By Taos Turner
BUENOS AIRES--Argentine securities linked to economic growth,
known as GDP warrants, surged Monday after the Federal Reserve Bank
of New York submitted a letter that some believe could help the
South American nation in its legal dispute against "holdout"
bondholders in a U.S. federal court case.
The TVPA GDP warrant soared 5.33% to 84 Argentine pesos
($17.50), the TVPP rose 2.62% to ARS16.06 and the TVPY jumped 5.86%
to ARS81.10.
In a letter submitted to the court, the New York Fed said that
depending on how the court rules, the case could have undesired
implications that go beyond Argentina and its relationship with its
bondholders.
The Fed's counsel said the possibility of an injunction seizing
funds transferred to creditors could be "overbroad and could have
operational ramifications that impede the smooth and efficient
operation of the payments system."
Some analysts interpreted this to mean that the judge in the
case might be less inclined to rule against Argentina. Local media
reported that Argentina's finance secretary was "surprisingly
pleased" by the Fed letter.
A U.S. appeals court in late October ordered Argentina to begin
paying Elliott Management Corp.'s NML Capital Ltd. and other
holdouts alongside the rest of its creditors and sent the case back
to federal Judge Thomas Griesa in New York to determine how such
payments should be made. Those hearings are under way, and Judge
Griesa has said he wants to move quickly.
Judge Griesa has awarded about $1.6 billion to NML, which last
month managed to get a Ghanaian court to seize the ARA Libertad, an
Argentine navy training ship which had put into port there, as
compensation.
Argentina has been battling the holdouts, which it calls
"vulture funds," for a decade. While it has paid those who took a
restructuring deal of about 33 cents on the dollar for 93% of the
defaulted bonds, officials have repeatedly said the holdouts won't
get a penny.
The dollar-denominated 2017 Bonar X bond rose 1.73% in price
terms to ARS520 ($108), while the dollar-denominated 2015 Boden
bond rose 1.8% to ARS567.
Meanwhile, the peso weakened slightly to ARS4.8045 to the U.S.
dollar on the MAE foreign-exchange wholesale market, compared with
ARS4.80 in the previous session.
On the black market--where residents pay a premium to skirt
government restrictions on dollar buying--the exchange rate
weakened to between ARS6.35 and ARS6.40 to the dollar, according to
financial newspaper El Cronista.
Argentina's benchmark Merval stock index closed a bit higher,
ended up 0.53% at 2,295.33 points in volume totaling about ARS25
million ($5.2 million).
The aluminium company Aluar Aluminio Argentino SAIC (ALUA.BA)
led the gains, rising about 1.9% to ARS2.10 while the oil producer
YPF SA (YPFD.BA, YPF) led the decliners, falling 3% to ARS68.50.
The most-traded stock belonged to Grupo Financiero Galicia SA
(GGAL.BA, GGAL), which rose about 3.7% to ARS3.40.
Write to Taos Turner at taos.turner@dowjones.com