Argentine Bonds Gain as Primary Indicates Runoff a Possibility
Argentine bonds rallied after the nation’s presidential primary elections signaled President Cristina Fernandez de Kirchner’s ruling party candidate will struggle to win in a first-round vote in October.
The nation’s 2033 dollar bonds gained 1.4 cents on the dollar to 100.9 cents, an eight-week high, according to data compiled by Bloomberg. While the bonds haven’t been paid in more than a year, they’ve increased 14 percent over that time on speculation Fernandez’s successor will unwind policies that helped trigger Argentina’s second default in 13 years.
With about 89 percent of the votes counted, the results of the Sunday election imply that Daniel Scioli, the ruling Victory Front alliance candidate, won’t get enough votes to win in the first round of presidential voting Oct. 25 and will face opposition leader Mauricio Macri in a runoff. The tight race reflects a push for changes in policy that have fueled inflation, slowed economic growth and prevented the nation from raising money from international markets.
“The results suggest that even if Scioli wins, the demand for changes is strong,” Alejo Costa, a strategist at Buenos Aires-based Puente Hnos SA, said in an e-mailed response to questions.
Scioli won 37.98 percent of votes counted in preliminary results. The opposition alliance headed by Macri received 30.55 percent support, while Sergio Massa’s dissident Peronist alliance known as UNA obtained 20.51 percent. The leading candidate needs 45 percent of the votes or more than 40 percent with a margin of victory of 10 percentage points in October to avoid a run-off Nov. 22.
The extra yield investors demand to own Argentine bonds over Treasuries fell 0.13 percentage point to 5.78 points at 9:25 a.m. in Buenos Aires, JPMorgan Chase & Co. data show.
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