As Argentine Debt Drama Wears On, Hope For Energy Stocks
1:23p ET September 15, 2014 (Dow Jones)
By Dimitra DeFotis
U.S. shares of Argentine energy companies were volatile Monday as oil prices traded sideways.
The international Brent crude price is flat on the day, while the benchmark U.S. oil price is up 0.3%.
Argentine energy exploration and refining company YPF ( YPF) stock was up 0.5% after rising more than 1.5%, while oil-and-gas exploration company Petrobras Argentina ( PZE) sank 1.5%. Electricity producer Pampa Energia ( PAM) slipped into negative territory, down 0.5%. Shares of the iShares Latin America 40 ETF ( ILF) are down slightly today.
Argentina is No. 3 worldwide in shale-gas reserves, and No. 4 in shale oil, according to the U.S. Energy Information Administration. (see Barron's feature on YPF, " Undervalued Shale Energy Stock Could Triple," Dec. 14, 2013, subscription required.)
Last week, Argentina's legislators approved a plan to circumvent U.S. jurisdiction on its bonds as it works out terms with its creditors, most of which agreed to exchange old claims for new claims worth 30 cents on the dollar. The Argentine government has refused to repay U.S. hedge funds are suing for 100 cents on the dollar, which resulted in another Argentine bond default in July. The hedge funds purchased Argentine bonds on the cheap in the country's 2002 default on about $100 billion in debt, all of which stemmed from the deep economic crisis in 2001. Argentina feels vindicated by United Nations support for a bond restructuring plan, Reuters reported.
The new legislation allows the government to pay its foreign-currency denominated bonds locally or in France. However, the U.S. judge in the case, District Judge Thomas Griesa, could find Argentina in contempt and fine the government, The Wall Street Journal reported
