2. ARGENTINE TOWN FACES GHOSTS OF ITS DIRTY WAR (The Washington Post)
1. ARGENTINA PLANS TO SELL UP TO $1 BILLION IN DOLLAR-LINKED BONDS (The Wall Street Journal)
By Ken Parks
20 October 2014
BUENOS AIRES — Argentina’s government said it would sell up to $1 billion in local U.S. dollar-linked bonds later this month as it continues to tap local institutional investors such as banks and insurers for financing.
The two-year, dollar-denominated bonds carry an annual interest rate of 1.75% and pay investors in Argentine pesos at the official exchange rate, the Economy Ministry said Friday night.
The government will receive offers for the bonds on Thursday, with final settlement Oct. 28.
“Selling bonds linked to the exchange rate is a normal and widespread recipe in emerging markets when fears of a devaluation are rising on the market and [a government] wants to send signals that it won’t devalue,” said Pedro Rabasa, a former chief economist at the central bank.
The peso closed little changed at 8.4760 a dollar Friday on the regulated foreign-exchange market. On the black market, where some Argentines go to skirt currency controls that limit the number of dollars they can legally purchase, the peso sold for 14.70 a dollar.
The gap between exchange rates is fueling speculation the government eventually might devalue the official exchange rate, something central-bank chief Alejandro Vanoli ruled out last week. In January, the government let the peso slide 20% to stop a run on the country’s hard-currency reserves in the biggest devaluation since 2002.
Mr. Rabasa thinks it isn’t a question of if the authorities will devalue the peso, rather when and by how much.
“The longer the central bank takes to move the exchange rate, the greater the risk that this ends in an uncontrolled devaluation,” he said.
Thursday’s bond issuance will mark the third time that President Cristina Kirchner has tapped domestic debt markets for financing this year as a dispute with creditors in the U.S. prevents her administration from selling bonds overseas.
Last month, the government sold 10 billion pesos ($1.17 billion) in two-year peso bonds. In March, it sold 5.5 billion pesos in three-year bonds, the first time in several years it raised funds from domestic investors.
The peso bond sales allowed the government to reduce its reliance on money printing to cover spending deficits, while at the same time helping the monetary authority contain inflation by taking pesos out of the economy, analysts say.
The government’s funding strategy still relies to a large degree on borrowings from the national pension agency and the central bank. Analysts point to money printing by the central bank to finance the federal government as a significant contributor to inflation of around 40%.
Argentina hasn’t sold bonds offshore since it defaulted on about $100 billion in 2001 amid a deep economic crisis. The governments of Mrs. Kirchner and her husband and predecessor, Nestor Kirchner, managed to swap about 93% of the defaulted debt that was eligible to be restructured for heavily discounted new bonds.
However, some creditors demanded to be paid in full and have hounded Argentina in courts across the globe. Earlier this year, Argentina defaulted on some of its restructured bonds after a judge barred payments unless the Kirchner administration also pays holdout creditors that have won $1.6 billion in court awards.
The dispute with holdouts is seen as the main impediment to Argentina borrowing abroad to relieve dollar shortages that have led it to restrict imports at the expense of economic growth.
2. ARGENTINE TOWN FACES GHOSTS OF ITS DIRTY WAR (The Washington Post)
October 20, 2014
OLAVARRIA, Argentina — Shade trees hide the crumbling farm house outside of Olavarria. Hidden at the end of a dirt path, the white plaster coating is falling away from the brick foundation like scabs peeling off an unhealed wound.
Araceli Gutierrez guards the memories of this place like a fragile keepsake. A voluntary caretaker, the 61-year-old with faded blonde curls watches over the house known as Monte Peloni where, as a young woman, she was tortured and raped by her military captors.
“This is a faithful reflection of the memory,” she says, walking through the decaying rooms, her expression lost in time. “If it collapsed, it would be as if the most important part of my life were to collapse.”
The events that took place in 1977 now are coming to light, forcing residents of this pastoral community to examine their role in Argentina’s Dirty War against those who challenged the military regime.
One secret unearthed this summer already cracked Olavarria’s facade of quiet rural life.
In August, residents learned an Olavarria music teacher named Ignacio Hurban was, in fact, Guido Montoya Carlotto, the lost grandson of Estela de Carlotta, whose Grandmothers of Plaza de Mayo group searches for children taken by the regime.
Now, Olavarria is learning about the secrets of Monte Peloni. Gutierrez is among the witnesses testifying before a judicial panel investigating the detentions of 21 people taken there by military officials.
A hearing set for next year will uncover abuses allegedly committed against 40 other people at Monte Peloni by 70 defendants, including former police officers, prison officials and town leaders who served as advisers to the regime that ruled Argentina from 1976 to 1983.
“With this tribunal, plus the appearance of Guido,” Gutierrez said, “Olavarria has wwked up.”
But it has been a difficult awakening. Olavarria, some 220 miles (350 kilometers) southwest of Buenos Aires, is a prosperous farming and industrial town that holds onto tradition. The afternoon siesta is still a part of life for many of the 90,000 residents. The twin steeples of the Catholic church stand over Olavarria’s tree-lined central square, right next to city hall.
The process is exposing secrets long buried by Olavarria, where victims and the accused share the same streets and know the same people.
Four aging military men could be sent to prison for life as a result of the tribunal that opened Sept. 22 and is expected to conclude before the close of the year.
The four defendants are Omar “Pajaro” Ferreyra, 64, an army sergeant who went on to serve as Olavarria’s director of urban control; retired Gen. Ignacio Verdura, 82, who commanded the regiment that controlled the region; former Capt. Walter Grosse, 69; and former Lt. Horacio Leite, 64.
Townspeople old and young crowd into a room at the local state university, or gather outside at the windows, to hear recollections of kidnapping and torture, of being taken to the bathroom of the old farmhouse, where the most sensitive parts of one’s body were fastened to electrical cables and shocked.
Tales of Monte Peloni, named for the Swiss family who built the home in the 1800s, long passed from one resident to another like ghost stories.
“I had one friend who would tell us that it scared him to walk by there at night,” said Facundo Carlucho, an industrial engineering student in Olavarria.
“I think it’s good that justice is being done for what happened in this country. I didn’t live through that time but, from what my parents told me, I know enough.”
Other communities in Argentina launched investigations into their Dirty War-era abuses years ago, but in Olavarria, there was “resistance” by longstanding social groups that continue to hold influence, according to Walter Romero, the prosecutor leading the Monte Peloni tribunal.
“It’s a small town with a conservative profile,” said Rafael Curtoni, dean of social science faculty at Central University of Buenos Aires province.
Curtoni said Olavarria continues to guard “certain secrets of the business sector and of people in power” who cooperated with the dictatorship.
“We all know who they are and where they are,” he said.
Many in Olavarria were stunned by the story of Hurban, who learned his true identity after volunteering to have his DNA tested. Shortly after his birth in 1978, he was taken from his mother, who died in military captivity, and given to a couple who raised him on a local farm.
Hurban has said his adoptive parents are “an extraordinary couple” who cared for him “with the greatest of love.” The Plaza de Mayo group opposes any effort by authorities to question the couple, concerned such an interrogation would discourage other lost children from coming forward.
As many are realizing, examination of the past is a delicate endeavor.
Carmelo Vinci, a former Monte Peloni detainee who now heads the Commission for the Memory of Olavarria, says local business owners participated in the repression of dissidents, noting that the people they employed in local factories were among the first to be detained. The tribunal has said it will investigate allegations that local Rotary Club members were given advance knowledge of who the military intended to pick up.
But Oscar Unzaga, president of the city’s main Rotary Club, denied that any such collusion occurred.
After consulting with the club’s oldest members, he told The Associated Press, “we decided not to say anything (about the charge) because that would give importance to an embittered testimony that does not deserve a response.”
The whole process of the tribunal, he said, is “a circus where the result is already decided.” All of the charges should be dismissed, he said, “because we are suffering attacks” perpetrated by guerrillas.
The airing of Olavarria’s secrets has made for uncomfortable encounters, said Vinci, who owns a printing shop in town.
A former military officer connected to the regime occasionally passes his store, he said. “Before, he would greet me very cordially. … But since the hearings began, he is not so friendly.”
A confrontation Gutierrez had with Ferreyra while he led the city’s urban control department some years ago was recorded by a television program and broadcast nationwide. The camera recorded Gutierrez as she chased him down the corridor of city hall shouting, “Come and tell me that you don’t know me.”
Ferreyra simply walked away, leaving her demand to hang in silence.
3. ARGENTINA LEADER ORDERED TO REST FOR 48 HOURS (The Washington Post)
October 17, 2014
BUENOS AIRES, Argentina — Doctors told Argentine President Cristina Fernandez on Friday to rest for 48 hours in order to recover from a sore throat.
Argentina’s presidency said in a statement that the 61-year-old leader is suffering from pharyngitis and had to suspend a public event scheduled for later in the day in order to get some rest.
It’s the latest health issue to sideline Fernandez.
In January, she was treated for hip pain and sciatica, and in July she missed Independence Day celebrations to continue recovering from an acute throat infection. Last year, she underwent head surgery to remove a blood clot. A 40-day period between December and January when Fernandez went silent from public comments caused concern over her condition.
Fernandez was last seen in public Thursday night after the launching of Argentina’s first domestically built communications satellite.
4. ARGENTINA PLANNING $1 BILLION DOLLAR-LINKED BOND SALE (Bloomberg News)
By Katia Porzecanski
Oct 19, 2014
Argentina plans to sell as much as $1 billion of dollar-linked bonds this month, the first sale of its kind by the sovereign in at least a decade.
The country, which hasn’t sold debt in international markets since defaulting on a record $95 billion in 2001, will take offers on the two-year local securities beginning Oct. 23, the Economy Ministry said in a statement Oct. 17. The bonds will be denominated in dollars and pay holders in pesos at the official exchange rate, with an annual interest rate of 1.75 percent. The sale will close Oct. 28.
The securities offer protection against a peso devaluation and are being sold as the government tightens controls on informal currency markets. Argentines who can’t or don’t want to get government permission to access U.S. currency pay as much as 73 percent more for dollars in the black market.
“Despite the capital gains in pesos you’d get with a dollar-linked bond in the medium term from the inevitable correction in the real exchange rate, the price and yield for dollar debt is still superior,”Daniel Marx, a former finance secretary who runs Buenos Aires consulting company Quantum Finanzas, wrote in a report Oct. 17.
The sale will compensate insurance companies that were told by government officials to sell their dollar-denominated bond holdings to relieve pressure on the informal exchange rate, Buenos Aires-based newspaper Ambito Financiero reported last week, without saying where it got the information.
Jesica Rey, a spokeswoman for the Economy Ministry, didn’t immediately reply to a message sent after normal business hours seeking comment on the objective of the sale.
Central bank President Alejandro Vanoli met with the nation’s banking association last week and reiterated a devaluation shouldn’t be expected, the monetary authority said in an Oct. 16 statement. Vanoli discussed measures to stimulate savings in pesos, the statement said.
Since her re-election in 2011, President Cristina Fernandez de Kirchner has restricted access to dollars as surging inflation spurred capital flight and a plunge in central-bank reserves. Prices rose 40.3 percent in September from a year earlier, according to the City of Buenos Aires.
Argentine companies and provinces have issued about $5 billion in dollar-linked securities as funding costs abroad jumped and speculation the peso would be devalued fueled domestic demand for the instruments, according to data compiled by the Argentine Institute of Capital Markets.
The nation devalued the peso 19 percent in January, and 17 economists surveyed by Bloomberg expect the currency to fall an additional 26 percent by the second quarter of next year to 11.4 per dollar.
This is Argentina’s third bond issuance in local markets this year. The nation sold 10 billion pesos ($1.2 billion) of two-year bonds last month and 5.5 billion pesos of three-year bonds in March.
5. MONSANTO SEEKING TO CURB WEED-KILLER MISUSE IN ARGENTINA (Bloomberg News)
By Charlie Devereux and Pablo Gonzalez
Oct 17, 2014
Monsanto Co. (MON), the world’s largest seed company, is planning to restrict sales of its herbicides in Argentina to certified buyers in a bid to reduce incidents of incorrect spraying that pose health risks.
The St Louis, Missouri-based company is working to create a register of herbicide users, Fernando Giannoni, director of corporate affairs for southern Latin America, said in an interview yesterday in Buenos Aires.
“We hope in the future to only sell our product to certified appliers,” Giannoni said. “Of course we don’t recommend that it’s applied near urban populations, nor schools or rivers. I don’t rule out that in the future we could sue farmers that apply our product incorrectly.”
He denied a report by Argentina’s National University of Rio Cuarto in Cordoba that links glyphosate, used in Monsanto’s weed killers, with cancer and blamed any side effects on farmers misusing the chemical. Giannoni said that while he hasn’t seen the Rio Cuarto paper, other reports have always ended up being disproved when sent up for peer review by the international scientific community.
Monsanto will seek to work with provinces or the national government to establish norms for the application of herbicides, Giannoni said. Argentina accounted for 7.5 percent of Monsanto’s sales last year, up from 5.9 percent in 2010, according to data compiled by Bloomberg.
“What’s happening is that there’s 5 percent of people that are using our product irresponsibly and this causes damage that applies to all farmers,” Giannoni said. “As an industry we need to close ranks so that everyone applies the product responsibly and expose those who don’t.”
6. ARGENTINA SAYS TO LAUNCH NEW TWO-YEAR BOND ISSUE UP TO $1 BLN (Reuters News)
17 October 2014
BUENOS AIRES, Oct 17 (Reuters) – Argentina will launch a new two-year sovereign bond on Oct. 23 for up to $1 billion, denominated in U.S. dollars and paid in the local peso currency, the Economy Ministry said in a statement on Friday.
The new bond will have an annual coupon of 1.75 percent, the statement said, adding that the minimum amount to be launched on Thursday will be $500 million.
The obligations will be paid at the country’s official exchange rate, it said.
“This bond is exclusively for the domestic market. The buyers will be local insurance companies and other institutional investors,” said Alejo Costa, chief strategist at local investment bank Puente.
“The government is trying to show it can issue at a low rate. It is also trying to mop up some excess liquidity,” he added. “The bond is denominated in dollars but the government will receive pesos and pay out in pesos, according to the exchange rate.”
The issue comes at a difficult time for Latin America’s No. 3 economy. The government defaulted on it global bonds in July after spurning a U.S. court decision ordering full repayment to “holdout” hedge funds that declined to participate in a pair of restructurings that followed Argentina’s 2002 debt crisis.
Investors who exchanged bonds in 2005 and 2010 were paid less than 30 cents on the dollar.
Inflation is expected by private economists to end this year at about 40 percent, one of the world’s highest rates, while heavy currency and trade controls weigh on economic activity.
7. CHINESE LOAN TO ARGENTINA EXPECTED IN NOVEMBER (Reuters News)
19 October 2014
BUENOS AIRES, Oct 19 (Reuters) – A multibillion-dollar currency swap between Argentina and China will launch in November, bolstering the South American country’s diminished foreign reserves, the central bank chief was quoted as saying in a local paper on Sunday.
The swap will permit Argentina to either pay for Chinese imports with the yuan currency or reinforce its hard currency reserves, which have fallen by more than 30 percent this year.
It is part of a loan worth a total $11 billion signed by Argentina’s President Cristina Fernandez and her Chinese counterpart in July, shortly before the Latin American nation defaulted on its debt for the second time in 12 years.
“The swap with the People’s Bank of China … we estimate that it will become operative in November,” local newspaper Pagina/12 reported Alejandro Vanoli said in an interview.
The newspaper, which has close ties with the Fernandez government, did not report additional details on the exchange.
No government or central bank officials were immediately available for comment.
Sources have previously told Reuters that Argentina will receive an initial installment of Chinese yuan worth about $700-$800 million before year’s end.
Argentina has relied on its reserves to pay for government expenses and has struggled to replenish them without access to global capital markets since its default.
“Reserves are for being used,” Vanoli told Pagina/12. “The government is not afraid, in a situation as special as this one is, to pay off its debt with reserves.”
Vanoli took over as the head of the central bank earlier this month after his predecessor quit in a dispute with the government.
Vanoli told Pagina/12 that he expects Argentina to end the year with a stock of reserves close to the current level.
Argentina’s international reserves now stand at $27.3 billion, according to central bank figures updated on Friday.
The economy ministry said on Friday that it plans to launch a new two-year sovereign bond for up to $1 billion this month.
Vanoli also said in the interview that Argentina’s dispute with the holdout owners of its defaulted debt will not likely be easily solved upon the expiration of a bond clause at the end of the year.
Argentina contends the so-called Rights Under First Offer, or RUFO, clause prohibits it from offering better terms to creditors who refused to take part in past debt restructurings.
“With respect to the RUFO clause … this idea has emerged that on January 2 everything will be fixed. And the answer is that on January 2 nothing is going to happen,” Vanoli was quoted saying in Pagina/12.
Vanoli said the hedge funds that have sued Argentina for full payment on its defaulted bonds must be more flexible with their demands.
8. ARGENTINIAN AUTHOR’S BOOK BASED ON JOURNEY OF ALUM, OTHER TEACHERS IN 19TH CENTURY (The MetroWest Daily News)
By Scott O’Connell
17 October 2014
Gloria Casañas’s best-selling novel is based on a group of American teachers who traveled halfway across the globe to teach students in Argentina in the late 19th century.
Casañas, a native of the South American country, now can relate.
The author, lawyer and professor has made a similar trek this fall to Framingham State University, where she is currently serving as the school’s first visiting lecturer.
“In a way, I think I’m having the same experience those teachers had when they went to Argentina,” Casañas said, pointing out that similar to those educators, who had to learn Spanish after they arrived, she is adjusting to English, the weakest of her three languages.
While this is her first trip to Massachusetts, Casañas is familiar with Framingham State, however. One of the historical figures of her book, “La Maestra de la Laguna,” is based on is Jennie Howard, an 1866 graduate of the school who was part of the contingent of teachers invited by President Domingo Faustino Sarmiento to set up teacher schools like Framingham State in Argentina.
Their story is in many ways a significant part of Argentine history, said Emilce Cordeiro, another native of the country and chairwoman of Framingham State’s world languages department, where Casañas is teaching this semester.
“(Casañas) wanted to emphasize the kind of education system Argentina had because of these teachers,” she said. “It was the best in Latin America at the time.”
But despite having the support of Sarmiento, the teachers faced adversity in the form of the Catholic Church, which ran the country’s educational system at the time and wasn’t welcoming of a group of American Protestants, as well as a prevailing belief that women only needed to learn to cook and sew, Casañas said. They also did much of their work out in Argentina’s distant provinces – “they were sent to the middle of nowhere,” Cordeiro said.
Casañas didn’t have it quite so bad when she came to Framingham State in August. The school set up an on-campus apartment for her to live in, for example, and instead of having to build an entire network of teachers colleges, her main responsibilities as a visiting lecturer are to teach an undergraduate and graduate course – in her native Spanish – in the world languages department. Both classes focus primarily on the Argentine normal school movement featured in her book.
Planning lessons based on her novel has been a challenge, though, according to Casañas.
“It was very difficult” just doing research for the book, she said. “There wasn’t a lot of information about this specific topic.”
Cordeiro said university officials had been planning to invite a visiting lecturer for more than a year, and found Casañas to be a good inaugural candidate given her book’s subject matter and the university’s 175th anniversary this year as America’s first public normal school. Framingham State plans to invite more visiting lecturers over the next few years as part of a new emphasis on global education.
“The majority of students in our major, they want to be teachers, so they’re very interested in this idea, that a group of teachers from this area decided to do this trip,” Cordeiro said.
Casañas, who will be giving public presentations on campus about her novel and its historical subject matter on Oct. 23 and Oct. 29, has also enjoyed the experience so far.
“I think it’s going to be a shock to go back to Argentina,” she said. “I’m going to remember this as a dream.”