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By Katia Porzecanski
October 2, 2015

*Governor of Salta province says Argentina needs investment
*Argentina should reveal inflation methodology, Urtubey says

Daniel Scioli, the ruling party candidate and frontrunner in Argentina’s presidential elections later this month, should hold talks with holdout creditors from the nation’s 2001 default as soon as he takes power, said ally Juan Manuel Urtubey.

Urtubey, the governor of Argentina’s Salta province, told reporters in New York that resolving the decade-long legal battle will allow the nation to regain access to overseas capital, which is crucial for improving its competitiveness. Only with the funding can Argentina develop the infrastructure required to make local producers competitive, he said. It’s also the key to reducing subsidies that have widened the fiscal gap, he said.

“Because of what settling with the holdouts means in terms of financing for Argentina, you’re in a position where you’re losing money if you don’t do it,” Urtubey told reporters at the Council of the Americas in New York. “We need financing to grow.”

President Cristina Fernandez de Kirchner’s refusal to negotiate with the holdouts, who won a U.S. court ruling requiring the nation to pay their repudiated debt when making payments on other bonds, pushed Argentina into default last year for a second time in 13 years. Still, prices on the nations notes have surged on speculation the her successor will resolve the dispute and unwind policies that fueled inflation and slowed the economy.

Scioli said last month that he would try to meet obligations with Argentina’s creditors under “fair, equal and legal” terms. Urtubey said Scioli is aware of investors’ expectations for the next administration.
“Our biggest challenge is getting things done on time so that those expectations can transform into reality and investment in Argentina,” he said.

The nation’s statistics agency, which unveiled a new consumer price index last year after being censured by the International Monetary Fund for misreporting economic data including inflation, should once again revise its methodology, Urtubey said. Because official figures have continued to diverge from private estimates, there is no reference point to guide public policy or anchor inflation expectations, he said.

Regarding investors’ concerns that Fernandez will remain influential during the next administration, Urtubey said that the decisions will be made by the government in power.

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By Carolina Millan
October 2, 2015

*Three or four bond deals may price before end of year
*IPO market may restart in 2016 led by the financial sector

Bank of America Corp. has surged to the top of Argentina league tables for bond sales this year, advising on the biggest deals from the Province of Buenos Aires to state-run energy company YPF SA.

Sebastian Loketek, head of Bank of America Merrill Lynch investment banking for Argentina, Uruguay and Chile, said the best year for Argentine issuance since 2011 may not be over yet. Three or four provincial and corporate debt sales may price before the end of the year for between $300 and $600 million each depending on market conditions, he said in an interview.

After a busy first half, issuance has slowed on increased volatility ahead of Oct. 25 elections and instability from the global selloff in commodities spilling over into Argentina.

“There will be market windows to price these deals,” he said. “We are recommending issuers to be ready so they can go as soon as they open. It’s going to be a volatile market from now until the end of the year and elections could be a differentiating catalyst for Argentina.”

BAML’s ranking among bond underwriters has jumped nine levels from last year after doing $2.5 billion of deals this year, according to data compiled by Bloomberg. Loketek said there’s been increased interest from so-called “real-money accounts,” long-term investors such as mutual funds and pensions, in entering Argentina both through debt markets and mergers and acquisitions.
Bank of America Merrill Lynch rose 9 ranks in bond underwriting from the previous year.
Bank of America Merrill Lynch rose 9 ranks in bond underwriting from the previous year.
With Argentina bracing for regime change as president Cristina Fernandez de Kirchner finishes her second term in December, Loketek says the market will start issuing on a larger scale once the government reforms regulations that restrict companies from repatriating profits and when the country reaches a resolution to the decade-long dispute with holdout creditors. The debt market in Argentina could pick up as soon as the second or third quarters of 2016, he added.

While ruling party candidate and front-runner Daniel Scioli is leading opinion polls to replace Fernandez, he has said he would focus his economic plan on promoting more investment and to provide predictability to policy. Opposition candidates Mauricio Macri and Sergio Massa have promised to lift currency controls within the first 100 days.

All three leading candidates have acknowledged the need to settle litigation with hedge funds led by billionaire Paul Singer’s Elliott Management in order to regain access to international capital markets.
“A resolution with the hold-outs will have an immediate effect on rates,” Loketek, 44, said. “I am convinced that the situation can be resolved.”

This year, the bank also advised Tulsa, Oklahoma-based Apco Oil & Gas International Inc. on its $427 million sale to Argentina’s Pluspetrol SA and worked with Caxias Do Sul, Brazil-based Lupatech SA on the sale of its Argentine assets to Sophia Capital for $22 million. In July, BAML also advised Colombia-based Almacenes Exito SA on the purchase of grocery chain Libertad as part of a $1.8 billion deal with Casino Guichard Perrachon SA.

Loketek also sees the market for initial public offerings recovering in the year ahead, with the most potential for companies in the financial industry followed by infrastructure and energy. There hasn’t been an Argentine IPO since technology company Globant SA went public in July 2014.

“It’s key that the IPO market starts out strong, with the right companies — those of a reasonable size and leaders in their industry,” he said. “There are some companies in Argentina that have the ability to open the market, we believe they will generate significant investor interest and we’re encouraging them to go.”

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By Richard Lough
October 5, 2015

Argentina’s presidential hopefuls sidestepped some of the most pressing economic issues facing the Latin American country in its first-ever presidential debate on Sunday, taking aim instead at the absence of ruling party candidate Daniel Scioli.

Scioli, the frontrunner in opinion polls to replace outgoing President Cristina Fernandez, said earlier on Sunday he would not take part because debates “often take an aggressive tone that goes against what the people are hoping for.”

Leading opposition candidate Mauricio Macri played up the concerns of some voters that Scioli would be a Fernandez puppet and not deliver the gradual change toward more open markets that he promises.

“I regret that Scioli is not here but it is clear that the (ruling party) is having trouble defining who will govern in the event it wins,” said Macri, who trails Scioli in polls by about 10 points.

Dissident Peronist Sergio Massa, placed third in the presidential race, said Scioli’s “silence is mocking society” and then left the remainder of his allotted time for the answer hanging in silence.

It was not immediately clear if Scioli’s empty debate stand would hurt his support. Opinion polls ahead of the Oct. 25 election have shown Scioli widening his lead over Macri and edging closer to the backing needed for a first round win.

There were few testy exchanges in a rigidly structured debate that saw each of the five candidates talk unchallenged on four subjects – economic development, education, security and strengthening democracy – and face one question from another candidate on each.

The candidates steered clear of Argentina’s debt default, capital controls imposed by outgoing President Cristina Fernandez and low foreign reserves.

Massa offered the most detailed economic policy platform, promising economic growth of 5 percent, credit for first time home buyers and the scrapping of export quotas on grains. He said he would also abolish income tax for workers.

Market-favorite Macri vowed to create jobs through infrastructure investment and lower inflation to single digits.

The other candidates, Margarita Stolbizer, Nicolas del Cano and Adolfo Rodriguez Saa are collectively polling less than 10 percent of voter backing.

Scioli’s absence dampened the fizz of the country’s first presidential debate, but still marked an important democratic step forward, analysts said.

“The debates should be institutionalized. They are one of many reforms like electronic voting that are needed to improve the quality of democracy in Argentina,” said Mariel Fornoni, director of the polling consultancy Management & Fit.

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By Sarah Marsh
3 October 2015

* Scioli says offering better deal to creditors not high on agenda
* Poll shows could win Oct 25. election in first round

VILLA LA ÑATA, Argentina, Oct 3 (Reuters) – Argentina’s presidential front-runner Daniel Scioli said improving an offer to creditors suing the country over defaulted bonds would not be a priority if he wins an Oct. 25 election.

Whoever succeeds outgoing President Cristina Fernandez will inherit Argentina’s long battle with “holdout” investors who rejected its debt restructuring following a 2002 default to seek full repayment in the courts instead.

Under the outspoken leftist Fernandez, Argentina has refused to offer better terms to the litigating hedge funds it calls “vultures” than it did to those creditors who accepted steep writedowns in bond swaps.

“Argentina has shown willingness to pay and the capacity to do so, so we have to see now if they have the willingness to adapt themselves to what the world and Argentina is proposing,” ruling party candidate Scioli said late on Friday on the sidelines of a boxing tournament in the sporting club he built near his home in Villa la Ñata.

An opinion poll published on Friday showed he may be able to win in the first round, after widening his lead over his closest rival Mauricio Macri.

Economists say whoever wins will need to seek a swift settlement with the holdouts in order to obtain cheaper financing. Yet all the leading candidates have been tight-lipped on the subject as to admit this would be politically dangerous.

Asked if he would improve Argentina’s offer to the holdouts, Scioli said “it’s not a priority of my work agenda. Argentina’s proposal is clear, so let’s see what happens.”

The Buenos Aires Province governor, who has pledged to attract $30 billion of investment per year over the next four years, said he had met earlier on Friday with 70 foreign investors in areas such as energy and tourism.

“I see growing interest in Argentina and will personally get involved in looking for these investors,” he said.

Scioli, a former power boat champion who lost his right arm in a crash in 1989, regularly plays soccer in the Villa la Ñata sports club where the walls are festooned with campaign posters.

Sporting an orange baseball cap emblazoned with “Scioli for president”, he said it was sport that had given him the “inner force to do best and continue moving forwards” after the accident and he said he would make space for it in his agenda if he won the presidency.

“We’re going to win on Oct. 25, we’re going to deal Macri a knockout,” he said as he chatted with boxers in the dressing rooms before they went into the ring.

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4 October 2015

BUENOS AIRES, Oct 4 (Reuters) – Daniel Scioli, the ruling party’s candidate for Argentina’s presidential election, has extended his lead but cannot yet be sure of an outright win in this month’s first round, a poll showed on Sunday.

Scioli, from President Cristina Fernandez’s Front for Victory party, was drawing 38.6 percent support among those who have decided their vote, according to a Management & Fit poll.

That was up from 36.7 percent a month ago, and takes him closer to the 40 percent threshold he needs for an outright win on Oct. 25.

Scioli has made new investment a cornerstone of his campaign platform, but has given few clues on the changes he would make to state controls on the economy imposed by Fernandez, often defending her policies instead.

Backing for second-placed Mauricio Macri, a market-friendly businessman, is crumbling, down to 27.9 percent from 29.2 percent last month. His support is being eaten away both by Scioli’s rise and a surge in support for dissident Peronist Sergio Massa, up from around 12 percent in July to 21.5 percent in Sunday’s poll.

Macri is campaigning on a platform to reduce the state’s role in the economy and an end to the broad-based Peronist movement’s domination of Argentine politics, but has struggled to close the gap on Scioli.

Spending on social welfare programs has given the government a bedrock of support, especially among the poor, and many Argentinians say they want gradual or partial change and fear Macri would move too fast.

If no candidate wins 45 percent of valid votes or achieves 40 percent with a 10 point margin in the first round, the election will go to a run-off on Nov. 22.

The poll, which does not include undecided voters, was conducted between Sept 23 and Sept 29. It surveyed 2,400 people with an error margin of 2 percentage points.

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By Sarah Marsh and Jorge Otaola
2 October 2015

BUENOS AIRES, Oct 2 (Reuters) – Argentina will on Monday pay the $5.9 billion maturity due for its Boden 15 bonds in cash and issue new debt the following day, Economy Minister Axel Kicillof said on Friday.

The South American country, which is in default on some debt because of a legal fight with bondholders in the United States, targets raising $500 million in the auction of notes under Argentine law, Kicillof told a news conference.

The new Bonar 20 bonds will carry an 8 percent coupon, said the minister who added the final amount to be sold would depend on market appetite.

Investors would likely demand costly double-digit yields, said Jorge Piedrahita, CEO at broker Torino Capital, in the global context of china’s slowdown, volatility in emerging markets including neighboring Brazil and uncertainty over the timing of a U.S. interest rate hike.

Argentina’s public institutions, like the pension funds, which hold Boden 15 notes, may offer softer terms for the new debt.

“It has to yield double digits for investors to “voluntarily” buy it,” said Piedrahita.

The Boden 15 capital and interest payment on Monday is set to take a large chunk out of foreign reserves that stand at $32.453 billion. Argentina uses those reserves to pay debt, finance imports and prop up its currency.

Net foreign reserves, which exclude Argentina’s currency swap with China and reserve requirements for private banks, are estimated by economists to be much lower – between $14 to 16 billion and less than three months imports cover.

The Boden 15 payout means net reserves could drop as low as $8 billion.

Piedrahita said the dollar-strapped government whose mandate ends in December may be willing to pay a high price to shore up those low foreign reserves. President Cristina Fernandez’s government has also printed new pesos to finance extra spending ahead of the October 25 election.

Fernandez “is leaving a financial bomb for the next president,” said Piedrahita.

Whoever wins the presidency will have to resolve the decade-long legal-battle with “holdout” bondholders who rejected the restructuring terms after Argentina’s record default in 2002 in order to improve the government’s financing options.

A deal would spark a huge bond rally, meaning there may still be demand for the Bonar 2020 despite the international outlook.

“The rate anticipated represents a good opportunity given an incoming government will plan on resolving the debt fight to reduce its financing costs,” said Marcos Wentzel, director of local investment bank Puente.

By Bob Mondello
October 03, 2015

A new tourist attraction in Argentina — The Centro Cultural Kirchner in downtown Buenos Aires — has been posting some impressive numbers since it opened in mid-May. As many as 10,000 patrons a day are trooping through an ornate, turn-of-the-last-century building that has been converted into what’s said to be the fourth-largest cultural center in the world. Remarkably, everything in it is free, from video installations to comedy acts to symphony concerts.

They call the main concert hall La Ballena Azul, “The Blue Whale,” and it swims inside a grand Beaux Arts palace where, for most of the last century, folks in Buenos Aires mailed letters: the former Central Post Office. The Blue Whale auditorium — blimp-shaped, three stories high, holding 1,750 people — floats in what used to be the package-sorting area.

Why “floats”? Because the subway runs nearby, says guide Federico Baggio. “So the vibrations would not enter the symphony hall. It ended up having a whale shape, so that’s why they named it like that, but the purpose is acoustics.”

The Blue Whale is the most eye-catching attraction in the new Kirchner Cultural Center, but even it can’t upstage its surroundings. The Palacio de Correos, literally the “Postal Palace” — commissioned in 1889 and completed almost 30 years later — was the largest public building in Argentina when it opened in 1928. It’s eight stories tall, occupies a full city block behind a French Second Empire facade, and contains almost 1 million square feet of marble hallways, stained-glass ceilings and windows. You can also find traces of original post office fixtures, such as mailboxes and grand marble counters where you could finish and address your letters.

When the new architects changed things, to add, say, elevators, or a boxy, chandelier-like structure above the Blue Whale that’s big enough to mount exhibits in, they purposely used different materials: frosted glass, stainless steel. That way you never lose sight of the the ornate beauty of the original building — beauty that enticed President Juan Peron to move his presidential offices here in the 1940s from the nearby Casa Rosada.

And the grandest room — a spectacular vaulted space the size of a banquet hall that had been the office of the postal service director — became the headquarters for the Eva Peron Foundation, which dispensed charity and gifts to impoverished Argentine citizens. That space has been restored as a sort of museum exhibit, with everything from Eva Peron’s desk to bottles of champagne, letters piled all the way to the 20-foot ceiling in one corner, dozens of toys, go-carts, and other gifts of the sort she dispensed.

Approaching the desk, you hear recordings of actors’ voices re-creating what went on there — children excited over Christmas toys, or asking first lady “Evita” for something for their grandparents. It’s a scene some older visitors can remember from real life, and occasionally prompts tears.

These historic details resonated with the late President Nestor Kirchner, for whom the cultural center is now named, and for his widow, Cristina Fernandez de Kirchner, who succeeded him as president. They’re from the Peronist party, and like Juan and Eva Peron, who founded that party, as well as such cultural institutions as the Argentine National Symphony, the arts are baked into their worldview, says Culture Minister Teresa Parodi.

“Culture is an investment for this government, not an expense,” she says.

So when Kirchner saw this abandoned building, the thought was “not to turn it into a shopping mall, or” — as happened to Washington, D.C.’s Old Post Office — “a grand hotel. Instead, they pictured a cultural space — an enormous workshop where people can be developers of their own culture.”

Parodi is herself a well-known singer/songwriter in Latin America, and when she accepted the Cabinet-level position of minister of culture, launching the new Kirchner Center became her responsibility.

At its debut on May 21, it was a work in progress, and even months later, there is work going on. Performance halls are complete, and six floors of art galleries are getting there, many devoted to what you might call art that’s “gone postal”: stamps in collages, a town’s response when every citizen received a letter with a different story, performance art video installations about mail that aggravates and inflames.

The public sector in Argentina, says Parodi, operates on the assumption that the arts belong to everyone.

“We consider culture to be a right,” she says.

That’s why the Culture Ministry stages concerts and workshops for the homeless in shantytowns, and why, at the Kirchner Center, everything is currently free. There will eventually be a “symbolic payment,” she says, noting that the building needs to be kept up, and artists paid for their work. But she says corporations will be invited to sponsor events and keep prices low and seats and galleries full, as they are now.

During his tour, Baggio notes that whenever the audience fills the building, Thursday to Sunday, it regains the feeling of all those people rushing to deliver mail, moving everywhere with this rhythm of rush hour.

That rhythm is clearly benefiting the artists who play here. Especially the Argentine National Symphony. The Perons may have founded it in 1948, but they didn’t provide it with a home, and it has wandered, homeless for 67 years, from opera house to concert hall to auditorium.

Now, to the evident delight of the public, it has taken up permanent residency at the Kirchner Center. In July, the symphony hosted Argentina’s own Martha Argerich, one of the world’s great classical pianists. Parodi says 1.2 million people tried to access the ticket website (they collapsed it) for an auditorium that holds fewer than 2,000. “She was bigger than the Rolling Stones,” Parodi marvels, “which speaks well for a country that is very cultured.”

In keeping with the building’s origins, that symphony concert also included music from the movie The Postman, conducted by its Argentine composer Luis Enriquez Bacalov, as well as tango selections. And in keeping with the idea that culture should belong to everyone — and that 1.2 million people had wanted to hear Argerich — it was simulcast nationally on radio and TV.

Parodi seems so personally devoted to the ideas espoused by the Culture Ministry that I asked her whether she’d ever written a song that reflects the work she’s doing there. She explained that that’s not how songwriting works. But I said: Look, I’m doing a radio piece — I need a song to go out on.

She laughed, and pointed me to a song titled “La Canción es Urgente” (“The Song Is Urgent”), which she wrote about the role of popular song in the story of a people. She says it’s about her dreams for her people, which makes it a love song. And she cites a lyric about the power of a song:

That your voice lifts it
That it releases it in the wind
And that it sounds of victory
When it breaks down the silence.

Parodi says while in her career as a singer it has been moving to be onstage, in the case of the Kirchner Center, she’s also moved to be part of the audience, and part of the process of creating a cultural center — “doing all the things necessary so all of this can keep going.”

By Maira Sutton
October 2, 2015

A new front has opened in publishers’ global war on the public domain. Lawmakers of Argentina’s ruling party are proposing a vast extension of copyright terms on photography—from 20 years after publication to 70 years after the photographer’s death. That means that the term of restriction of photographic works would be extended by an average 120 years.

The law would extend copyrights on works retroactively, so a lifetime of photos that are already in the public domain would be re-captured by copyright. That would bring about a huge amount of legal uncertainty over works that have already been shared, remixed, sold, and modified in innumerable ways. If this bill passes, many tens of thousands of photographs that have been uploaded into cultural archives, including Wikipedia, may have to be erased from the Internet or else they could face civil, or even criminal prosecution failing to do so.

This is why Argentinian digital rights organization, Fundación Via Libre has launched a campaign to fight back against this destructive term extension. They sent a letter to Argentinian lawmakers earlier this week, urging them to conduct proper, public-interest impact assessment and open it to public debate before moving forward with a bill that would have such sweeping impacts on the cultural commons. Now, EFF is one of 38 digital rights and access to knowledge groups urging Argentinian lawmakers to drop this proposal. The letter states (translated from Spanish):

Among the entities affected by the draft bill are museums, archives, and public libraries, as more and more of them digitize their collections and make them publicly available on the Internet. Projects such as the National Library’s Trapalanda digital library, and digitization efforts made by the General Archives of the Nation of Argentina will be severely affected by the measure, and will lead to the removal of large amounts of photographs that are openly and publicly accessible on the Internet.

Another harmed initiative would be Wikipedia, the online and community non-profit encyclopedia which currently provides free and open access to knowledge. Thousands of photographs that illustrates Argentina’s encyclopedic articles of great importance would be eliminated, critically affecting users who use Wikipedia every day for access to knowledge and learning.This is part of a long disturbing trend towards lengthening the international “norm” of copyright lengths to life of the author plus 70 years—two decades beyond what is required by international law as established by the Berne Convention. The Berne Convention requires life plus 50 years of protection for most works, but for photographs only 25 years from when they were taken, in a rare recognition of the qualitative differences between different classes of copyright work. Admittedly, this points towards an obligation to extend the term of protection for photographs—but only for 5 years, not 120.

This bill comes as we fight 20-year copyright term extensions in six of the 12 countries negotiating the Trans-Pacific Partnership (TPP), where Hollywood has taken advantage of opaque trade negotiations to lengthen and ratchet up restrictions on cultural works behind closed doors.

Big publishers are working with policymakers to make these extensions seem like an imperative that must not be questioned for the sake of “protecting” artists’ interests. But it’s critical that we push back against this seeming inevitability that more and more culture will become locked up behind longer, ever more extreme restrictions.

If you’re in Argentina, support Fundación Vía Libre and their fight against excessive terms on photography.

If you’re in the United States, or in the handful of other TPP nations that is under threat from copyright term extensions, visit our TPP Copyright Trap page to find out how you can take action.

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