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February 19, 2014


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I wouldn't say it's as much to "protect" the price of current bond issues as it is to allow Argentina to issue. Repsol trying to sell $5bn on the open market is equivalent to issuing $5bn on the open market (ok, not exactly, but you get my point). $5bn for Argentina today is a massive issuance. That basically makes it almost impossible for Argentina to issue anything over the next couple of years (it's not just a higher yield, at some point it just becomes difficult to get investors to absorb all of that because of risk limits, balance sheets, blablabla). Oh, and why just two years? Well you have a new presidential administration then, and so CFK is less concerned about that and investors are likely to be less concerned then too (or at least that's the current expectation). I think the interesting story here is that Argy really wants to issue (or at least preserve that option)

(Slaps head.) That makes sense! CFK gets the option to issue new bonds if she needs to. Any pressure on Argentina's borrowing capacity gets pushed to the next administration.

Of course, if markets were efficient, then it wouldn't make any difference, but pigs and wings and all that.

I just recently came across your blog and it was like a glass of fresh water in the desert. Interesting ideas and appreciations in particularly on energy matters -my interest- but as well on all other topics. Keep up the good work Noel, I enjoy reading your contributions !

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