Category: Argentina

Merrill Lynch has upgraded its 2006 and 2007 growth expectations for Argentina based on the data published this quarter that suggests no landing in the third quarter. The Bank raised forecasts for 2006 from 8.1% to 8.4% and for 2007 from 6.0% to 7.0%. It said it expected economic activity this year to grow “2.5% on a quarter-on-quarter, non-annualized, seasonally adjusted basis – similar to Q2 and faster than the Q1’s 1.1%”. For next year, it foresees “Chinese-like rates of GDP growth, stable inflation (roughly 10%) and twin surpluses.” However, the Bank warned that, in its opinion, the government’s heavy-handed micro policies would have limited success in the longer term and have negative implications on investment.

Argentina and Spain are to sign an agreement by the start of December setting out the repayment of Argentina’s $960 million debt to Spain. According to Spain, the Latin American nation will repay the debt by 2012. The debt forms part of the $6.5 billion still outstanding to the Paris Club group of lenders. The announcement of the forthcoming agreement was made at the Ibero-American Summit held in Uruguay following meetings between the two countries.

Argentina is awaiting the first infrastructure securitization to come to market later this month, due to be launched by gas companies Transportadora de Gas del Sur (TGS) and Transportadora de Gas del Norte (TGN). The securitization, backed by gas receivables, will total $600 million and will replace original financing from international and domestic oil companies with that of institutional investors. It is being structured by Nación Fideicomisos. Early next year, another infrastructure securitization is expected totaling $75 million – to finance the paving of rural roads. Argentina’s private pension funds (AFJPs) are expected to take a strong interest in investing in the new instruments as they represents a way of investing in the real economy. To date, only a small fraction – around 3% – of the $25 billion the AFJPs manage has been invested in structured finance.

Félix Alberto Camarasa is stepping down from the board of Argentina’s Central Bank (BCRA), a position he has held since June 2002. The departure of Camarasa leaves the following board members: Zenón Biagosch, Arnaldo Bocco, Eduardo Cafaro, Waldo Farías, Jorge Levy, Arturo O’Connell and Luis Corsiglia.

Eduardo Hecker, formerly head of Banco Ciudad, has taken over as head of Argentina’s securities commission, CNV. He will be joined by Alejandro Vanoli, who becomes vice-president. Hecker replaces Narciso Muñoz, who resigned on October 17. The change of team at the Commission reportedly mirrors the new stage in the economy and the need to grow the domestic capital markets significantly.

Argentina’s country risk fell to a low of 278 basis points Thursday, as measured by JP Morgan’s EMBI+ index. Analysts concurred that Argentina’s improving macroeconomics have helped bring down the country risk, as well as a general repositioning of investors with regards to emerging markets in general. Argentina’s country risk has fallen 43% this year, from 492bp at the start of the year and compares with the stratospheric heights reached in August 2002 following the country’s debt default when the spread was over 7,000bp.

Argentina-based telecoms company Impsat has been sold to US-based Global Crossing, a company that provides telecoms solutions, in a deal worth $336 million. Global Crossing, registered in Bermuda, will pay $9.32 per share in an all-cash transaction, said Impsat in a released statement. The deal will see Global Crossing pay $95 million in cash and assume $241 million of debt. “The acquisition has been unanimously approved by the Board of Directors of Impsat”, continued the release, adding that shareholders representing just short of a third of the common stock of the company had supported the transaction. Impsat has operations in Argentina, Brazil, Venezuela, Ecuador, Chile, Peru and Colombia in Latin America.

The government of the Province of Buenos Aires sold $475 million of 12-year government bonds at a yield of 9.75 percent on Tuesday, the first time the province that includes the Argentine capital had sold debt since the 2002 default. The lead manager of the issue was Merrill Lynch, which had expected a yield as high as 10 percent for the bonds.

Argentina’s trade surplus fell 10.3 percent to $895 million in September compared with the same period a year ago as a surging economy sucks in more imports. The surplus in the first nine months of the year stood at $9.09 billion, 1.5 percent higher than in the comparable period in 2005. Imports rose 28 percent to $3.17 billion in September while exports rose 17 percent to $4.07 billion.

Pluspetrol, an Argentine oil company, will resume pumping 50,000 barrels a day of oil after reaching agreement with Achuar Indians in Peru, who blocked company installations for 13 days to complain about environmental damage. Pluspetrol agreed to pay $12.4 million for a local health plan and contribute $1.2 million a year towards building a local airport. The Peruvian government also promised the Achuar 5 percent of the money from an oil-funded regional development plan.