Category: Argentina

Argentina has announced that it is to kickstart its nuclear program in a drive to avert its much-heralded energy crisis. Planning Minister Julio de Vido said the government planned to extend the life of its two existing nuclear power plants, which date back to the 1970s, and complete stalled construction of a third plant by 2010. The country may also resume uranium mining as part of the same strategic plan. Rising energy demands and continuing economic growth have led to warnings of an energy crunch in Argentina. This, combined with the higher costs of traditional fuels, have likely prompted the government to review its nuclear program.

Argentina’s trade surplus narrowed to $940 million last month, down 25% on the surplus for July last year. However, overall, the surplus for the first seven months of the year was up 1.7% year on year. The reduction in the surplus was due to the sharp rise in imports in July, up 21% to $2.9 billion, against a slight rise (6%) in the value of exports to $3.8 billion. So far this year, exports have risen 12% to 25.3 billion and imports are up 16% to $18.5 billion, taking the trade surplus to $6.8 billion. Argentina’s largest trade partner continues to be Mercosur, followed by the EU.

Argentina’s rate of unemployment fell to 10.4% in the second quarter of the year, its lowest level for this period in three years. The rate, according to the national institute of statistics (INDEC) compares with 12.1% as at the end of the second quarter last year, and is down from 11.4% in the first quarter of this year. The government’s stated goal is to drive down unemployment rates to below 10% – levels not seen since 1994 – by the end of the year.

The Inter-American Development Bank’s (IADB) Multilateral Investment Fund has approved $5 million of financing for an equity investment fund in Argentina and a $100,000 technical assistance grant to support development of the venture capital industry. This follows a similar recent announcement of a $9 million investment by the MIF in Brazil’s venture capital industry. The financing in Argentina will be directed at TGLT Consultores Ventures, founded in 2004, to build one of the country’s first venture capital funds.

Telefónica de Argentina, the Argentine subsidiary of the Spanish telecoms group, has agreed to pay its shareholders for the first time since the country’s financial crisis in 2001. However, the company will not be paying shareholders a dividend but rather a nominal refund of contributed capital. Under the proposed scheme, Telefónica will pay 60 cents (local currency) for every 1 peso share, as well as four shares of 10 cents each. The result will be a reduction in the company’s share capital by 60%. The payout will total around $340 million. The proposal will be put forward to shareholders at an extraordinary general meeting to be held on September 7.

Argentine electricity distributor Edesur has secured a $48.8 million syndicated loan with a group of six banks. The loan, which expires February 2010, was signed with ABN AMRO, Banco Comafi, Banco Hipotecario, JP Morgan Chase Bank, BNP Paribas and Banco Río de la Plata. The loan will be used to refinance debt, according to the company. The loan has three amortizations and a grace period of two-and-a-half years.

Electronic transactions and payments First Data International, a subsidiary of First Data Corp of the US is to buy Argencard, a leading payment processor in Argentina and Uruguay. Buenos-Aires based Argencard provides card and processing services to more than 70 banks with nine million cardholders and over 150,000 active merchants. Although neither Argencard nor First Data have disclosed details of the deal, it is thought to be worth around $45 million. Subject to regulatory approval, the acquisition should be completed by year end.

Argentina has continued to sustain its long run of economic growth, with expansion of 8.2% seen in June, slightly below market expectations. The figures mean that growth for the first half of the year overall remains at 8%. Expansion in June was driven by the car, steel and construction industries, with demand coming from the domestic, as well as the export, market. Most economists expect growth to slow during the year to post a final figure of 7.6%.

Argentina’s Banco Río has placed the largest mortgage-backed securitization seen in the domestic market since 2002. The Bank sold $30.2 million worth of its Supra Letras Hipotecárias Clase II Thursday to yield around 2.75% above the CER rate. The offering was nearly twice oversubscribed, with almost half of the paper sold to pension funds and a third to insurers. Banco Río and Banco Hipotecário are the only two financial institutions in Argentina to issue mortgage certificates.

Argentina’s economy ministry has forecast record exports of more than $45 billion this year, beating last year’s high of $40 billion. The rise in exports has been driven by the increased sale of agricultural commodities such as soybean and vegetable oil, in particular to China. According to the ministry, exports have accounted for over half of the country’s economic expansion over the past three years. The economy has grown, on average, by around 8% a year since the end of 2002.