Argentina's Buenos Aires Province Confirms Payments on 2017 Bonds
By Ken Parks
BUENOS AIRES--Argentina's Buenos Aires Province said Friday that it will make payments next Monday on its U.S. dollar and euro-denominated bonds as it sought to calm jittery investors after currency controls forced a province to use pesos to pay its local dollar bonds.
The province said it already has transferred $48.8 million to pay its 2017 dollar bond and EUR19.7 million for its 2017 euro bond. Both bonds were issued under New York Law.
"Buenos Aires Province has been able to purchase foreign currency on the exchange market...to pay offshore debt without any problems," the provincial government said in a statement.
The province's dollar bond fell 0.8% to ARS505.00, yielding 1.52%.
Argentina's fixed-income market was roiled this week after Chaco Province made a payment in pesos on two dollar-denominated domestic bonds because the central bank didn't allow it to purchase dollars.
While it is unclear if a technical default occurred, the news revived fears that Argentina might forcibly convert dollar-based contracts into pesos. That is exactly what happened 10 years ago, when the government at the time converted virtually all dollar-based contracts into heavily devalued pesos amid a deep economic crisis.
Rumors that the government would turn dollar bonds into the Argentine currency or mandate debt payments be made in pesos surfaced earlier this year amid a broad push by the government to restrict the use of the dollar in the economy.
Those "pesofication" fears largely disappeared after President Cristina Kirchner's government made a $2.2 billion payment on the local law Boden 2012 in early August.
But the Chaco incident has investors once again fretting about the sanctity of dollar contracts in Argentina.
In an attempt to calm markets and clarify its policies, the central bank said Wednesday that public- and private-sector borrowers that issued offshore bonds can buy hard currency to pay interest and principal on that debt.
Issuers who sold foreign currency-denominated bonds under Argentine law to finance infrastructure projects will also be allowed to access the exchange market to pay those debts.
"Current rules don't contemplate the possibility of accessing the exchange market for other types of local issuances," the central bank said.
Write to Ken Parks at ken.parks@dowjones.com
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