Barclays Sees Bogus Growth Boosting Warrants: Argentina Credit

Warrants tied to Argentina’s economy are posting the biggest gains this year on speculation President Cristina Fernandez de Kirchner’s increased spending before mid-term elections will bolster growth and ensure a payout for holders of the securities.

The warrants, which pay investors if Argentina’s economy grows 3.22 percent this year, jumped 25 percent in the past week, the biggest gain since the five-day period ended Dec. 5, to 7 cents on the dollar. The notes surged after the government said June 27 the economy expanded 7 percent in April from a year earlier, exceeding the 5 percent median estimate. The jump was nine times more than Argentina’s dollar-denominated bonds in the same span and exceeded the 3.09 percent gain for emerging-market notes, according to JPMorgan Chase & Co.