Argentina sells enough securities to roll over debt

In a local debt auction in June, Argentina sold enough securities to roll over its debt due in the month of June, easing concerns of an immediate financing shortfall.

The economy ministry said that the government raised 248 billion pesos $2 billion in local instruments in a key debt sale Tuesday night, enough to roll over all its bonds by the end of the month. The nation has around 16 billion pes in net new financing through its local debt auctions in the month of June, according to the statement.

The sale was seen as a barometer of market sentiment after a sell off in peso securities in recent weeks on jitters that Argentina's inflation-linked debt, which makes up the majority of the government's local obligations, will become a growing burden as prices increase. The yield on short-dated notes has gone above 12% in secondary-market trading, providing an all-in rate of more than 70% at current inflation rates.

The results are pretty good, given the situation of the past few weeks, said Juan Manuel Pazos, chief economist at broker TPCG Valores in Buenos Aires. The government will still be facing large maturities in the coming months, especially in September, despite the fact that there was no net new money in this auction. Argentina's bonds edged up on the news, with dollar-denominated bonds due in 2030 inching up 0.24 cents to about 22.4 cents on the dollar as of 4: 45 pm in New York.

Economy Minister Martin Guzman said in an interview with local radio that Argentina's local debt is absolutely sustainable and an anchor for the whole economy.

According to Portfolio Personal Inversiones, about 90% of which is thought to be held by private investors, Argentina is seeking to refinance about 245 billion pesos of local debt by the end of the month. The government exchanged an additional 358 billion pesos in a swap last week, and hiked interest rates three percentage points on June 16 to encourage investors to hold more peso denominated paper.

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