Argentina is to sell peso-denominated six-year notes for the first time since the country defaulted on US$95bn of debt, central bank president Martin Redrado has said.

The sale reflects a rebound in investor confidence in Argentina, which has posted two years of economic growth above 8% and a record budget surplus. The yield investors demand to purchase Argentina 10-year bonds has declined by 20% during the past three years.

The appointment in September 2004 of Redrado has helped stoke optimism among potential investors.

Redrado is now taking steps to bolster economic expansion. In November, he loosened banking regulations to foster lending and followed up with the revival of sales of four- year bonds in December.

Before the default in late 2001, Argentina sold domestic debt due in as long as 15 years.

After the default, Argentina was unable to sell debt for three months. When the government returned, it sold securities with maturities of no longer than seven days.

“We want to build a yield curve that can give the market some direction,” Redrado claims. “We will be testing five or six-year notes this year.”
As part of his effort to lure capital, Redrado also plans to allow investors to use the US currency to buy dollar-denominated debt, such as Boden bonds, in the domestic market – a measure that will cut investors’ costs. The practice was suspended after the default to reduce demand for dollars and help strengthen the local currency.

“Very soon investors will be able to use dollars to buy dollar-denominated securities in the local market,” says Redrado. “That’s a decision that’s been made.”