July 22 (Bloomberg) -- Argentine inflation-linked peso bonds rose, with yields sliding to a nine-month low, after the government said it will create an academic panel to review the methodology the National Statistics Institute uses to measure consumer price increases.

Economists and politicians, including Vice President Julio Cobos, have questioned the government’s data since former President Nestor Kirchner began changing personnel at the institute in January 2007. Critics say Indec, as the institute is known, underestimates inflation and overstates production and growth in South America’s second-biggest economy. The panel will review all statistics since 1999 and its report will be sent to Congress, Economy Minister Amado Boudou said yesterday.

The plan to review the data is “positive,” said Alberto Bernal, head of fixed income investments at Bulltick Capital Markets in Miami. “The fact that Congress will review the panel’s findings will help build investor confidence regarding the results.”

The yield on Argentina’s benchmark 5.83 percent peso bonds due in 2033 dropped 67 basis points, or 0.67 percentage point, to 12.76 percent, the lowest since Oct. 8, at 4:54 p.m. in New York, according to Citibank Inc.’s unit in Argentina.

Annual inflation in Argentina slowed to 5.3 percent in June, the lowest rate in four years, according to Indec. Alejandro Cuadrado, an economist at Banc of America Corp. in New York, estimates the actual rate is about triple that at 15 percent.

‘End to Questions’

“The goal is to put an end to questions over the institute,” Boudou said. “We’ll work with the academic panel to determine the best practices there are in the world in order to incorporate them.”

Reforming Indec may help the government reach an agreement with the International Monetary Fund to receive aid and improve its chances of reaching an accord with holders of about $20 billion of defaulted debt kept out of a 2005 settlement, Bernal said. It could also pave the way for Argentina to access international credit markets in the future, he said.

The extra yield investors demand to own Argentina’s dollar bonds instead of U.S. Treasuries shrank 51 basis points to 10.01 percentage points, according to JPMorgan Chase & Co.

The plan to review the data “should provide some potential upside on peso Discount and CER bonds for near-term buyback speculation and eventual more thorough INDEC reform,” RBS analyst Siobhan Morden wrote in a report from Greenwich, Connecticut. “We remain bullish on a view of near-term solvency and normalization of credit spreads.”

Credit Default Swaps

Five-year credit-default swaps based on Argentina’s bonds slid 39 basis points to 19.06 percentage points, according to Bloomberg data. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

Credit-default swaps, which are used to hedge against losses or to speculate on a company’s or a country’s ability to repay its debt, pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent.

Boudou reiterated in radio interviews today the government’s position that it will not accept IMF oversight as a precondition to clear its $6.7 billion in defaulted debt with the Paris Club of lenders.

“The ideological and dogmatic rejection of the IMF is in our view counterproductive and one of the reasons why market confidence towards the credit remains weak,” Goldman Sachs Group Inc. economist Alberto Ramos wrote in a report today.

To contact the reporter on this story: Drew Benson in Buenos Aires at abenson9@bloomberg.net

Last Updated: July 22, 2009 17:02 EDT