Category: Argentina

Argentina’s largest gas distributor, Metrogas, has extended its debt swap offer deadline until 15 March to accommodate Italian bondholders. This is the fourth time it has reviewed the closing date for the restructuring which offers to swap $437 million of defaulted debt. The last extension was at the end of December when Metrogas gave investors until 11 January, hoping to increase the number of participating debtholders up from around 80%. Uptake currently stands at 90.56%, according to the company.

Venezuela is set to buy $312.4 million dollar-denominated sovereign debt from Argentina, pushing up its holding of Argentine paper to just over $2 billion and making it by far the largest investor in that country’s foreign debt. In December, Venezuela bought $766 million of the same Boden 2012 bonds. Earlier in the year Chávez’s government sold $600 million of its Argentine bonds, although it is not known exactly at what profit. The sale of the dollar-denominated Boden will help Argentina with its goal of building up dollar reserves following the 3 January payment to the IMF of $9.8 billion to cancel its debt.

The Province of Mendoza, Argentina, is celebrating the decision by a New York Appeals Court to uphold a previous ruling by Judge H. Baer Jr. which found in favor of the province’s Aconcagua debt swap against bondholders Greylock Global Opportunity Master Fund Ltd. and Greylock Global Distressed Debt Master Fund Ltd., who brought a case against Mendoza last September in the US courts. The $250 million Aconcagua bond offering was originally issued in 1997 with a maturity date of 2007. The bond was restructured in 2004 to mature in 2018.

Argentina is reportedly looking at renegotiating its debt to the Paris Club of international creditors following the successful early repayment of its entire IMF loan at the beginning of January. Argentina has yet to restructure its defaulted debt to Paris Club lenders, which totals around $6.5 billion, less than 5.25% of the total assumed debt.

Venezuela has said that it will continue to buy Argentine bonds if more are offered. Venezuela bought $1.6 billion worth of the debt last year, although it later sold $600 million. Argentina is thought to be looking to sell up to $2.5 billion of sovereign bonds to its northern ally to help replace funds used for its early repayment of its entire IMF debt.

Argentina’s central bank is set to buy euros to help build up its foreign currency reserves after using around $10 billion of the funds for its early debt repayment to the IMF on 3 January. The reserves had fallen from $28 billion to $18.5 billion following the payment. The move towards buying euros away from the long-favored dollar is part of a diversification strategy that has seen the bank buy sterling, yen and gold as well as US dollars.

Alberto Fernández, Argentina’s powerful cabinet secretary, said that last year’s 12.3% inflation rate – twice the rate in 2004 – is a positive effect of economic growth. But he warned companies about their “responsibility” to avoid an inflationary spiral and urged them to be “very prudent and rational” in setting prices.

Prices jumped to a 31-month high in December, driving Argentina’s inflation rate last year to 12.3%. Inflation in 2004 was 6.1%. Economists say a 23% increase in public spending last year triggered higher prices. The government has responded by negotiating deals with leading supermarket chains to hold down prices of about 200 products.

Environmentalists in northern Argentina say they will organize more roadblocks to protest two new paper and pulp projects in neighboring Uruguay. The roadblocks would halt traffic between the two countries during the peak summer tourist season. Protesters say the plants will damage the local environment. Finland’s Metsa Botnia is investing $1.2 billion and Spain’s Ence a further $660 million in Uruguay.

Economy Ministry officials say they are preparing a proposal for bondholders who refused the terms of Argentina’s $81 billion debt exchange last year. About 24% of investors holding about $20 billion in defaulted bonds rejected the government’s original terms. Buenos Aires daily Clarín says holdouts would be offered discount bonds only, worth 33% of the old bonds’ face value. The government will not pay past due interest on defaulted debt. Neither will holdouts receive warrants offered last year that pay out when GDP growth rises above trend rates.