Category: Argentina

Argentina’s government is redoubling efforts to reinforce its price agreement policies with retailers in an attempt to hold down inflation. It has struck a deal with supermarkets to extend the price agreements until the end of next year, beyond presidential elections slated for October. Last week, monthly inflation figures for September were released showing that prices had risen 0.9% through the month, the highest monthly climb since April. Argentina began to pursue its unorthodox anti-inflationary policy of price freeze agreements at the start of the year after annual inflation hit 12.3% in 2005.

Ratings agency Standard & Poor’s has upgraded debt issued by several local banks to reflect the improving financial system in Argentina and “the efforts made by the financial institutions in the country to clean up their balance sheets and increase intermediation”, according to the Agency. S&P raised its long-term counterparty credit ratings on Banco Hipotecario and Banco Patagonia, from B to B+ and that of Caja de Valores from B+/B to BB-/B. The outlook on all three institutions is stable. The rating actions follow the upgrade of the Republic of Argentina to B+ from B announced October 2 and reflects the close link between the credit quality of the sovereign and that of its financial system.

Argentine Banco Patagonia sold just over $5 million worth of securitized notes – Fideicomiso Fava XI – on Tuesday. The issue, which was oversubscribed, was the latest financial securitization to be offered by the bank. The certificates were placed to yield 10.48% and have a duration of 2.9 months. Banco Patagonia specializes in financial securitizations – mostly backed by consumer loans – and most recently placed $4.6 million of securitized notes in July.

Following in the wake of announcements from several Argentine provinces of their plans to tap international markets, the City of Buenos Aires has said it too will issue international debt, sometime next year. The City hopes to raise around $213 million from the bond issue to part-finance its projected budget deficit of about $345 million. Buenos Aires currently has debts amounting to $677 million. These would be the first bonds to be issued by the City in international markets since Argentina defaulted on its debt in 2001/02.

Argentina recorded monthly inflation of 0.9% in September, according to the national institute of statistics (INDEC), up on August’s figure of 0.6%, and above most analysts’ forecast of between 0.6% to 0.8%. The rise was the highest monthly climb since April, when prices rose by 1%; it took inflation for the nine months through September to 7.1%. The September price rise was driven largely by a hike in the cost of clothing, up 5.7% over the month, as a result of the change in season. Food and beverages rose only 0.8%.

Argentina will put forward a proposal to the Paris Club to restructure its debt before the end of the year, according to economy minister Felisa Miceli. Earlier this year, and following the early repayment of its entire IMF debt, Argentina indicated it would look to renegotiate its $6.5 billion defaulted debt to the Paris Club of international creditors. The debt, which represents less than 5.25% of the country’s total assumed debt, includes money owed to countries such as Spain, Germany and Japan.

Ratings agency Standard & Poor’s has raised Argentina’s foreign and local currency credit ratings to B+ from B, with a stable outlook. This is the second ratings upgrade by S&P this year. In March the Agency raised the country’s rating from B- to B. The rating is four levels below investment grade and is the highest credit rating to be awarded to the Latin American nation since it defaulted on its debt in 2001. S&P also raised the foreign and local currency ratings of the cities of Buenos Aires and Mendoza from B to B+. The Agency recently awarded a B+ rating to the planned $250 million bond issue, backed by oil reserves, by the Province of Neuquén. The transaction will be the first structured international notes to be issued with assets originating in Argentina since the country’s debt crisis in 2002.

Argentina’s state-owned energy company Enarsa is to participate in gas exploration and extraction in Bolivia, according to the government. A recent meeting between the Argentine and Bolivian governments led to an agreement to explore working together on gas, of which Argentina is an important buyer. The two governments also agreed that Bolivia would supply Argentina with up to 7.7 million cubic meters of gas a day at a price of $5 per million BTU. This could rise to 27.7 million cubic meters a day. Bolivia currently supplies Argentina with 5.5 million cubic meters a day.

Argentina’s Central Bank is to allow banks to issue bonds with tenors over 30 years. Perpetual bonds have no maturity date and are not redeemable. Instead they pay a steady stream of interest forever. The move by the Central Bank is aimed at enabling banks to increase their capital for regulatory purposes so that they can expand their lending portfolios. Local banks such as Banco Galicia, Banco Patagonia or Banco Hipotecario are considered likely candidates to issue such bonds.

Grupo Clarín, Argentina’s largest media group, and US investment fund advisor Fintech Advisory have joined forces to merge Argentina’s two largest cable providers. The merger will create the largest cable provider in the local market, which aims to expand regionally and take on the big foreign players. The new MSO (multiple system operator) combines market leader Cablevisión with Clarín-controlled Multicanal, as well as a network of other internet service providers such as FiberTel and Prima. The deal, thought to be worth around $1 billion, involved the acquisition of the outstanding 40% of Cablevisión from US buyout fund Hicks, Muse, Tate & Furst as well as the exchange of assets and shareholdings between Clarín and Fintech. The companies will be investing around $600 million to develop the operation’s infrastructure, in particular focusing on broadband services.