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Argentina Stock Index Surges to Record on Outlook for Debt Deal

By Camila Russo
July 08, 2014 4:30 PM EDT 1 Comments

Argentina’s benchmark stock index surged to a record on speculation the South American nation will reach an agreement with holders of defaulted debt after officials met with a mediator yesterday.

The Merval (MERVAL) stock index rose 2.1 percent to 8,321.04, the highest level ever. Pampa Energia SA was the biggest gainer, surging 5 percent to 4.19 pesos, also a record.

Argentine Economy Minister Axel Kicillof met yesterday with Daniel Pollack, the court-designated mediator, for four hours in New York, and government officials will hold additional talks with Pollack on July 11. Argentina is ready to negotiate, Kicillof said in a statement today.

“The market is looking at every single step backward and forward that the Argentine government makes,” Rafael Di Giorno, director at Buenos Aires money manager Proficio Investment SA, said in a telephone interview. “The talks with the mediator were taken as progress toward a deal with the holdouts.”

About 7 percent of Argentina’s creditors refused to take losses of about 70 percent in 2005 and 2010 debt restructurings after the country’s record $95 billion default in 2001. Some of those investors, led by billionaire Paul Singer’s Elliott Management Corp., are demanding full payment in court.

The case is coming to a head after the U.S. Supreme Court on June 16 left intact lower-court orders for Argentina to pay holdouts at the same time it pays its restructured bonds. U.S. District Judge Thomas Griesa blocked trustee Bank of New York Mellon Corp. on June 27 from making an interest payment on the notes.

Argentina is using a 30-day grace period that began June 30 to try to find a solution to its conflict with holdouts and avert a default on the restructured bonds.

To contact the reporter on this story: Camila Russo in Buenos Aires at crusso15@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Dennis Fitzgerald

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