Venezuelan and Argentinean Presidents Hugo Chávez and Néstor Kirchner, respectively, are expected Tuesday or Wednesday to announce the second joint issuance of the Bond of the South for some USD 1 billion, according to financial sources.

Kirchner late Tuesday is kicking off an official visit to Venezuela during which he is to initial trade agreements, promote the creation of the Bank of the South, define the Venezuelan financial aid to Argentinean dairy cooperative Sancor and announce the first joint drilling of an oil well by Venezuelan and Argentinean state oil firms Pdvsa and Enarsa.

The Venezuelan Legislature okayed a debt issuance for some USD 2.4 billion, a part of which are to be used to launch the second issuance of the Bond of the South together with Argentina.

Last November, the Bond of the South hit the market for the first time, comprising USD 500 million in Venezuelan titles and other USD 300 million in Argentinean Boden 12 bonds and USD 200 million in Argentine Boden 15.

These bonds are attractive for Venezuelan investors as they allow for legal purchase of foreign currency amidst stringent exchange controls in force since 2003.

For Chávez' Government this is a chance to mitigate market tensions that have pushed up the parallel exchange rate to the US.

Further the Bond of the South would help Venezuela absorb liquidity, a factor boosting inflation in the country. Last January, inflation jumped 2 percent. Should inflation keep this trend, the figure in 2007 would be 27 percent.