Category: Argentina

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.

Chilean retail group Cencosud has announced it will invest at least a further $500 million in Argentina over the next two to three years. Cencosud group, which has already invested around $500 million in Argentina, includes the store brands Jumbo, Easy, Disco, Vea and Paris. The investment by the Chilean retailer in its neighbor’s booming economy will create around 15,000 new jobs at over 180 new stores, according to Cencosud.

Argentina’s current account surplus for the second quarter of the year rose 34%, year on year, to $2.5 billion, according to the national statistics institute (INDEC). The increase in the surplus was driven by an 11% rise in exports, from $10.6 billion to $11.8 billion, while imports grew by 9% up to $7.8 billion for the quarter. Meanwhile, the country’s foreign exchange reserves, as at the end of June, stood at $25.5 billion – a rise of $3.8 billion from the first quarter of the year. Argentina succeeded in reducing its foreign debt slightly to $106.8 billion at end-June, from $109.2 billion at the end of March.

The Argentine Province of Mendoza is the country’s third province hoping to tap international markets to raise funds. Mendoza is hoping to raise up to $500 million, more than the $250 million Neuquén is looking for or the $300 million Buenos Aires expects. In 2004, Mendoza closed the debt swap for its Aconcagua bond, successfully exchanging $235 million of the $250 million outstanding in the market for its new bond Mendoza 18 or New Aconcagua. Mendoza will be no doubt be watching with interest as Buenos Aires leads the way to market some time in the first two weeks of October.

Argentina’s securities market (Merval) has launched a new debt instrument – Merval Bonos Indexados (MBIX) – which brings together in one basket the eight most representative index-linked notes in the local market. These include the first eight peso-denominated bonds in the IAMC index: Boden 2008, Boden 2014, Bocon Pro12, Bocon Pre8, Bocon Pre9, Bogar and the new debt securities issued with the debt swap, Par and Discount. None of the underlying bonds can have more than a 35% weighting in the securities certificate (Ceva). In November, Merval launched the first Ceva when it began to trade Macc, a certificate that bundles together the top eight stocks on the Merval local index into one financial instrument.

Argentina’s economy expanded 9.1%, year-on-year, in July, taking growth for the first seven months of the year to 8.5%. The strong growth – the strongest since last November – surprised most analysts who had forecast an increase of 8.3% for the period. Economic expansion was 1% up on June, according to Argentina’s national statistics institute (INDEC), which published the figures. The market is now looking forward to August’s performance to compare it to the same month last year when the economy had its strongest growth of 10.5%. Some believe GDP may expand at around 9% this year to match last year’s expansion.

Spanish pulp company Ence has said it is to relocate its planned pulp and paper mill, which was to be built on the border between Uruguay and Argentina, to another as yet unnamed site in Uruguay. The planned mill – along with another by Finnish company Botnia — provoked strong protests by Argentine environmentalists, led to international arbitration and caused political friction between Uruguay and its larger neighbor. Ence claims environmental issues have not provoked the relocation decision, but rather logistics. The company denied it was planning to pull out of Uruguay. The two planned pulp and paper mills represent the largest foreign investment ever in Uruguay – totaling $1. 7 billion.

Argentina has revealed that an investment group headed by George Soros is interested in investing in the country’s fledgling biofuels industry with a commitment of between $300 million and $500 million. The investment would be based in the province of Santa Fe and envisages a plant producing biofuel based on maize and sugar-cane.

Argentina’s government sent its 2007 Budget proposals to Congress for approval Friday. The government foresees an increase of almost 15% in spending next year. The Budget forecasts economic growth of around 4%, average inflation of 7.7% and an increase in investment of 7.2%. So far this year the economy has grown at an average pace of 8%, following last year’s expansion of 9.2%. Meanwhile, following a meeting between Argentina’s President Nestor Kirchner and President Nicanor Duarte of Paraguay, in New York, Argentina has agreed to swap $8 billion of debt owed by Paraguay for 8,000 gigawatts of energy a year from the Yacyretá hydroelectric facility.