EMERGING MARKETS-Latam markets stable as Fed awaited; Argentina bonds slide

Wed Jun 18, 2014 1:32pm EDT

SAO PAULO, June 18 (Reuters) - Latin American currencies
strengthened slightly on Wednesday while stocks were near flat,
as investors remained in a holding pattern ahead of a key U.S.
Federal Reserve policy statement due later in the afternoon.
    Meanwhile, Argentina debt prices continued to fall as
investors reacted to the country's proposal to place its
restructured debt under local law.
    While little change is expected in the Fed's outlook for
interest rates, investors are on the lookout for new details on
the planned exit from its current easy monetary policy.
 
    "We don't have any big news and the market is waiting for
the Fed. The (dollar's) gains (Tuesday) were exaggerated because
of the low trading volume caused by the Brazil (World Cup) game
and now it is retreating a bit," said Joao Medeiros, head of
currency trading at Sao Paulo brokerage Pioneer.
    Stock markets were calmer in the region, with most indexes
unchanged to slightly higher. The MSCI Latin American stock
index snapped a four-session losing streak,
though its gains were slight.
    While Argentine stocks were little changed, its
bonds fell after Economy Minister Axel Kicillof said on Tuesday
that the country is taking steps to swap bonds governed by U.S.
law for those governed by Argentine law so they would not be
subject to U.S. courts that have made paying existing
bondholders more difficult. 
    The move comes after the U.S. Supreme Court left intact
lower court rulings ordering the country to pay holdout
creditors that declined to accept the government's settlement
after a 2001 default.
    "In our view, the likelihood of another stage of
negotiations with holdouts ... has declined, while the risk of a
technical default has increased," Federico Rey Marino, an
analyst at Raymond James, wrote in a client note late on
Tuesday.
    Argentina's dollar-denominated 2017 Global bond
 fell about a point to bid 81.42 with the yield
rising to 17.03 percent, according to Thomson Reuters data. Its
dollar-denominated discount bonds due in 2033 fell
1.6 points in price to 71.86 cents, boosting the yield to 12.57
percent.
    Lawyers for Argentina and for hedge funds that did not take
part in its debt restructuring are scheduled to appear in
federal court in New York on Wednesday in what could be a
last-ditch attempt by the country to avoid default.
 
    
    Key Latin American stock indexes and currencies at 1639 GMT:
        
 Stock indexes                               Daily   YTD pct
                               Latest          pct    change
                                            change  
 MSCI Emerging Markets          1,042.52      -0.1      4.07
                                                    
 MSCI LatAm                     3,355.93      0.24       4.6
                                                    
 Brazil Bovespa                54,377.04      0.14      5.57
 Mexico IPC                    42,619.41      0.02     -0.25
 Chile IPSA                      3,832.2      0.12      3.60
 Chile IGPA                    18,736.69      0.05      2.80
 Argentina MerVal               7,485.99     -0.28     38.86
                                                    
 Colombia IGBC                 14,190.31     -0.31      8.56
 Peru IGRA                      16,383.5      0.36      4.00
 Venezuela IBC                  2,157.37      N/A     -21.17
                                                            
 Currencies                                  Daily   YTD pct
                                               pct    change
                                  Latest    change  
 Brazil real                      2.2518      0.16      4.66
 Mexico peso                     13.0636      0.43     -0.26
 Chile peso                        558.5      0.21     -5.80
 Colombia peso                  1,893.29      0.46      2.04
 Peru sol                          2.801      0.07     -0.29
 Argentina peso (interbank)       8.1275      0.03    -20.12
                                                    
 Argentina peso (parallel)          12.3     -0.41    -18.70
                                                    
 
 (Reporting by Asher Levine and Bruno Federowski, editing by G
Crosse)
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