Category: Argentina

Argentine gas distributor Gas Natural Ban has successfully placed $113 million of two-year notes in the market. The issue was almost twice oversubscribed, with demand reaching $209 million. The notes received a national scale rating of A1.ar, with a stable outlook, by Moody’s Investor Services, which commented that, with this sale, the company will have virtually eliminated its exposure to dollar-denominated debt. The ratings agency also noted that Gas Ban was one of the few companies that never defaulted on its debt during Argentina’s financial crisis. Gas Natural is owned by Spain’s Gas Natural. ABN AMRO acted as book-runner for the deal.

Argentina’s abundant supply of vegetable-based oils – such as that from soybeans – is attracting foreign investors, in particular from Europe, in search of the increasingly scarce and expensive biodiesel energy to comply with EU norms. Biodiesel is a renewable energy derived from vegetable oils. After several months of negotiations, German investor Neckermann-Gate has agreed with Argentina’s Oil Fox to invest $27 million in a biodiesel plant in San Nicolás, which will supply 25 million litres a month. If the project is successful, Neckermann-Gate is reportedly interested in investing in further plants in Argentina and perhaps beyond into other parts of Latin America.

Argentina’s industrial output in June was higher than expected at 8.9%, compared with the same month the previous year. Overall output was driven by automotive production and cement sales, the latter reflecting a booming construction sector.

Argentina has effectively doubled the price of gas it exports to Chile, a result – its says – of the increase in cost it has to pay to Bolivia for the natural resource. At the end of June, Bolivia and Argentina agreed to a price rise of $1.65 per one million British thermal units (BTUs). Argentina says it must pass on this higher cost in the gas it then sells to Chile, which will now have to pay around $2 more for every one million BTUs it buys from its neighbor. Meanwhile, Chile’s president, Michelle Bachelet, has announced that her government is planning to make the country “energy independent” within two years, as a matter of national security.

Argentina has announced that Venezuela is to buy another $600 million of its dollar-denominated Boden 2012 bonds, in tranches of $200 million, before the end of July. Venezuela has become Argentina largest external financier since it began buying the paper in the middle of last year. To date, it has bought around $3.2 billion of the paper, although it has sold a great part of this. In August Argentina needs to find $3.4 billion to pay debt obligations, including payments to multilaterals and maturing capital and interest payments on Boden 2012.

Spanish group Nargam has decided to buy into the boom in Argentina of luxury boutique hotels by acquiring Compania Hotelera Argentina which owns the recently renovated five-star 725 Hotel (former Hotel Continental) in Buenos Aires. Nargam paid $4.5 million for 96.3% of the company’s capital and has taken on its debt amounting to $7.6 million.

Argentina’s Senate voted early Thursday morning in favor of granting the government “superpowers” over budgetary allocation. The bill proposed by the government allows permanently the executive to reallocate part of the budget without Congressional approval and is necessary, says President Nestor Kirchner, to allow him to govern effectively. In the past, budgetary flexibility was approved on a year-by-year basis. The legislation must now be debated by the lower house. Critics of the president and the government’s proposed legislation say that the move is anti-Constitutional and an attack against the rule of law.

The International Court of Justice in the Hague yesterday, Thursday, ruled in favor of Uruguay in a dispute with neighboring Argentina over planned pulp and paper mills on the border region. The court rejected Argentina’s claims that the mills were an imminent threat to Argentina’s environment and will not act to stop construction of the plants. The $1.7 billion project along the River Uruguay, which separates the two countries, represents the largest ever single foreign investment in Uruguay. Presiding judge, Rosalyn Higgins, said however that the Court would look further into the dispute and that, by not ordering a suspension of work: “Uruguay necessarily bears all risks relating to any finding on the merits that the court might later make”.

Argentina’s Senate was due to vote yesterday, Wednesday, whether to approve the proposal by president Nestór Kirchner to be granted the power to allocate around $4.5 billion of budgetary funds without approval from the nation’s lawmakers. Greater flexibility in budgetary allocation is not a new concept for Argentina’s governments but Kirchner’s critics are worried about the increasing control being exerted by the president over the country’s institutions and his tendency to govern “by decree”. The president has countered that greater control is needed if anything is to be done and has accused some lawmakers of holding him to ransom and stopping him from governing effectively.

After almost a month of deliberation, the International Court of Justice in the Hague is set to rule today, Thursday, on the bitter paper mill dispute between Uruguay and Argentina. The dispute centers on two pulp and paper mills being built alongside the Uruguay River, which separates the two countries. The $1.7 billion project represents the largest single foreign investment ever in Uruguay. For Argentina to be successful it must show that the damage to the environment is irreversible and that the threat is immediate.