Category: Argentina

Banco Galicia y Buenos Aires will repay $170.6 million worth of debt to the Argentine central bank this week, part of the money it borrowed to survive the financial crisis in 2001. The bank has now paid off half its original debt. Argentine banks still owe the monetary authorities about US$2 billion.

Venezuela has sold a further $300 million of the Argentine paper that it holds. It has now sold $1.4 billion of the $2.5 billion purchased since last year for a total profit of $80 million. Venezuela’s finance minister, Nelson Merentes, has indicated that Venezuela is ready to buy more Argentine bonds, depending on market conditions. Its most recent purchase of the dollar-denominated Boden instruments was at the beginning of March, when it bought $250 million of the bonds. Chávez’s government currently represents the largest foreign investor in the country’s external debt.

Argentine bank Macro Bansud, owned by local businessman Jorge Brito, debuted with great success on Wall Street, Friday. The bank issued 9.7 million ADS, 10% more than originally planned, and the price ended the day 14.74% up at $23.35. Each ADS represents 10 Class B shares of the bank. Macro Bansud is one of Argentina’s highest-growth private banks and is on target to acquire several more regional banks to add to its expanding portfolio. The deal was arranged by UBS Investment Bank and Raymond James.

Argentina has successfully returned to the open international debt market, achieving a better-than-expected yield of 8.36% on its new dollar-denominated Bonar V bond. The government sold $500 million of the five-year bond on Wednesday, the majority placed with foreign banks. New economy minister, Felisa Miceli, must have breathed a sigh of relief that six months after the sovereign had to cancel a global issue due to lack of investor appetite, the market once more seems hungry for Argentine paper. Meanwhile, international ratings agency Standard & Poor’s has raised Argentina’s long-term foreign currency credit rating one notch to B from B-, and its short-term rating to B from C, citing the country’s “improved external and fiscal flexibility.”

Argentina has revoked the license of Aguas Argentinas, part-owned by French utility company Suez, and says it will take control of the water supply and sewerage treatment of the residents of Buenos Aires through a new group, entitled Aysa. The group is 90% owned by the state and 10% by workers. Suez, which was granted a 30-year contract in 1993, has already said it will pull out of Argentina because government price freezes have made it impossible to keep its local business afloat. The government, meanwhile, accuses Suez of not investing in its services. Critics of the current administration are concerned that this move signals a trend towards greater state intervention, which, they say, will lead to mismanagement and corruption. Two years ago Suez lost a water concession in Bolivia after mass protests in El Alto against high water charges forced the government to act.

Argentina is to launch a new global bond, the Bonar V, the first tranche of which will be offered at Dutch auction on Wednesday. The bond, which matures March 28 2011 carries a coupon of 7%. The government plans to issue $1.5 billion of the bond in total, with this first tranche amounting to $500 million. It will be the sovereign’s first foray into the international market since canceling its global issue last September due to the high yields being demanded by investors. Argentina has since sold only directly to Venezuela and other state agencies. The success of the new five-year dollar bond in the open market will be an indicator of the how investors think Argentina is doing.

Argentina’s economy expanded by 9.2% last year, according to figures published by the National Institute of Statistics (INDEC). Growth was driven by the construction sector which rose by 20.4%, followed by agriculture (11.9%) and manufacturing (7.7%). The annual growth rate is the best since 2002 – the economy expanded 8.8% in 2003 and 9% in 2004.

Argentina’s Central Bank is to raise the minimum reserve requirement on banks’ checking and savings accounts from 15% to 17%, effective 1 April. The Bank says the move is aimed at encouraging banks to offer longer deposit terms and stimulate longer-term saving. It says that raising the reserve level will help to curb inflation by absorbing around $482 million excess liquidity from the market.

Meanwhile in Argentina Macro Bansud, one of the country’s highest-growth banks, has declared a keen interest in bidding for Rosario-based Nuevo Banco Bisel, under administration by state-run Banco Nación since 2002. Bisel, formerly a subsidiary of French bank Crédit Agricole, is the country’s 19th largest bank in terms of deposits. Macro Bansud recently bought two banks in the northwestern province of Tucumán, paying just over $27 million.

Venezuela’s finance minister, Nelson Merentes, explained that Venezuela has earned $100 million of profit from trading Argentina paper. Merentes outlined the gains made by Venezuela as part of a presentation to parliament concerning the proposed debt buyback plan. The minister said that the government planned to continue trading in the bonds, detailing that, to date, Venezuela had bought $2.5 billion of the paper and had made a profit of $100 million – $75 million earned by the government and $25 million by 28 local banks involved in the trades.