ARGENTINE UPDATE – Jan 22, 2016


1. US DROPS OPPOSITION TO MULTILATERAL ARGENTINE LOANS (The Washington Post)

2. ARGENTINA ‘WANTS TO PUT OFFER ON TABLE’ FOR DEBTS (Financial Times)

3. ARGENTINA MAY LURE $20 BILLION IN INVESTMENT IN 2016, MACRI SAYS (Bloomberg News)

4. ARGENTINA WINS OVER COKE TO SHELL IN INVESTMENT PLEDGES AT DAVOS (Bloomberg News)

5. U.S. ENDS OPPOSITION TO DEVELOPMENT LOANS TO ARGENTINA AMID THAW (Bloomberg News)

6. GLOBAL ANGST OVERWHELMS ARGENTINA BOND OPTIMISM AS AUCTION FLOPS (Bloomberg News)

7. ARGENTINA CAN BUCK WORLD TREND UNDER MACRI, PRAT-GAY SAYS (Bloomberg News)

8. ARGENTINA SAYS NOV PRIMARY BUDGET DEFICIT 172 MLN PESOS (Reuters News)

9. ARGENTINA SAYS COCA-COLA TO INVEST $1 BLN OVER FOUR YEARS (Reuters News)

10. U.S. ENDS OPPOSITION TO MULTILATERAL DEVELOPMENT BANK LOANS TO ARGENTINA (Reuters News)

11. ARGENTINE GOVERNMENT TO ALLOW BEEF IMPORTS (Reuters News)

12. ARGENTINA-STYLE LEGAL DRAMA LOOMS IF VENEZUELA DEFAULTS ON DEBT (Reuters News)

13. FRONTIER MARKET TO EMERGING MARKET: ARGENTINA, AN UPDATE (Nasdaq)

14. BRITAIN, ARGENTINA SEE CHANCE TO RESET STRAINED RELATIONS (Voice of America)

15. ARGENTINA ON ALERT WITH 1,100 CASES OF DENGUE FEVER (Fox News)

16. ARGENTINA’S TOUGHENED STANCE ON ORGANIZED CRIME STIRS DEBATE (Insightcrime.org)

17. A PINOT NOIR FROM ARGENTINA THAT STANDS OUT IN A SEA OF MALBECS (The New York Times)

18. GRILLING IN ARGENTINA, THE BEEF CAPITAL OF THE WORLD (The Huffington Post)

1. US DROPS OPPOSITION TO MULTILATERAL ARGENTINE LOANS (The Washington Post)
January 21, 2016

BUENOS AIRES, Argentina — The United States says it will no longer oppose lending to Argentina from multilateral banks.

The U.S. Treasury statement follows a meeting between U.S. Treasury Secretary Jacob J. Lew and Argentina Finance Minister Alfonso Prat-Gay at the World Economic Forum in Davos, Switzerland, on Thursday.

It says the policy change was prompted by the Argentine government’s “progress on key issues and positive economic policy trajectory.”

Argentina is in the process of renegotiating about $10 billion of unpaid debt to US hedge funds that refused to give it debt relief at restructurings in 2005 and 2010.

Market-friendly Mauricio Macri took office as Argentine president in January, replacing Cristina Fernandez, who frequently clashed with Washington.

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2. ARGENTINA ‘WANTS TO PUT OFFER ON TABLE’ FOR DEBTS (Financial Times)
January 22, 2016

Argentina’s new government has been welcomed back to the fold at the World Economic Forum in Davos as its economic team pledged to pay back the principal owed to so-called “holdout” creditors in full.

Speaking in a panel at the forum, Alfonso Prat Gay, Argentine finance minister, pledged to honour the debts owed to US hedge funds holdouts while seeking to negotiate the costs of accumulated interest, writes Chris Giles in Davos.

“We want to put an offer on the table,” Mr Prat Gay said, adding that Argentina was offering 120 cents on each dollar owed.

The problem, he said was that the creditors, including Elliot Partners, were asking for 350 cents on the dollar, a tally that had spiralled due to accumulated interest payments over the past decade on certain loans. “I want to honour the debt and let’s discuss the interest bill,” Mr Prat Gay said.

As a sign of support from the international community for its new approach, Treasury secretary Jack Lew announced that the US had ended its formal opposition to the World Bank and other multilateral development banks lending to Argentina.

After a meeting with Mr Prat Gay on the sidelines of the World Economic Forum, the US Treasury pledged to assess “each Argentine project on its own merits”.

The Argentine economics team has also held meetings with the International Monetary Fund in Davos, seeking to restart a normal relationship with the fund after years of mutual distrust under the previous government of president Christina Kirchner.

Since the election of president Mauricio Macri in December, the new administration has sought to resolve the simmering dispute with holdout creditors from the Argentine debt restructuring in 2001 who won a US court case in 2012.

Mr Prat Gay told an audience in Davos that he hoped to restart negotiations with the US court mediator within days so that the country could resolve the dispute with creditors and regain access to international capital markets.

Commenting that the details of the accumulated interest were exorbitant, the finance minister said the terms were not fair, nor reasonable and would have created excessive returns on instruments that had no market price. “I don’t think you’ll find a more juicy investment and therefore this is a discussion we want to have”.

Mr Prat Gay criticised the previous Argentine government for saying the country had secured huge write-downs on the bond principles. “It was not true that it was the haircut of the century,” he said.

Once Argentina fully secures a normal relationship with the international community, it is likely to invite the IMF to evaluate the health of its economy and provide technical assistance on producing statistics, which are not trusted internationally.

After the meeting with the US treasury, Mr Lew said in a statement that he commended the new Argentine government focus on “taking necessary steps to move Argentina toward stronger and sustainable economic growth”.

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3. ARGENTINA MAY LURE $20 BILLION IN INVESTMENT IN 2016, MACRI SAYS (Bloomberg News)
By John Micklethwait and Katia Porzecanski
January 22, 2016

* Shale, renewable energy, infrastructure and agro are promising
* Argentina wants a deal with holdout creditors `now’: Macri

Argentina may lure as much as $20 billion this year in foreign investment as President Mauricio Macri unwinds policies that have prevented companies from entering or expanding operations in the country.

“Argentina has decided to take its place in the global landscape. We have have an important role to fulfill,” Macri said in an interview with Bloomberg News on Friday at the World Economic Forum in Davos, Switzerland. “We need important companies of the world to finance and construct roads, ports, waterways, energy, trains. We’re a huge country that only depends on trucks today. It’s impossible.”

The 56-year old president, who took office Dec. 10 after running the city of Buenos Aires for eight years, has already won an investment pledge of $1 billion from Coca-Cola Co., and “hundreds of millions of dollars each” from Total SA, Royal Dutch Shell Plc, and Dow Chemical Co. while at Davos, he told Bloomberg Thursday. BP Plc also promised to invest in the Vaca Muerta formation, part of the world’s second-largest shale gas reserves, he said. The investments come after Macri lifted capital controls that for several years limited the repatriation of dividends for the companies — all of which currently operate in Argentina.

In his first month in office, he already devalued the peso, lifted most capital controls, is revamping the statistics agency, and kicked-off talks with disgruntled creditors from the nation’s 2001 default in a bid to rebuild confidence and investment in Argentina. The government wants an agreement with holdout creditors “now,” and will resume talks Feb. 1 with the goal of reaching a solution to unlock even more investment potential, he said.

“Argentina is maybe one of the best alternatives in the next 10 years for investors,” Macri said.

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4. ARGENTINA WINS OVER COKE TO SHELL IN INVESTMENT PLEDGES AT DAVOS (Bloomberg News)
By Katia Porzecanski
January 21, 2016

* $1 bln from beverage giant, `hundreds of millions’ by others
* `We’re just getting started’ – Argentine President Macri

Argentina’s new president has promised change will come to South America’s second-biggest economy, and investors from Coca-Cola Co. to Royal Dutch Shell Plc are taking his word for it.

One day into President Mauricio Macri’s visit to the World Economic Forum in Davos, he secured a $1 billion investment pledge from the beverage giant, and said that Shell, Total SA, Dow Chemical Co. have each pledged to invest “hundreds of millions of dollars” in the country. The investments come after Macri lifted capital controls that for several years limited the repatriation of dividends for the companies — all of which currently operate in Argentina.

Macri has vowed to unwind the policies of President Cristina Fernandez de Kirchner’s that drove away interest in the country. In his first month in office, Macri has already devalued the peso, lifted most capital controls, revamped the statistics agency, and kicked-off talks with disgruntled creditors from the nation’s 2001 default in a bid to rebuild confidence and investment in Argentina.

When asked as he was leaving dinner if he has an estimate for how much foreign-direct investment may flow into Argentina this year, Macri said, “No. We’re just getting started.”

Muhtar Kent, the chief executive officer of Coca-Cola, met with Macri in Davos, where they discussed investments for developing operational and distribution infrastructure, as well as environmental initiatives and promotion of exercise, according to e-mailed statement from the Argentine government.
When asked in a Bloomberg TV interview if he was investing because of Macri’s ascent to the presidency, Kent said “Partly. We still were going to invest, but nothing like that.”

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5. U.S. ENDS OPPOSITION TO DEVELOPMENT LOANS TO ARGENTINA AMID THAW (Bloomberg News)
By Andrew Mayeda and Daniel Cancel
January 21, 2016

* Lew meets Prat-Gay in Davos, informs counterpart of decision
* U.S. had voted against World Bank, IDB loans to Argentina

The U.S. ended its opposition to loans for Argentina from multilateral development banks, in another sign the country is reintegrating into the global economy under President Mauricio Macri.

Treasury Secretary Jacob J. Lew informed Argentine Finance Minister Alfonso Prat-Gayof the U.S. decision to end the policy during their meeting Thursday in Davos, the Treasury said in a readout of the meeting. The U.S. will consider each project on its merits, the department said.

Lew commended Prat-Gay’s “focus on taking necessary steps to move Argentina toward stronger and sustainable economic growth,” the Treasury said.

The U.S. established the policy in 2011 as a way to pressure former Argentine President Cristina Fernandez de Kirchner to make payments owed to investors and settle with holders of defaulted debt.

The U.S. sought to halt development loans to Argentina by the World Bank and Inter-American Development Bank. The U.S. is the biggest shareholder in both lenders.

Since taking office Dec. 10, Macri has lifted currency controls, let the peso float, cut export taxes on grains and set inflation and fiscal targets as he looks to unwind restrictions implemented by Fernandez.

Prat-Gay said in an interview this week at Davos that Argentina wants to improve relations with the International Monetary Fund and that the government has “nothing to hide,” in reference to allowing an Article IV review of the economy for the first time since 2006.

Argentina has also restarted negotiations with holdout creditors led by billionaire Paul Singer’s Elliott Management to resolve a debt conflict that has kept South America’s second-largest economy estranged from international capital markets since 2001.

On Dec. 18, Inter-American Development Bank President Luis Alberto Moreno announced plans to provide $5 billion in loans over the next four years in Argentina.

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6. GLOBAL ANGST OVERWHELMS ARGENTINA BOND OPTIMISM AS AUCTION FLOPS (Bloomberg News)
By Daniel Cancel
January 21, 2016

* Argentina didn’t sell any bonds, swapped some notes locally
* Government planned to issue about $1 billion in sale, swap

The bond-investor optimism inspired by Argentina President Mauricio Macri is proving no match for the angst roiling financial markets from the U.S. to China.

Argentina didn’t sell any of its dollar-denominated notes due in 2020 at an auction geared to local investors on Wednesday, a day when the Dow Jones Industrial Average sank more than 560 points before paring losses. The South American country had planned to issue about $1 billion of the securities in a sale and debt swap with a maximum authorization for $5 billion in part to capitalize on soaring demand for its debt in the wake of Macri’s election in November.

“It was a tough day internationally to try to sell debt,” said Alejo Costa, head strategist at Puente, a Buenos Aires-based brokerage. “It appears the government wasn’t willing to pay the higher yields being demanded by the market.”

The failed sale shows how intensifying turmoil in global financial markets may make it harder for Macri to revive Argentina’s economy and help the nation regain access to international credit markets for the first time since 2001.

A Finance Ministry press official told reporters Wednesday in Buenos Aires that the deserted auction showed that dollar demand among local investors has largely already been met.

The 2020 notes rose 0.42 cent to 102.02 cents on the dollar at 2 p.m. in Buenos Aires, according to data compiled by Bloomberg. The yield on the 8 percent bonds has risen 0.14 percentage point this year to 8.1 percent.

The Finance Ministry also said Wednesday that investors exchanged $444 million of the country’s bonds due in 2017 for government debt maturing in 2020. The government had offered to give Bonar 2020 notes at 96 cents for each 100 cents of Bonar 2017 bonds along with a cash payment for future interest.

Jorge Piedrahita, the chief executive officer of broker-dealer Torino Capital in New York, said the terms of swap weren’t attractive enough to entice more investors.

“The offer was rather poor,” Piedrahita said by phone. “The global market played against the government. It just hasn’t stopped falling, so that didn’t help.”

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7. ARGENTINA CAN BUCK WORLD TREND UNDER MACRI, PRAT-GAY SAYS (Bloomberg News)
By Katia Porzecanski and Daniel Cancel
January 21, 2016

* `This is almost an idiosyncratic story,’ finance minister says
* Argentina willing to allow Article IV review by IMF: minister

Argentina is in a position to both return to growth this year and narrow the widest deficit in more than three decades as President Mauricio Macri reinserts the nation back into the global economy, his Finance Minister Alfonso Prat-Gay said.

After lifting currency controls and trade barriers within the first month of taking office Dec. 10,

Argentina’s economy may expand as much as 3 percent in the second half of 2016 from a year earlier with an expected growth rate of between 0.5 percent and 1 percent for the full year. The government will cut spending at a pace that will not imperil its ability to govern, Prat-Gay said in an interview in Davos where he is attending the World Economic Forum.

Investors interested in how Argentina will return to growth, need to understand that the government intends to go slowly but surely, he said. “We know the rest of the region, the rest of the world, is not doing well. This is almost an idiosyncratic story that stands out in a difficult world, and it stands out not because we’re going to do great things but rather because we’re going to stop doing horrible things, and that by itself will unleash significant potential in the economy.”

Macri will arrive in Davos on Wednesday and plans to meet with top executives from technology companies from Alphabet Inc. to Microsoft Corp. as well as energy companies like Total SA and Dow Chemical Co. After 12 years of rule by the Kirchner family, Argentina remains in default and locked out of global capital markets. By 2019, the government plans to slow inflation to about 5 percent from an estimated 27 percent last year and will cut the fiscal deficit to 1 percent of gross domestic product from an estimated 7 percent in 2016, according to targets announced last week.

“It’s a pretty aggressive fiscal policy for next year, so taking account the legacy and the measures we already announced, it’s a deeper cut,” Prat-Gay said. “We’re going from 7 percent to 4.8 percent, that’s pretty tough I would argue, in a year where we still need to see growth picking up.”

The global economy will expand 3.4 percent this year, down from a projected 3.6 percent in October, the International Monetary Fund said Tuesday in a quarterly update to its World Economic Outlook. The fund cut its forecast for Latin America and the Caribbean to -0.3 percent in 2016, from a projected 0.8 percent in October.

‘Nothing to Hide’

As part of Argentina’s planned reinsertion to the global economy, it would like to discuss an Article IV revision with the IMF and will present a proposal to holdout creditors to resolve its debt conflict next week, Prat-Gay said. Any deal with holdouts led by billionaire hedge fund manager Paul Singer will have to be public and transparent to get approval through Congress, he said.

“We want an Article IV because we have nothing to hide,” Prat-Gay, a former JPMorgan Chase & Co. banker, said in the interview.

The Finance Minister will probably meet with the IMF’s Managing Director Christine Lagarde in Davos to discuss resuming formal ties including the first Article IV review of the Argentine economy since 2006, according to a person with knowledge of the matter.

IMF press officers didn’t respond to phone calls and e-mails seeking comment after business hours Tuesday.

The government also inherited international reserves at a nine-year low. To rebuild central bank funds, the central bank is expected to announce a bank loan for as much as $6 billion backed by dollar bonds and farmers have agreed to sell about $4 billion of grains that were being held awaiting a better exchange rate. Argentine businesses who plan to invest this year have agreed to front load as much as $3 billion of those funds in the short-term, Prat-Gay said.

“This is not an academic game where we go to the blackboard and pretend. We cannot pretend. These are the constraints, this is the best we can offer,” the 50-year-old finance minister said. “Are we confident that we can perform under these promises, I think yes, we might even overperform, but we have to be extremely careful.”

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8. ARGENTINA SAYS NOV PRIMARY BUDGET DEFICIT 172 MLN PESOS (Reuters News)
By Gabriel Burin
Jan 21, 2016

Argentina had a primary budget deficit of 172 million pesos ($17.7 million) in November of last year and an overall shortfall of 9.2 billion pesos, factoring in debt payments, the government said on Wednesday.

The numbers showed a worsening of public finances versus November 2014, when the government clocked a primary surplus of 388 million pesos ($45.5 million) but an overall deficit of 3.4 billion pesos.

Center-right President Mauricio Macri, inaugurated last month, inherited a stagnant economy with double digit inflation and a primary fiscal deficit of 5.8 percent of GDP in 2015.

Finance Minister Alfonso Prat-Gay said this month he aims to reduce that deficit to 4.8 percent of GDP this year and 3.3 percent in 2017, in part by eliminating public service subsidies for wealthier Argentines.

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9. ARGENTINA SAYS COCA-COLA TO INVEST $1 BLN OVER FOUR YEARS (Reuters News)
By Juliana Castilla
Jan 21, 2016

Coca-Cola Co (KO.N) will invest $1 billion over four years in its bottling and distribution operations in Argentina, the company said on Thursday, and leave the door open to further acquisitions in the South American country.

Coca-Cola CEO Muhtar Kent told Argentine President Mauricio Macri of the spending plan when the two met at the World Economic Forum in Davos, where Macri has been courting chief executives with a message that Argentina is open for business.

Macri, who took office on Dec.10, has dismantled capital controls and unified the country’s currency exchange rate, overseen the easing of some banking regulations and resumed negotiations with holdout creditors as part of a drive to restore investors’ battered confidence.

Francisco Do Pico, a spokesman for Coca-Cola Argentina, said the investment would include a new bottling plant in the northern Corrientes province and two new distribution centers. Construction of the bottling factory had already started, he said.
“At this time we do not rule out acquiring a local company in the non-alcoholic drink sector,” Do Pico added, without giving any further details on possible acquisitions in the pipeline.

Macri also met with the CEOs of The Dow Chemical Company (DOW.N), Royal Dutch Shell (RDSa.L) and Facebook FB.N Thursday.

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10. U.S. ENDS OPPOSITION TO MULTILATERAL DEVELOPMENT BANK LOANS TO ARGENTINA (Reuters News)
By Lindsay Dunsmuir
Jan 21, 2016

The United States is ending its policy of opposing most lending to Argentina from multilateral development banks, the U.S. Treasury Department said on Thursday.

U.S. Treasury Secretary Jack Lew informed Argentine Finance Minister Alfonso Prat-Gay of the move on Thursday when the two met in Davos, Switzerland, the department said in a statement. It said the United States will consider each Argentinian project on its own merits.

The policy had been in place since 2011 as part of a larger U.S. campaign to pressure Argentina to pay debts and other obligations to American investors a decade after the South American country defaulted on more than $81 billion of government bonds. It meant the U.S voted against new loans to Argentina at the World Bank and Inter-American Development Bank.

Argentina’s center-right president, Mauricio Macri, has made swift reforms since taking office in December, including resuming talks to reach a deal over the unpaid debts with U.S. hedge funds.

Macri also has eliminated capital controls and cut onerous export taxes.

Lew said the United States was ending it policy in light of the new government’s “progress on key issues and positive economic policy trajectory,” the Treasury statement said.

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11. ARGENTINE GOVERNMENT TO ALLOW BEEF IMPORTS (Reuters News)
21 January 2016

BUENOS AIRES, Jan 21 (Reuters) – Argentina will allow beef imports if the recent opening of the export market results in a domestic shortage of steaks and burgers, farm minister Ricardo Buryaile told local radio on Thursday.

The country lifted restrictions on beef exports after President Mauricio Macri, elected in November on an open-markets platform, was inaugurated on Dec. 10. Permitting exports has raised worries that beef may become scarce domestically.

In the first 15 days of this year 59,924 head of cattle were sold in Argentina’s domestic market, down from 72,546 in the same 2015 period.

“We will not allow a shortage to take place,” Buryaile told local radio station Radio 10. “If someone requests authorization to import, we will grant permission.”

Previous President Cristina Fernandez adopted protectionist trade policies and market controls. She did not grant permission to import beef, in part because she tightly controlled exports, ensuring ample domestic supply during her administration.

Buryaile, a cattle rancher by trade, aims to dramatically increase Argentina’s beef production, as well as output of poultry and pork. Beef export at the end of 2015 were around 200,000 tonnes per year. The government’s goal is to increase that by 60 percent by the end of 2016.

Twelve years ago Argentina was the second biggest beef exporter in the world. Now it comes in at 15th or 16th, according to Macri’s farm policy team. (Reporting by Maximilian Heath; Writing by Hugh Bronstein; Editing by Phil Berlowitz)

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12. ARGENTINA-STYLE LEGAL DRAMA LOOMS IF VENEZUELA DEFAULTS ON DEBT (Reuters News)
21 January 2016

MIAMI/NEW YORK, Jan 21 (IFR) – The lack of collective action clauses on close to US$40bn of Venezuelan bonds could expose the oil exporting nation to a lengthy legal fight with holdout investors if plunging oil prices force the government to default on its debt.

With crude hovering around US$29 per barrel on Thursday, Venezuela – which has requested an emergency OPEC meeting – could have trouble satisfying its debt obligations.

Barclays said the country will have difficulty avoiding a credit event in 2016 – and that is based on the bank’s forecast of US$37 oil, almost US$10 higher than current prices.

If that happens, analysts said hedge funds could look to borrow a page from Argentina’s play book and try to exploit the absence of collective action clauses on some sovereign debt to block a potential restructuring and sue for full repayment.

“The fact that some bonds don’t have collective action clauses is a problem,” said Lee Buchheit, a partner at law firm Cleary Gottlieb who has advised sovereigns from Greece to Iraq on sovereign debt matters.

“Venezuela has more commercial connections with the US than most sovereigns do and that increases the litigation risk. They should be concerned about a debt restructuring that left behind holdouts.”

Buchheit was recently hired by Argentina’s new government as the country reopens negotiations with holdout investors.

NO CACS

Collective action clauses typically spell out that any restructuring can go ahead with a 75% approval from investors, binding any dissenting creditors in the process.

The lack of these clauses could stagger the restructuring process and cause delays that in the case of Argentina led to the country’s 15-year isolation from the capital markets.

Venezuelan bonds without CACs include all of the US$35.6bn in dollar debt issued by state-owned oil company PDVSA as well as two series of Venezuela’s own debt – about US$4bn of 9.25% September 2027s and US$300m of 13.625% August 2018s.

“The 2027s are going to be the most valuable in the event of a default,” said Russ Dallen, a partner at Latinvest in Miami, who argued those notes’ large size and liquidity could make them easy prey for hedge funds.

Two other bonds issued by the sovereign – the 7% December 2018s and the 9.375% January 2034s – have CACs, but require a higher threshold of 85% for a restructuring to go ahead, potentially making it harder for an agreement among creditors to be reached.

An Argentina-style protracted legal fight in the US – where Venezuela owns refiner Citgo and sells a large portion of its oil exports – is seen by several analysts as the main risk facing bondholders in a post-default scenario.

“My fear in Venezuela is not the default,” Siobhan Morden, head of Latin America fixed-income strategy at Nomura said at a conference of the Emerging Markets Trading Association in Miami this week.

“The concern is an extended period, similar to Argentina in 2001, where you hit a low in terms of recovery value … but you don’t know when debt negotiations are going to start.”

Inaction from the Venezuelan government, which faces major domestic issues at home including triple-digit inflation and shortages of basic goods, could also hinder negotiations with creditors.

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13. FRONTIER MARKET TO EMERGING MARKET: ARGENTINA, AN UPDATE (Nasdaq)
By Peter Kohli
January 21, 2016

It has been just over a month or so since President Mauricio Macri took over the reins in Argentina, and in that month he has been working furiously to right a sinking ship. This week finds him in Davos at the Global Economic Conference where apparently his agenda includes a meeting with David Cameron, Prime Minister of Britain, regarding the thorny issue of the Falkland Islands.

For those that weren’t aware or weren’t alive in the 1980s, Argentina, which at that time was under military dictatorship, invaded the Falkland Islands, a British territory. A brief war took place and the Argentine army, basically made up of conscripts, was beaten and had to surrender. Since then, the relationship between the two countries has never thawed. That is until this week, hopefully!

By attending the conference in Davos, Mr. Macri becomes the first Argentine leader to do so in over a decade. It’s good to see the country reengage with the rest of the world, and there is a lot to be gained by doing so. One important gain, due mainly to Mr. Macri’s aggressiveness in tackling problems, is the possibility of an upgrade to Argentina’s market classification. Carolina Millan of Bloomberg reports that, “Argentina is set to recapture its emerging- market classification almost seven years after its equities were downgraded to frontier status when the country implemented capital controls, according to Itau BBA.”

In order for a country to receive an upgrade, MSCI requires that at least three companies meet certain liquidity measures and have market capitalization of at least $1.26 billion. In my December 31 article, I named three stock choices that already meet those requirements. They are: Grupo Financiero Galicia (GGAL), BBVA Banco Frances SA (BFR), and YPF (YPF) which is a state-owned petroleum company. The upgrade takes some time, usually about a year according to MSCI, but I am fairly confident that Argentina will make the cut.

Mr. Macri’s assertiveness hasn’t gone unnoticed in the press either. The Financial Times published an article with the headline, “Macri raises hopes for Argentina’s economic renewal.” Authors Benedict Mander and Daniel Politi write, “With a cloud hanging over most emerging economies after a collapse in commodity prices, it could hardly be a tougher moment for the former mayor of Buenos Aires to engineer a turnround in Argentina’s fortunes. But many investors are brimming with optimism for Latin America’s third-largest economy, as Mr Macri leads a drive to normalise relations with the international community following his election victory in December.”

Yes, I know I wrote about Argentina only three weeks ago, but considering things are moving at breakneck speed in that country I felt it necessary to give an update. President Macri has his work cut out for him, but being able to secure a $9 billion loan from a group of international banks led by JP Morgan is, in my opinion, a thumbs-up. Of all the developing markets out there, Argentina stands to gain a large chunk of the $2 trillion invested each year in emerging markets. Especially now that capital controls have been lifted and the adults are back in charge.

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14. BRITAIN, ARGENTINA SEE CHANCE TO RESET STRAINED RELATIONS (Voice of America)
January 21, 2016

LONDON— Old foes Britain and Argentina said on Thursday there was an opportunity to open a new chapter in diplomatic relations after a meeting between British Prime Minister David Cameron and newly elected Argentine President Mauricio Macri.

Relations between Britain and Argentina have been fraught since a brief war in 1982 which was triggered by a sovereignty dispute over the Falkland Islands, a British overseas territory in the South Atlantic known as the Malvinas in Argentina.

That tension had been fanned in recent years by former Argentine president Cristina Kirchner, who repeatedly criticized Britain’s refusal to discuss the sovereignty of the archipelago.

Cameron met Macri, who was sworn in as president last month, on the sidelines of the World Economic Forum in the Swiss resort of Davos and afterwards signalled a possible thawing of relations.

“Both agreed that there was an opportunity to embark on a new chapter in relations between our two countries,” a spokeswoman from Cameron’s office said in a statement following the meeting.

The statement said they discussed economic reform in Argentina, the expansion of trade and investment links and the Falkland Islands. Cameron’s position on the British sovereignty of the islands had not changed, it added.

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15. ARGENTINA ON ALERT WITH 1,100 CASES OF DENGUE FEVER (Fox News)
January 21, 2016

Argentina is on alert for dengue fever, with 1,100 cases nationwide and a situation of epidemic proportions in the country’s northern border provinces.

Argentina already has passed from the “containment phase” to the “mitigation” phase, treating patients in hard-hit areas who traveled to neighboring affected countries or had contact with people who had done so, Health Ministry official Nestor Perez Baliño told EFE.

The northeastern provinces of Formosa and Misiones, which border on Brazil and Paraguay, have the most cases – 900, all told – while the rest are spread among other provinces although the situation is not one of an outbreak, he said.

The most common symptoms of the disease transmitted by the Aedes aegypti mosquito are high fever, back and joint pain, skin rash, head- and eyeache and occasional vomiting.

For Argentina, the good news is that there are still very few people who have become infected within the national territory.

The increase in rain and temperatures caused by the El Niño weather phenomenon has resulted dengue epidemics in Paraguay and Brazil, thus increasing the risks for Argentina.

Dengue generally spikes in four- to six-year cycles, said Perez, and the last epidemic occurred in 2009.

However, this year, the disease is hitting weeks earlier than its normal February-March appearance and experts don’t know whether it will continue through the end of the Southern Hemisphere summer or will begin to abate before that.

“Under 12 degrees C (equivalent to 54 F), it’s very difficult to find the Aedes (mosquito), and so I’m sure the epidemiological curve will start to fall off in May,” he said.

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16. ARGENTINA’S TOUGHENED STANCE ON ORGANIZED CRIME STIRS DEBATE (Insightcrime.org)
Written by Quenton King
Thursday, 21 January 2016

Argentina President Mauricio Macri’s announcement of a national security emergency underscores both the public’s growing concern regarding crime and the new government’s determination to stop it. But some critics are already saying the president has gone too far.

Argentina’s presidential office outlined several new measures that will be implemented under the national public security emergency announced on January 19, including the creation of a law enforcement cabinet and the authorization to shoot down drug planes.

The new anti-drug office, the Cabinet of Human Security, will concentrate on attacking the growth of organized crime in urban areas, most notably Rosario, a hotspot for drug violence in Argentina. Authorities were recently forced to transfer leaders of the Los Monos drug gang from a Rosario jail to a federal prison outside the city following a shootout between criminals and security officials that is believed to have been an attempt to set the gang leaders free. The heads of Los Monos were reportedly continuing to oversee the gang’s drug trafficking operations from behind bars.

In addition to the Cabinet of Human Security and the shoot-down authorization, the government plans to install radars along the country’s northern border in order to gain “efficient control” over this frontier region.

InSight Crime Analysis

Macri’s decision to elevate the fight against transnational crime will probably win public favor due to the perceived increase in drug trafficking activity in Argentina, but some detractors have voiced concern about this new approach.

Horacio Verbitsky of the Center for Legal and Social Studies questioned what unintended consequences might come from “border control, the militarization of anti-drug efforts, the hidden introduction of the death penalty and the deployment of yet more security officers to impoverished neighbourhoods.” Political figures have also directly criticized the president, saying he overstepped his bounds by authorizing shoot-downs via an executive decree.

Government officials have fired back, with Security Minister Patricia Bullrich defending the government’s decision to shoot down suspected drug planes on local television. She noted that authorities will first try to intercept a suspicious aircraft and order it to land and that “the goal is not to shoot [down] the plane.”

One aspect that could get lost in the discussion is whether these new security policies will actually result in less crime and drug violence. Macri appears to be following through on his campaign promise of taking a tougher stance on crime than former President Cristina Fernández de Kirchner. Whether this will improve or worsen Argentina’s security situation remains to be seen.

17. A PINOT NOIR FROM ARGENTINA THAT STANDS OUT IN A SEA OF MALBECS (The New York Times)
By Eric Asimov
Jan. 21, 2016

MAINQUÉ, Argentina — The flat, dry Río Negro Valley on the northern end of Patagonia won’t strike anybody as a glamorous wine region. For one thing, apple and pear orchards, along with platoons of poplar trees, far outnumber grapevines. For another, the restaurants, hotels and the usual camp followers of the winemaking life are nowhere to be found.

But glamour did not draw Piero Incisa della Rocchetta to the Río Negro. The old pinot noir vines did, along with promising soils, a sparkling climate and a dream of creating a self-sustaining wine estate the way his grandfather the Marchese Mario Incisa della Rocchetta did in Italy 50 years ago. The marchese created Sassicaia, a paradigm-breaking cabernet blend that proved greatness could be achieved in Bolgheri, on the Tuscan coast.

Dreams and inherited wealth have fueled more than a few wine start-ups, but rarely in so unprepossessing a place and with so untested a notion as Argentine pinot noir. Unlike many start-ups, though, Mr. Incisa’s estate, Bodega Chacra, is producing wines that decisively earn whatever attention his family history initially brings him.

Argentina is known for one wine, malbec. The prevailing style of these wines, grown mostly in the province of Mendoza to the northwest, is the antithesis to good pinot noir; powerfully fruity, opulent and often highly alcoholic and oaky. By contrast, good pinot noir is known for its elegance and finesse, characteristics that Mr. Incisa has managed to achieve in his Chacra wines in just a decade.

A 2012 Treinta y Dos, made from pinot noir vines planted in 1932 by Italian immigrants, is a savory delight, graceful and lithe with flavors of red fruits and flowers tempered by minerals. A 2013 Cincuenta y Cinco, from vines planted in 1955, is likewise beautifully balanced and floral, with an umami quality. Even Mr. Incisa’s bigger-production 2014 Barda, made from younger vines, shares their tangy, floral, energetic qualities, though without the extra depth of the other pinot noirs.

While pinot noir may not be associated with Argentina, it’s not unknown. Fifty years ago, Mr. Incisa said, more than 4,000 acres in Patagonia were planted with pinot noir. Most of those grapes went into sparkling wines. Chandon Argentina, for example, a subsidiary of the Champagne producer Moët & Chandon, has been making sparkling wines in Argentina for more than 65 years. But many of those grapes are now in other regions. By 2000, Mr. Incisa said, less than 500 acres of pinot noir remained in Patagonia.

From those remaining vines came a pinot noir that Mr. Incisa tasted blind in 2001. He was impressed with the wine, which had been made by a Dutch wine consultant, Hans Vinding-Diers, for Humberto Canale, a pioneering Patagonian producer. So impressed that he was determined to see the source of those grapes. He finally visited in 2004.

He found an old stand of pinot noir dating from 1932. He was struck by the dry climate, the fresh breeze that seemed to blow constantly from the Andes in the west and the brilliance of the sunlight. Though technically a desert, bounded by rivers flowing from the mountains into the Río Negro, the region was irrigated by canals dug by British colonists in the 19th century.

But Mr. Incisa was disturbed by the condition of the vines, which had long been neglected, and of the soils — gravel, sand, limestone and clay — which seemed gray and lifeless. Taking a chance, he bought the land and the vines and set about building his estate. He has since supplemented the oldest vines with several additional pinot noir vineyards.

“I was the idiot guy with a fair dose of not knowing what I didn’t know,” Mr. Incisa said as we walked the vineyards, now alive with birds, bees, bats and other signs of a healthy environment, the result of biodynamic viticulture. “Maybe I had the idea of getting out of a family trajectory, which was very privileged but maybe not so much of a challenge for me. Plus, I had a passion for pinot.”

Mr. Incisa, now 48, has a history of adapting to new environments. He was born in Bolgheri, and spent his early childhood there and in Florence. He went to boarding school in Switzerland, college in California, and now commutes between Patagonia, New York and Italy.

As he established himself in Patagonia, he found something of a guide in Mr. Vinding-Diers, who by then had his own label, Bodega Noemía, making Patagonian malbec. Mr. Vinding-Diers allowed him to use his winery until his own was completed. Mr. Incisa’s first vintage was 2004, and he called it Chacra, a regional term meaning “farm.”

“I wanted to use a local word,” he said. “Here, I’m very much of a stranger.”

Despite the condition of the vines and soil, Mr. Incisa said, the vineyards came with built-in advantages. In the fresh Patagonian climate, there were none of the usual problems — humidity, fungus, mildew, pests. Unlike the vines in most of the great vineyards of Europe and the world, which are grafted onto American rootstocks to combat the threat of phylloxera, an aphid that devastates grapevines, Mr. Incisa’s vines, even the younger ones he has planted to supplement his old stands, are ungrafted.

“We know it’s sort of a gamble,” he said, “but if at 85 years old the vines are doing well, we figure we don’t need to change.”

Adapting to local custom, Mr. Incisa has planted rows of poplars around the vineyards and in between different blocks to protect the vines from the stiff, incessant wind. He has planted cover crops in between the rows of vines to absorb heat from the summer sun and has sculpted the canopy of leaves over the vines so that the grapes ripen slowly in the luminous light.

“We’re looking for something on the feminine, softer side rather than big and tannic,” he said. “I always want freshness, good acidity and, as a byproduct, low alcohol.”

In the low, sandstone winery Mr. Incisa built, the grapes are handled as little as possible. They are fermented in epoxy-lined cement tanks, mostly as whole bunches, with indigenous yeast. The wine then ages in French oak barrels until bottling. The wines are neither fined nor filtered, and receive a minimal dose of sulfur dioxide as a preservative. Mr. Incisa is experimenting with small cuvées that receive no sulfur at all.

As he has become more confident in his winemaking, his wines have become more precise and transparent. He has cut back on the use of new oak, harvested earlier and become more delicate in the winery.

“There is not a right or wrong,” he said. “There is just personal taste.”

Working in virtually the middle of nowhere (the nearest city, Neuquén, is more than an hour’s drive away) and in an often dysfunctional Argentine economy has its challenges. Equipment is difficult to repair or replace, and a lack of technical support means Mr. Incisa and his local team must figure things out for themselves.

“You learn to make do, conserve, be efficient,” he said. “Keep everything cheap, local and good for the environment.”

Winemaking can also be dangerous. In 2012, while working in his winery, Mr. Incisa slipped off the edge of a tank and fell backward onto the floor below, where he remained for hours until he was discovered. He broke his leg in many places and was in a wheelchair for three months.

He decided life was too short to play it safe. He would take chances to make the wines that he wanted.

“The most beautiful thing in my life was the accident,” he said. It has given him perspective on his project. “It’s taken a small series of miracles to make this work,” Mr. Incisa added. “I attach more to the process than the outcome.”

His 2015s may be his best wines yet. Tasted from barrels, where they are still aging, they are fresh and energetic with crunchy fruit flavors and that characteristic savory quality.

Nonetheless, persuading the rest of the world to take interest in Argentine pinot noir has proved a challenge. With so much other good pinot noir in the world, why should anybody drink his?

“Hopefully, because you are curious and want to explore,” he said. “It an expression of pinot noir that’s different.”

18. GRILLING IN ARGENTINA, THE BEEF CAPITAL OF THE WORLD (The Huffington Post)
By Steven Raichlen
01/21/2016

2016-01-21-1453415102-3477904-Argentina3630x407.jpg

The stats are in and the winner is… Argentina. No other country consumes more beef. Last year, Argentineans consumed an average of 154 pounds per person — compared to 89.8 pounds in the U.S.

Argentina’s love affair (I use the term deliberately) with beef began with the gauchos, rugged cowboys who settled the Pampas to tend vast herds of cattle, the descendants of steers brought here by conquistadors in 1536. Gaucho life was primitive, and so was gaucho barbecue: whole lambs, pigs, and racks of beef ribs stuck on T-shaped metal stakes in front of a roaring bonfire. Seasonings were limited to salt or perhaps such dried herbs as you could find at a country general store. And the herbs were moistened with a little vinegar–the origin of Argentina’s table sauce, chimichurri. The gaucho’s asado (literally, “roast”) remains one of the world’s most authentic and heroic live-fire cooking experiences, popular throughout rural Argentina and even in major cities.

By the early 20th century, beef had made Buenos Aires one of the wealthiest cities in the western hemisphere. Refrigerated freighters, their holds brimming with meat, steamed down the Plata River destined for New York, Europe, and beyond. Beef fortunes transformed Buenos Aires from a cultural backwater into the “Paris of South America.”

Over time, the rustic asado of the gauchos evolved into sophisticated steak houses distinguished by their broad menus, with dishes grilled to order on industrial-strength parrillas (grills). The preparation remains simple–salt, fire, and perhaps a chimichurri for serving. The focus stays on the beef.


Nobody can go back and start a new beginning, but anyone can start today and make a new ending.” – Maria Robinson

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