By Taos Turner
BUENOS AIRES--A move by Argentina's government to try to pay
creditors by circumventing U.S. court orders sent most of the
country's debt prices plunging on Tuesday.
Argentina's GDP warrants, which are securities tied to economic
growth, tanked following news that the country will offer to pay
its investors in Buenos Aires rather than in New York. The
government also plans to reopen for a second time its debt swap,
allowing investors holding old defaulted bonds to trade in for new
bonds, at a hefty discount.
The TVPA GDP warrant plummeted 8.9% to ARS66.50; the TVPE fell
4.84% to ARS84.50; the TVYO slid 4.3% to ARS64.50.
At least one security bucked the trend--a bond from the Province
of Salta that is backed by New York law and tied to oil industry
royalties. The SARH bond rose 4% to ARS828.50.
Stocks also had a bad day.
The Merval stock index fell 1.26% at 3,848.02 in volume totaling
almost ARS85.7 million ($15.2 million).
Banco Frances (FRAN.BA) led the declines, falling 4% to ARS14 in
light trading. The steel producer Tenaris SA (TEN.MI, TS) was the
most traded stock. It fell 0.5% to ARS195.
Telecom Argentina SA (TECO2.BA, TEO), which was also heavily
traded, closed unchanged at ARS32.60.
The financial conglomerate Grupo Financiero Galicia SA (GGAL.BA,
GGAL) fell 1% to ARS5.69.
The Argentine peso weakened to ARS5.644 against the U.S. dollar
on the regulated MAE foreign-exchange wholesale market, versus
ARS5.632 in the previous session.
The central bank intervenes in the exchange market daily to buy
dollars and build its foreign currency reserves, while gradually
weakening the peso to help exporters.
In the underground market, the peso weakened at a much faster
rate, closing at ARS9.45 to the dollar versus ARS9.19 in the
previous session, according to the newspaper El Cronista, which
publishes rates collected from black-market traders.
Strict capital controls that limit the amount of foreign
currency Argentines can purchase legally have fueled a parallel
illegal market for dollars where people pay a steep premium for the
U.S. currency.
Write to Taos Turner at taos.turner@wsj.com