Category: Argentina

Steelmaker ArcelorMittal dropped another South American firm in its shopping cart, agreeing to acquire Argentina’s M.T. Majdalani y Cia. for an undisclosed price. The deal for the family-owned maker of flat stainless steel products awaits regulatory approval. In October, ArcelorMittal paid $542m to buy the third of Argentine steel company Acindar that it did not already own. Last week ArcelorMittal agreed to spend up to $1.75bn to buy out ArcelorMittal Inox Brasil, formerly known as Acesita.

Argentina’s Transportadora de Gas del Norte plans to submit for approval a bond program of up to $400m, it told shareholders in a filing Tuesday. The program will be submitted to investors at a January 22 meeting. The bonds may be denominated in dollars or other currency.

Beatriz Paglieri, the head of price measurements at INDEC, Argentina’s economic statistics bureau, has been removed in an apparent attempt by the new president to wipe the slate clean at the troubled organization. Paglieri was appointed by Guillermo Moreno, minister of interior commerce earlier this year. Many critics say the move was an attempt by the government to place one of their own in the organization to help dress up the official inflation figures, which, according to lower-ranked INDEC employees, dramatically understated the real numbers. A search for a replacement is underway.

Cristina de Kirchner took an oath of office Monday in a ceremony held at Argentina’s congress to become the country’s first woman president. After the swearing in, Kirchner received the presidential sash from her husband and gave a speech that touched on some of the main points of her campaign, which include a general plan to build on the economic successes of the first Kirchner administration. She notes that Argentina has today found a new balance between the two extremes of answering to the IMF’s every whim and wholeheartedly supporting a debt default. She also points to a number of international issues Argentina faces, such as disputes with Uruguay, anti-Israel violence in Buenos Aires, FARC hostages in Peru and the Malvinas Islands, as well as domestic issues close to Argentines’ hearts, such as the human rights violations committed by the military dictatorship.

Argentine corporates, especially utilities, represent attractive opportunities for fixed income investors, according to Anne Milne, head of Deutsche Bank’s LatAm corporate bond research group. They are yielding 10%-13% and would likely rally, especially if there is good news on tariffs. “We could easily see them coming back down below 10%,” says Milne. She adds that Edenor and Transener have returned 15%-17%, while TGS has yielded 13%-14%. Her top picks for 2008 are Edenor and TGS. From a valuation perspective, Milne also likes some of the Mexican industrials yielding 10%-12%, like Vitro and Kuo. “They have definitely outperformed in the short term but more recently widened,” says Milne. The analyst recommends avoiding smaller Mexican homebuilders with no access to capital, such as Demet. Milne also dislikes IUSA, given the impact the US housing slowdown has had. She was speaking on a panel at EMTA’s annual meeting in New York.

Argentina plans to sell $604m in 7% of 2015 Bonars to the Venezuelan government. The deal expands an existing program of the same bonds, most of which have been sold to Venezuela. Separately, Argentina said it will get an $80m loan from CAF. Proceeds from the 15-year facility, priced at 105bp over Libor, will finance a project to upgrade the cross-border transit route between Argentina’s Mendoza province and Chile known as El Pehuenche.

Argentine power distributor Empresa Distribuidora Electrica Regional opened yesterday the books for its offer of up to 155.6m ordinary class B shares in a local and international equity offering. The company anticipates a pricing of ARS3.70-ARS4.40 for ordinary class B shares and $11.75-$13.97 for global depository shares. In addition to Buenos Aires, the sale will also be carried out on exchanges in New York and Luxembourg, marking an IPO for the company in those markets. The owner of three distributors in the Salta, San Luis, and La Rioja provinces plans to use proceeds to cover operating and financing costs and to invest in expansion projects and acquisitions. Emdersa is controlled by a unit of JPMorgan, which is managing the sale along with Merrill Lynch. The selling shareholders, many of whom acquired stakes Emdersa in 2005, are local fund GPU Argentina Holdings, JPMorgan Overseas Capital, Whitewater EMCO and EMCF, and D.E. Shaw Laminar Emerging Markets.

Kirchner II’s new economy minister is Martín Lousteau, a 37-year old economist educated in the University of San Andrés in Argentina and the LSE. The appointment is broadly market friendly, but analysts wonder how much autonomy the current head of Banco de la Provincia de Buenos Aires will have. “The dominant view among observers is that major economic policy decisions will continue to be made by the president and a small inner circle,” says Goldman Sachs. “We expect the new minister to tighten the fiscal stance, try to renegotiate the Paris Club debt, and resort to agreements with labor unions and business sector representatives on wage and price increases to fight inflation,” the shop adds. “He is an opinionated man, who supports a weak peso to promote competitiveness,” says Merrill Lynch. “Louteau should provide more sense to the conduct of macro policy if allowed to act. This remains an unknown,” it adds. Central bank president Martin Redrado is set to remain in his post in charge of FX and monetary policy.

A group led by Argentine executive Enrique Eskenazi is rumored to be lining up a bridge loan to acquire a 25% stake in YPF, the Argentine subsidiary of Spanish oil and gas behemoth Repsol YPF. Bankers away from the deal say the financing is apparently being led by Credit Suisse and is estimated at $4bn. YPF’s market cap was quoted by Economatica at ARP48.7bn Thursday, which would make a 25% stake worth roughly $3.89bn. The deal has been in discussion for months, according to local press reports, though concrete steps to make it happen so far have been limited to statements on the government’s intentions to make it happen. Eskenazi is the owner and CEO of Banco Santa Cruz, based in the southern province of Santa Cruz, where Nestor Kirchner was born and where he became governor in 1991. The two reportedly have personal ties. Argentine corporates have found themselves out of favor in the international debt markets lately, and a bank financing for a private equity-like deal from Argentina is sure to include some challenging pricing dynamics.