October 30, 2008 / 8:39 PM / 12 years ago

Argentina bonds reverse long fall, stocks rise

(Recasts throughout, adds closing prices)

BUENOS AIRES, Oct 30 (Reuters) - Argentine bonds rose on Thursday, reversing an 11-session rout as investors finally spotted buying opportunities after prices were severely punished by the global crisis and local uncertainty.

Stocks jumped as private pension fund managers followed government orders to get out of Brazilian shares, and bought up Argentina-listed papers of the same companies. But the peso currency weakened as the Central Bank stayed out of the market.

Sovereign bonds rose an average 0.5 percent in local over-the-counter trade, led by long-term issues, but prices were still extremely low, reflecting concerns about Argentina’s ability to meet debt obligations that rise to more than $20 billion next year at a time when global credit is tight.

The 2038 dollar-denominated Par bond ARPARP=RASL rose 5.0 percent to an ask price of 14.70, while the 2033 dollar-denominated discount ARDISCD=RASL rose 4.2 percent to an ask price of 24.65.

“Every moment, as painful as it might be, eventually turns into an opportunity for those who know how to take advantage of it,” said Datarisk consulting firm in a report.

Argentine debt prices on the domestic market plunged an average 65 percent in October through Wednesday, first because of the global financial crisis, then hit by the government’s plan to takeover the private pension system.

The pension takeover bill, which still has to get through Congress, was seen as possibly drying up liquidity on Argentina’s small capital markets, and also as a sign that the government was desperate to find funds for next year’s debt obligations.

The MerVal index .MERV of the leading stocks rose for a third straight session after steep losses last week. The MerVal jumped 6 percent to close at 973.56 points, in heavy volume of $63 million. Of active issues 57 advanced, 19 declined and nine were unchanged.

Volume was high because the government ordered private pension fund administrators to repatriate investments from Brazil and they transferred into Buenos Aires-listed shares of the same companies.

Brazilian mining company Vale’s Buenos Aires shares VRIO.BA rose 14.8 percent and it was the value leader of the session.

In the foreign exchange market, the peso currency weakened, in low volume. In formal trade between banks the peso slipped 0.52 percent to 3.3825/3.3875 per dollar ARS=RASL. In informal trade between foreign exchange houses, as measured by Reuters, the peso ended a tad weaker at 3.4650/3.4750 per dollar ARSB=.

“The Central Bank let the dollar rise to cloak the market with some intrigue. That way investors won’t be counting (on the central bank) to set a floor of 3.37 (pesos per dollar),” said a trader who asked not to be named.

A day earlier the peso strengthened after the central bank put $1 billion in greenbacks on offer in the market.

Fernando Izzo, an analyst at ABC Mercado de Cambios foreign exchange house, said the trend was still demand for dollars and the Central Bank would have to intervene on Friday to prevent further weakening in the peso, which has been trading at its softest levels since the 2002 currency devaluation. (Reporting by Walter Bianchi, writing by Fiona Ortiz; Editing by Diane Craft)

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