UPDATE 1-Argentine assets rise on death of ex-President Kirchner

(Updates with comment, background, market prices)

By Daniel Bases

NEW YORK, Oct 27 (BestGrowthStock) – Argentine shares and bonds
rose on Wednesday after the death of political heavyweight and
former President Nestor Kirchner removed a market-unfriendly
contender from the country’s 2011 election campaign.

Investors immediately bid higher Argentine credit and
equity-related assets following the news Kirchner, 60, husband
and predecessor to current President Cristina Fernandez, died
of a heart attack on Wednesday. For related stories
[ID:nARGENTINA]

“Sincerely, for Argentina and from a market perspective
there is nothing better than knowing that Kirchner will be out
of the presidential race of next year. For years his
confrontational, resentful style towards investors, companies
and bond holdouts deprived Argentina of much-needed capital,”
said Roberto Sanchez-Dahl, who oversees $1.1 billion in
emerging market debt for Pittsburgh-based Federated Investment
Management. Federated manages nearly $337 billion in assets.

In Argentina, Latin America’s third largest economy, a
market holiday muted local prices. But in global markets, the
country’s five-year credit default swaps spread narrowed by 54
basis points to 644 basis points, according to data provider
Markit. Shares of Argentine companies listed in New York surged
on the news. BNY Mellon’s Argentina ADR index (.BKAR: ) rose as
much as 13 percent before easing back to a 6.91 percent rise.

While no longer president, Kirchner’s influence in shaping
policy within his wife’s center-left administration was
formidable. His combative and outspoken criticism of big
business and political rivals did not endear him to
international investors. Kirchner was widely expected to run
for re-election in 2011.

“This reduces political risks. If there is a possibility
that this could lead to a more market-friendly and transparent
leadership in time,” said Richard Segal, analyst Knight
Libertas in London.

Argentina is still wrestling with fallout from its $100
billion sovereign default in 2002. Kirchner, president from
2003 to 2007, refused to settle with hold-out investors who
sued the government over the default. The move stopped
Argentina freely raising capital in international markets.

The nation’s credit rating only recently came off the
bottom rung as the nation moved to clean up defaulted bonds, a
process it has yet to complete.

As a populist president, Kirchner oversaw Argentina’s
recovery from the 2001-02 economic collapse. Many Argentines
credit him with fighting poverty and unemployment in a country
that is the world’s largest exporter of soy oil and third
biggest soybean exporter.

“From a world view you tie that with their friendship with
(leftist Venezuelan President Hugo) Chavez and that from a
market standpoint is seen a bit anti business,” said Bryant
Evans, portfolio manager at Cozad Asset Management, in
Champaign, Illinois.

The accuracy of government economic statistics became
widely questioned during Kirchner’s time in office, and remains
so today.

“One aspect that will be interesting to know is whether his
death will help sweep away all the cronies. If it opens the
door for a clean-up of the administration, then I would think
this adds one positive to the credit,” said Jean-Dominique
Butikofer, who manages $850 million in emerging market bonds
for UBP Asset Management in Zurich.

Argentina’s restructured U.S. dollar-denominated debt rose
on Wednesday. The 2033 Global Discount bonds were bid up 3.062
points in price to 92.25 (ARGGLB33=RR: ). The 2038 Par bonds were
bid up 0.812 points in price to 44.625 (ARGGLB38=RR: ).

The spread between the yield on benchmark Argentine bonds
and comparable U.S. Treasuries narrowed by 51 basis points to
530 basis points, with total returns up 4.19 percent, according
to the benchmark JP Morgan Emerging Markets Bond Index Plus
(11EMJ: )(.JPMEMBIP1LUS: ).

(Additional reporting by Rodrigo Campos in New York,
Guillermo Parra Bernal in Sao Paulo and Sujata Rao-Coverley in
London; Editing by Andrew Hay)

UPDATE 1-Argentine assets rise on death of ex-President Kirchner