Argentina Stocks Gain as Banks Rise After Favorable Court Ruling

  • Country slated to issue $15 billion in bonds to pay creditors
  • `Milestone' decision means country can resume bond payments

Argentina’s benchmark stock index rose to a five-week high and its benchmark bonds extended gains after a U.S. Court of Appeals ruling opened the door for the country to return to international debt markets.

The Merval gauge jumped 4 percent as of 12:26 p.m. in New York to the highest since March 9, let by gains in financial shares, as all 15 members of the index advanced. Overseas bonds due in 2033 climbed 0.9 cent to a record 122.53 cents on the dollar. The peso strengthened 0.8 percent to a two-month high of 14.34 per dollar.

Investors are betting on a surge in investment into South America’s second-largest economy after the U.S. appeals court upheld a ruling allowing the nation to repay its overseas creditors, clearing the way for a new bond sale and the completion of a settlement with creditors who sued the country after its $95 billion default in 2001. Government officials have said they’re seeking to issue as much as $15 billion of bonds within a week of the ruling, which would be the biggest sovereign sale for an emerging market since at least 1999.

"The decision clears the future for Argentina and its long-term panorama," said Christian Reos, the head of research at Buenos Aires brokerage Allaria Ledesma. "This is a milestone that will allow the normalization of dollar flows into the country. We’re already seeing the positive effects on Argentine stocks today."

Grupo Financiero Galicia SA contributed the most to the Merval’s advance as it climbed 6.3 percent, the most since October. Banco Macro SA added 6.5 percent ans BBVA Banco Frances SA gained 5.8 percent.

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