Argentine stocks rallied to historic highs on Friday in the heaviest volume since October after the Senate approved a law prohibiting future debt swap offers, traders said. The MerVal index of the 12 leading stocks jumped 2.09 percent to 1,428.54 points, surpassing a previous record high set on Thursday. Trade volume was $48.1 million.
The government sent a bill to Congress on Wednesday that aims to ban any future settlements with holders of defaulted debt beyond the February 25 deadline for the current offer to restructure $102.6 billion in bad debt.
The Senate approved the bill on Thursday and next week the lower house is expected to give it final passage.
Local traders see the bill persuading some undecided investors to sign up for the government's offer and comes as large creditors groups urge investors to hold out in order to negotiate a better deal in court down the road.
"It's possible that this measure (Senate approval) will mean that the success of the swap we originally expected may actually happen. All news on the swap generates a short-term trend in the stock market," said Juan Pablo de Bary, trader with De Bary y Compania brokerage.
Heavyweight Group Financiero Galicia GFG was the top percentage gainer, climbing 1.96 percent to 2.60 pesos. Steelmaker Acindar jumped 2.57 percent to 5.98 pesos.
The debt swap reached the halfway mark on Friday, which was also the deadline for retail investors to sign up for the par bonds, one of three bonds on offer.
In the foreign exchange market, the peso closed flat on dolar-buying by the central bank and state-owned Banco de la Nacion to prevent the currency from strengthening, traders said.
The peso closed at 2.92/2.925 pesos per US dollar, unchanged from Thursday.
The market is awash with dollars from exporters' returns but with no strong demand, leading the Central Bank to extract an average of $40 million in dollars daily this week. Traders said the Banco de la Nacion normally buys bigger volumes of dollars.
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