Category: Argentina

Argentina’s currency and markets slumped on Friday following the news late Thursday that the country’s intends to clear all of its debt with the International Monetary Fund (IMF). The peso closed at the year’s weakest level of 3.0355 pesos against the dollar, reflecting investor fears that government spending may rocket and inflation may slip out of control. Argentina’s President Néstor Kirchner said he wanted to clear the $9.8 billion debt so that the country could get on with its economic management without external pressure. In declaring its economic independence from the IMF, Argentina will have to dig into its foreign reserves to settle the debt but Kirchner says the early repayment will save $1 billion in interest. Argentina’s decision came a few days after Brazil’s announcement that it would be repaying its $15.5 billion debt to the IMF two years ahead of schedule. However, unlike with Brazil, investors have reacted nervously to Argentina’s intended move and Kirchner has faced internal criticism.

Boston-based money manager firm Granthan Mayo Van Otterloo (GMO) is suing the Republic of Argentina for a minimum of $236 million in principal and interest it claims to have lost in the sovereign’s debt default in 2001/2. GMO is part of the 24% of creditors who refused to enter into a debt swap deal offered earlier this year by Argentina.

Japanese manufacturer Honda Motor Co plans to start producing motorcycles in Argentina from the middle of next year. Honda will invest $1 million in a facility based in the province of Buenos Aires to produce the C105 Biz model. The Japanese company is currently Argentina’s market leader in motorcycle sales, with a 22% market share.

The 2010 dollar-denominated notes of Argentina’s Telecom Personal have been rated B- by Standard & Poor’s. The 144A securities of up to $300 million are being issued to help finance part of the company’s existing debt. Telecom Personal is owned by Telecom Argentina SA and the rating reflects the close link of Personal’s credit quality with that of its parent company.

Argentina’s consumer prices rose 1.2% in November, above the average forecast by analysts. Inflation for the year, as at November, stood at 11.1%, overshooting government targets. Annual inflation to November was 12%, the highest rate in 28 months. The government has, however, managed to secure an agreement by food retailers to drop the price of 250 basis products by 15% in its efforts to contain inflation.

Celular telecoms operator Personal, owned by Telecom Argentina, has issued three bond series: two peso-denominated bonds issues worth 500 million pesos (US$172 million) and one dollar-denominated issue worth $300 million. This is the company’s first bond issuance since it carried out its restructuring program, the largest in local corporate history. In October, Personal’s shareholders approved a global bond issuance program worth up to $500 million.

HSBC Argentina is planning to issue 177,228,000 new shares to raise $60 million thereby increasing the bank’s current capital stock from $379 million. The shares will consist of 85,533,941 class A shares worth one vote each and 90,694,059 class B shares worth five votes each.

The departure of Economy Minister Roberto Lavagna from the helm of Argentina’s economic management has left markets jittery as they wait to see whether the government will pursue expansionary policies that may spark rising inflation. Lavagna, who had an excellent relationship with the financial markets, was seen as key to keeping the country’s inflation in check. He served as economy minister for the past three years, overseeing the country’s debt restructuring programme. Argentina’s annual inflation rose to 10.7% in October, the highest rate so far this year.

Argentine President Néstor Kirchner yesterday, Monday, replaced Economy Minister Roberto Lavagna following disagreements between the two with regard to inflation. Felica Miceli, currently president of state-owned Banco de la Nación, the country’s largest bank, has been appointed new economy minister and becomes the first woman to hold that post. An economist, she had previously served on the board of the central bank.

Macro Bansud, one of Argentina’s highest-growth private banks, has finalized the purchase of 75% of Banco de Tucumán from local Banco Comafi for $17.3 million. This is the second bank Macro Bansud has bought in the north-western province of Tucumán; a few weeks ago it took over Banco Empresario de Tucumán Cooperativo Limitado, which had suspended trading, paying $10 million.