JPMorgan Raises Argentine Bonds to Overweight, Cuts Venezuela

JPMorgan Chase & Co. (JPM) raised Argentine bonds to overweight from marketweight, saying debt prices already reflect investor concern about capital controls and nationalizations and that economic growth could quicken.

“Argentina’s economy has touched bottom and is in the process of benefiting from both a cyclical lift and a more comfortable balance of payments position that should extend into 2013,” Vladimir Werning, a JPMorgan economist in New York, wrote in a report.

While government intervention “will continue to generate headline risk,” it is already reflected in asset prices, Werning said.

The government is scheduled to release second-quarter growth figures on Sept. 21. The economy probably expanded 0.5 percent in the quarter from the year-earlier period, according to the median forecast from 10 analysts surveyed by Bloomberg.

While raising Argentine debt to overweight, JPMorgan cut Venezuela to marketweight after a four-month rally in the securities.

The extra yield investors demand to own Argentine government dollar debt over U.S. Treasuries fell 24 basis points to 846 basis points at 6:20 p.m. in Buenos Aires while Venezuela’s bond spread rose 10 basis points to 956 basis points, according to JPMorgan’s EMBIG index.

To contact the reporter on this story: Camila Russo in Buenos Aires at crusso15@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net