Argentina's Bond Prices Up on Potential IMF Backing in Debt Case

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   By Prabha Natarajan 
 

Argentina's bond prices surged on the news that it may get the backing of the International Monetary Fund in its debt case.

After market close, news broke that the IMF is preparing to back Argentina and may file a brief in support of the sovereign's petition in the Supreme Court that requests an overturn of a lower court's ruling.

This unexpected support from the fund provided a pop to Argentina's bonds, though trading usually is light, especially now since most investors have scaled back their holdings of these bonds due to the taint of litigation.

Argentina's 2017 global bond saw its yield fall to 16.7% from 17.752% prior to the IMF support, according to data provider Markit. The bond's price rose to 78 cents on the dollar from 75.5 cents. Bond yields move inversely to prices.

The 2015 bond also saw its yield narrow to 13.11% from 13.154%, according to Markit.

Argentina has been fighting a long battle with the holdout creditors of the bonds on which the sovereign defaulted in 2001. Several distressed debt funds had bought these bonds and have been seeking Argentina to make payments on these bonds. Argentina has been making regular payments on its restructured bonds, but hasn't been able to make a deal with the holdout creditors.

Last year, a U.S. federal court ruled that Argentina would have to make payments to these creditors; a decision on a payment plan to these creditors is expected anytime.

Meanwhile, in June, Argentina filed a petition with the U.S. Supreme Court seeking an overturn of the lower court's ruling.

-Ian Talley and Thomas Catan contributed to this article.

Write to Prabha Natarajan at prabha.natarajan@dowjones.com

http://online.wsj.com/article/BT-CO-20130717-712642.html?mod=googlenews_wsj