Category: Argentina

The IFC, the private-sector arm of the World Bank has granted a $550m loan to the Argentina’s energy firm Pan American Energy. The loan comprises a $150m tranche due 2018, and a $400m tranche – raised by the IFC from a group of commercial banks – $158.2m of which is due in 2014, and $241.5m of which is due in 2015. The money will be used towards an $858m investment in the Cerro Dragon oil and gas field, in the southernmost provinces of Chubut and Santa Cruz. Pan American, a joint venture between BP plc and Bridas Corporation, is Argentina’s second-largest oil and gas producer, accounting for about 17% of the country’s output.

Persisting cold weather has heightened Argentina’s energy crisis and things took a turn for the worse Wednesday. The government ordered a stop to natural gas exports to Chile and told oil companies to halt the sale of natural gas to vehicles at filling stations. Cities like Bariloche were out of power for 14 hours, according to a Goldman report, which notes the abnormal temperatures, while damaging in the short term, may not have a major economic impact in the long run, and should shave but a few decimal points off GDP, expected to top 7% this year.

Argentina’s national statistics agency Indec, the subject of much controversy in recent months, is once again in the spotlight after the government made a second appointment, this time to the department in charge of unemployment and poverty figures. Luis Fara becomes the new national director of the Argentine households survey. Critics say this latest move is a further attack on the bureau’s independence.

Hidroeléctrica Piedra del Aguila, the Argentine utility, priced Tuesday, following the pre-holiday market close, $100m in 9% 10-year amortizing bonds at 98.557 to yield 9.25%. Pricing came at the wide end of the 9.00%-9.25% price range announced last week, and the total proceeds were dropped from $125m to $100m. The issuer opted for a lower amount of proceeds because the yield came in at the higher end of the range, according to an executive close to the deal. The bonds amortize equally in years 7, 8, 9 and 10. HPDA’s offering concludes a short, thin week for LatAm issuance marked by a slight improvement in market conditions. During the previous week, which was characterized by widening Treasury spreads and spikes in volatility, a number of non-LatAm issuers were pushed out of the market, and timing on offerings from Lupatech, Arcor and HPDA was delayed. Merrill Lynch had sole books for HPDA.

Argentina is preparing to issue $500m worth of peso-linked bonds, the second round of issuance from its Bonar V, according to local press reports. On June 7, the sovereign tapped the markets for the same amount in 10.5% 2012 bonds at 95.50 to yield 11.70%. Bankers later said market conditions were among the worst they had been in weeks that day. Still, there was a strong bid for the bonds, with orders coming in at ARP5.3bn for the ARP1.5bn in notes. Argentina is looking to raise funds regularly in the markets to be able to pay down close to $2.5bn in Boden bonds that come due in August and a $900m coupon on its GDP warrants, due in December. On Monday, the outstanding Bonar V were trading at 94.2-95.1, according to one buysider.

Cristina Fernández de Kirchner, the wife of Argentine president Nestor Kirchner, will run for president this October, representing the ruling Peronist party. As of today, she is expected to win a presidential bid, possibly in the first round, for which she would need more than 45% of the votes. If she does win, analysts expect few if any major policy changes, and the strategy to maintain a weak peso will likely remain in place, says a Goldman Sachs report. The only significant changes would be cosmetic, according to the report: “Our impression is that Cristina Fernández could bring change in terms of governing style, presiding over a government that may turn out to be less centralized in terms of decision-making than the current one,” it adds.

Argentine utility HPDA is expected to bring its $125m in10-year non-call 5 bonds today Monday, at 9.00%-9.25%, according to buysiders. The deal was expected to come by the end of last week but choppy markets resulted in the need for additional time. HPDA is the largest private hydroelectric generator in Argentina, and proceeds are being used to refinance debt from restructurings in 1999 and 2004. Merrill Lynch has sole books.

The drop in the price of Argentina’s sovereign bonds of around 7%-10% during this past month has been pushed down further by a sell-off in the paper by Venezuela, says Argentine daily Clarín. The newspaper reports that Venezuela began to sell the notes in May. The paper is held by Fonden, the government development fund set up in 2005. The sell-off by Venezuela in the Argentine and also Ecuadorian paper it holds was aimed at stopping the rise of the Bolivar and to ease inflationary pressures.

Argentine food company Arcor is expected to price $100m in 10-year amortizing peso-linked bonds today, Wednesday. Price guidance is 8.375%-8.500% for the notes, which amortize in the final two years and are rated BB minus. Citi has sole books with Santander Rio and BBVA as joint leads.

Argentina’s Appeal Court has upheld a ruling by the country’s anti-trust regulator to block a $54m bid by US equity firm Eton Park Capital Management for a 50% stake in local electricity transmission firm Transener. The regulator blocked the bid because, it said, the US investment firm did not have sufficient experience of the company’s business in what is a key economic sector. Transener handles 95% of the country’s electricity.