechanisms at big German pension funds.
The cut took the average rating between the big three rating firms - S&P, Moody’s and Fitch - down to CCC. For many big German institutions that level is classed as too risky to hold under Versicherungsaufsichtsgesetz or VAG rules.Argentina’s 2033 euro-denominated bonds slumped 4.7 cents AR020554584=and a 2027 version dropped nearly 2 cents AR150316049=. The peso traded 2.48% weaker at 59.37 to the U.S. dollar, extending losses so far this year to 36.49%.
Friday’s selling extended the rout in Argentina’s markets since business-friendly President Mauricio Macri was thumped by populist-leaning Peronist Alberto Fernandez in primary elections this month. The general election, with Fernandez now the clear front-runner, is in late October. The central bank said on Friday it would start buying short-term debt from local mutual funds affected by the government’s plan to extend its bond maturities. Funds were adjusting their operations to be able to function “normally”, according to a release issued by Argentina securities regulator on Thursday.The central bank sold $169 million in reserves on Friday at an average 59.1301 pesos per dollar in its first currency market intervention of the day, traders said.
They also fear the plan to extend maturities will do little more than buy time and fail to prevent a more serious financial crisis further down the line.
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