Archive for the ‘ARGENTINE UPDATE’ Category

ARGENTINE UPDATE – Feb 11, 2016

11 febrero, 2016

1. ARGENTINE OFFER OPENS THE WAY FOR A DEBT SETTLEMENT (The New York Times)

2. A REASONABLE DEAL TO END ARGENTINA’S DEBT SAGA; HOLDOUT INVESTORS SHOULD ACCEPT THE OFFER FROM BUENOS AIRES (Financial Times)

3. HEDGE FUND QUERIES ARGENTINA’S HOLDOUT DEAL (Financial Times)

4. ARGENTINA HIRES NEW LAWYERS IN DEBT BATTLE (The Wall Street Journal)

5. ARGENTINA DEBT DEAL FACES HURDLES (The Wall Street Journal)

6. ARGENTINA’S DEBT: FIRST STEP ON A LONG ROAD (Business News Americas)

7. ARGENTINA DEBT OUTPERFORMS ON HOLDOUT OFFER (Reuters News)

8. EMERGING MARKETS: ARGENTINA: A RARE BRIGHT SPOT (Barron’s)

9. ARGENTINA’S OFFER TO HOLDOUTS: 2 MORE TAKERS (Barron’s Blog)

10. ARGENTINA INFLATION AND THE 30% LIMIT (Business News Americas)

11. ARGENTINA BOND BATTLE DRAGS ON AS ELLIOTT SPURNS MACRI OFFER (Bloomberg Business)

12. COMEDIAN BECOMES FIRST PLUS-SIZE WOMAN TO WIN ARGENTINA’S ‘BEST BODY’ COMPETITION (People Magazine)

1. ARGENTINE OFFER OPENS THE WAY FOR A DEBT SETTLEMENT (The New York Times)
By Reynolds Holding and Martin Langfield
9 February 2016

Real money may finally be on the table in Argentina.

President Mauricio Macri’s government has asked owners of roughly $9 billion in defaulted bonds to accept a 25 percent discount. Two have agreed. The big holdout — Elliott Management — is still haggling, and the Argentine Congress and an American judge would have to bless any bargain. For the first time in ages, though, a functional economy and access to global markets seem in reach.

The legal battle for payment has raged since Argentina’s 2001 default on some $100 billion of debt. About 95 percent of creditors swapped their bonds in 2005 and 2010 for some 30 cents on the dollar or less. An Elliott affiliate refused, winning court orders saying the country cannot pay any other creditors before the hedge fund and other holdouts.

Mr. Macri’s offer on Friday of more than 70 cents on the dollar looks mighty sweet by comparison. Even if Elliott agrees to it, though, substantial hurdles remain.

The biggest for the president may be at home. His Peronist predecessor, the fiery leftist Cristina Fernández de Kirchner, refused to talk with the holdouts, belittling them as ”vultures.” A left-leaning Congress will still need convincing. But recent defections of a dozen legislators away from Mrs. Kirchner’s strand of Peronism may help Mr. Macri gain approval for the deal.

That still leaves Thomas P. Griesa, the 85-year-old federal judge whose scathing decisions have effectively blocked Argentina from international capital markets and garnered support from the United States Supreme Court. His rulings favoring Elliott may give it powerful leverage to cut a better deal. Yet even Judge Griesa has long insisted on a settlement, and obstinance could sway the judge to modify his orders and force Elliott’s hand.

In any event, there may never be as propitious a time for a bargain. Argentina is having one of its bouts of economic sanity, which do not tend to last. Mr. Macri has political momentum and probably needs this agreement to turn around an economy that the International Monetary Fund forecasts will shrink by 0.7 percent in 2016. If he fails, so may his administration, opening the way for a much less cooperative successor — perhaps even Mrs. Kirchner — in 2019.

Elliott and the other holdouts have won every hand so far in this high-stakes game. It’s time they cashed in their chips.

Back to contents

2. A REASONABLE DEAL TO END ARGENTINA’S DEBT SAGA; HOLDOUT INVESTORS SHOULD ACCEPT THE OFFER FROM BUENOS AIRES (Financial Times)
9 February 2016

A mere 14 years after Argentina crashed into what was then the biggest sovereign default in history, the prospect of a resolution for the bondholders is, perhaps, in sight.

The government of Mauricio Macri, Argentine president since December, has offered about $6.5bn to settle claims of $9bn to holdout investors who refused to participate in restructurings in 2005 and 2010.

The offer, for a haircut of about 25 per cent, is more generous than for those earlier writedowns. This reflects the strong legal position of holdouts who have obtained judgments from American courts which in effect cut Argentina out of global capital markets until they are paid off.

Galling though it must be to pay ransom, Mr Macri’s government is right to make the offer. It is not yet clear how many of the holdouts, and particularly the combative Elliott Management , will accept the terms or something close to them. If they insist on full payment or a much smaller writedown, Mr Macri’s position becomes more difficult and his decision more finely balanced.

That Argentina ever came to this reflects a ruling by a judge in New York on pari passu clauses in sovereign bonds that was creative bordering on eccentric. That judgment and the extraterritorial reach of US law cut Argentina off from international bond investors.

Certainly Buenos Aires, even if it clears its arrears, should not be eager to start racking up debt again. But normalising its position in the international financial system is a big step on its journey back to economic sanity.

While Argentina’s travails with holdout creditors are hardly new, there is more at stake now than at almost any time over the past 14 years. Since Mr Macri took over, Argentina has seen perhaps the most remarkable outbreak of sensible economic policy since the unification of the republic in 1853.

In short order his government has removed capital controls, allowing the Argentine peso to devalue about 30 per cent, and restored independence to the politicised central bank and national statistics agency. Courageously, he has also made a start on dismantling expensive and ill-targeted energy subsidies that contribute to a fiscal deficit that last year reached almost eight per cent of gross domestic product.

For the moment, despite the pain inflicted by these measures, Mr Macri’s government remains popular. But there can be no doubt that paying back at full value the holdout creditors who have held Buenos Aires to ransom for more than a decade would be expensive politically as well as financially. Outside investors would also ask, with good reason, why obstreperous bondholders with superior financial and legal resources should be paid so much more than those co-operating early on.

For the first time since the debt default in 2001, Argentina has a sensible government with whom those holdout investors can deal. Indeed, the US courts that handed them such a powerful weapon did so partly based on the unreasonableness of previous Argentine administrations. Those bond-holders, and the courts backing them, should recognise the change of approach by Buenos Aires and come to agreement around the current offer.

Argentine economic policy in the past has varied from the hubristic to the comic. That, however, does not justify Argentina being held to ransom, particularly at a time when a new government wants to put economic policy on a solid and legitimate footing. Mr Macri is right to make this offer. The holdout creditors should accept it.

Back to contents

3. HEDGE FUND QUERIES ARGENTINA’S HOLDOUT DEAL (Financial Times)
By Robin Wigglesworth and Benedict Mander
February 8, 2016

One of the hedge funds suing Argentina has said the country only reached an agreement with one of its rivals by effectively paying its claim in full, even as Buenos Aires looks to impose a “haircut” on other creditors.

Aurelius Capital has been one of the main hedge fund antagonists of Argentina, alongside Elliott Management, pursuing it through the global judicial system for more than a decade after the country’s $80bn debt default in 2001.

The new government of Mauricio Macri has made reaching an agreement with the “holdouts” that refused to restructure their debts at punitive terms in 2005 and 2010 a priority. Last week, it struck deals with a group of Italian investors and two other hedge funds, Montreux Partners and Dart Management.

Argentina’s finance ministry on Friday publicly offered to pay about $6.5bn to holdouts through various options — equating to a 25 per cent haircut on claims totalling roughly $9bn — and said that Montreux and Dart had accepted the offer.

Elliott and Aurelius — the latter led by Mark Brodsky, a former senior trader at Paul Singer’s Elliott — last week stayed silent on the status of their negotiations. A person with direct knowledge of the discussions confirmed on Monday that both of them, along with two smaller funds that have not accepted the offer, were continuing to negotiate with Argentina.

In a statement this weekend, Mr Brodsky said Argentina had “bought Dart’s support by agreeing to pay its claim in full”, rather than impose a haircut.

“Aurelius would gladly accept such generosity, though we have always been willing to take a haircut,” the hedge fund manager said. Dart’s lawyers at Debevoise & Plimpton did not respond to requests for comment.

The apparent treatment discrepancy comes from differences between the claims that creditors hold, and the interest bills attached to them. Dart holds a legal judgment from 2003 that has less past due interest than the claims of Elliott and Aurelius.

A person at Argentina’s finance ministry insisted on Sunday that the same offer had been made to all parties involved, in line with the public announcement of the proposal made to all remaining holdouts on Friday.

The long-running saga has been called the “trial of the century” for sovereign debt, and its twists and turns have been widely followed by public officials, fund managers, lawyers and academics for its potential impact on how countries restructure their debt.

A series of decisive courtroom victories for Elliott and Aurelius in practice forced Argentina to choose between paying off holdout creditors in full or defaulting on the investors that had accepted the restructuring terms. Rather than repaying hedge funds the former government lambasted as “vultures” and “financial terrorists”, the country defaulted for the eighth time in its history in 2014.

Last week’s proposal by Argentina was therefore “a historic breakthrough”, according to Daniel Pollack, a court-appointed mediator. Mr Pollack said that it was his “strong hope” that with continued negotiations Argentina would reach an agreement with Elliott, Aurelius and two other hedge funds that have yet to a strike a deal with Buenos Aires.

US Treasury Secretary Jack Lew spoke to his Argentina counterpart Alfonso Prat-Gay on Sunday, commending the government’s “good faith efforts to resolve this longstanding dispute”.

Back to contents

4. ARGENTINA HIRES NEW LAWYERS IN DEBT BATTLE (The Wall Street Journal)
By Julie Wernau
9 February 2016

Argentina is putting on a new face for the judge who will ultimately decide the outcome for a 15-year debt battle that has locked the country out of capital markets.

The Argentine government said Tuesday that New York-based law firm Cravath Swaine & Moore will represent Argentina before U.S. District Judge Thomas Griesa in New York.

Cleary Gottlieb, who has represented Argentina in the courtroom since 2002 in the debt battle, will still be co-counsel for Argentina, but not in front of the judge.

Insiders say the move is a push by President Mauricio Macri to convince the judge that the new government is serious about ending the stalemate.

The government has failed to settle with holdout creditors who refused to settle for 30 cents on the dollar as part of two exchange offers that stemmed from a 2001 default on more than $80 billion in bonds.

The high profile case eventually led the nation to default on those exchange bonds as well after the judge issued an injunction under a legal premise that it couldn’t pay some bondholders and not others.

Under the new government, Mr. Macri’s administration traveled to New York last week to try to settle the matter and has an offer on the table to all holdouts, some of which have agreed to the proposal.

Argentina officials have said publicly that they hope to sway the judge to lift the injunction even if not all creditors have agreed to the deal.

Argentina says Cravath was selected from eight submitted proposals, calling it the firm that will “advise the country in the final stage of this long dispute.”

Back to contents

5. ARGENTINA DEBT DEAL FACES HURDLES (The Wall Street Journal)
By Julie Wernau and Taos Turner
8 February 2016

An end to a stalemate over Argentina’s defaulted debt faces a number of hurdles despite the country’s new $6.5 billion offer to U.S. bondholders Friday, said people familiar with the matter.

An agreement would have to contend with a number of thorny issues in the U.S. and Argentina as large debt owners haven’t yet signaled their approval, these people said. Argentina is trying to settle with these holdouts so it can return to the global bond market.

The government’s proposal was its first formal offer to U.S. bondholders since Argentina defaulted on more than $80 billion of debt in 2001, the largest government default at the time.

The offer represented 75% of the amount bondholders say they are owed, and any deal is expected to serve as a model for settlement talks with hundreds of other creditors who have sued the government.

Most of the U.S. hedge funds that own the debt — including one of the biggest creditors, Paul Singer’s Elliott Capital Management — haven’t signaled their approval of the offer, say people familiar with the matter. Analysts believe that some of these bondholders feel little pressure to rush to an agreement and may be inclined to push for better terms.

While newly elected, business-friendly President Mauricio Macri has pledged to end the standoff between Argentina and bondholders, he is expected to face strong opposition from much of the population and some members of Argentina’s Congress, who have derided bondholders as “vultures.”

Hundreds of smaller debtholders must also get on board with an agreement. There is a risk that these mostly local investors could try to scuttle a deal that works for big U.S. hedge funds.

Argentina’s negotiators have already left New York City, the setting last week for the most recent meetings to break the stalemate, a sign that no immediate agreement is expected, say people briefed on the matter.

“It’s not time to pop the champagne,” said Charles Blitzer, an economist and former senior International Monetary Fund staffer, who has been involved in many sovereign-debt restructurings. “It’s this kind of unilateral offer that got them into trouble five and even 10 years ago. They need to communicate with more creditors and actually negotiate.”

The default issue has been a lingering and painful problem for Argentina because it effectively bars the government from borrowing any money in the international capital markets.

The new administration views a global bond offering as crucial for raising new capital to stimulate an economy mired in recession.

Mr. Macri has some reasons for optimism. The Finance Ministry said in a statement that some creditors, including Dart Management and Montreux Partners, had already agreed to accept the offer. Representatives of those firms couldn’t be reached or declined to comment.

Mark Brodsky, chairman of Aurelius Capital Management, another of the lead holdouts, said that his firm is not insisting on getting paid in full. “We have always been willing to take a haircut,” he said in a statement.

Even Mr. Singer has said as recently as July that his firm would be willing to negotiate with Argentine officials and accept a discount to full value.

“In the past, these hedge funds, particularly Elliott, have said ‘we’re entitled to full payment,'” said Mark Cymrot, a partner with BakerHostetler in Washington. “The truth is, you can’t get a very determined sovereign to pay.”

That Argentine negotiators, including Financial Secretary Luis Caputo, traveled to New York to meet with bondholders is a step forward. Mr. Macri became personally involved, holding a phone call with the U.S. District Court-appointed mediator last week. By contrast, U.S. bondholders’ request last year to resume negotiations received no response from the former Peronist-led government.

Yet people on both sides think there is much more work to be done.

Any deal would have to overcome significant political opposition. Former President Cristina Kirchner made blaming the holdouts a pillar of her political discourse.

On social-media networks over the weekend, opponents of the government’s offer accused Mr. Macri of selling out, saying that even if Argentina pays the holdouts 75% of what they are owed, Mr. Singer would be making a windfall.

Some smaller Argentine debtholders may continue to hold out.

Jennifer Scullion, a partner at Proskauer Rose LLP representing bondholders in eight class-action cases in New York, said Argentina hasn’t included them in negotiations. The two sides are arguing over how to quantify the size of those classes, and Ms. Scullion said she would move for an injunction if the government settles with other bondholders before they have agreed to a deal with her clients.

“These are literally the same bonds,” she said. “We have the same rights.”

Back to contents

6. ARGENTINA’S DEBT: FIRST STEP ON A LONG ROAD (Business News Americas)
8 February 2016

The US government, analysts and followers of new Argentine president Mauricio Macri applauded the government’s decision to make a repayment offer to creditors that hold some US$9bn in defaulted bonds.

Argentina’s country risk – or the spread between the interest the country would need to offer to raise funds on international markets and what the US pays – fell sharply after the US Treasury Department said this weekend that secretary Jacob Lew “commended Argentina’s good faith efforts to resolve this longstanding dispute.” The offer implies a 25% haircut for the so-called holdout creditors on the consolidated debt and it has alredy been accepted by some funds in the US and Italy.

The holdouts are those creditors, hedge funds from abroad, who refused to accept Argentina’s debt restructuring terms after the country defaulted in 2001, effectively cutting the country off from international markets.

Despite the carnival holiday in Argentina on Monday, the opposition to Macri – whose party does not control either of the two chambers in congress – did not hesitate to send a clear signal about what to expect in parliament.

“We are alarmed by the 1,000% profit that these vulture funds would get [with the offer], now they seem to be white doves, for some people they’re no longer vultures,” Héctor Recalde, head of the opposition block of deputies that follow former president Cristina Fernández de Kirchner, said on Monday, according to local media.

To be able to effectively pay the holdouts, the government would have to nullify the so-called Ley Cerrojo, which prohibits the country from making a deal on the bonds that offers better conditions than the ones offered in 2005 and 2009.

And a second law that says debt payments can only be made in Buenos Aires would also need to be repealed.

When asked if his block would back the government’s proposal in congress, Recalde said his legislators will discuss the issue but would stick to “the same principle we have always had.” The two laws that Macri needs to nullify were proposed by Fernández and approved quickly by the legislators of her party, called Frente para la Victoria.

Capital Economics said in a report that a solution for the whole problem is still far away. “One concern is that congress has, until now, had zero appetite for a deal. Mr Macri’s Cambiemos [Let’s Change] coalition does not have a majority in either the upper or lower house, and the left-wing Front for Victory coalition still has the power to block a deal,” the report says.

Last week, however, the political movement behind Fernández showed its first sign of weakness since Macri took office in December, as 12 Frente para la Victoria legislators left the block saying they did not agree with the former president’s view on the role of the opposition.

Credit Suisse highlighted that development and said it expects Macri to gather the needed support to repeal the two laws. “Additionally, we expect collaboration from various governors who would also like to seek financing abroad to aid in building support in the senate,” the bank said.

Back to contents

7. ARGENTINA DEBT OUTPERFORMS ON HOLDOUT OFFER (Reuters News)
8 February 2016

NEW YORK, Feb 8 (IFR) – Argentina bonds outperformed on Monday after two of six holdout investors agreed to a government offer last week to pay a total US$6.5bn to them.

Discounts and pars were up about half a point Monday afternoon at 117.00-118.00 and 64.50-65.00, respectively, after Dart Management and Montreaux Equity Partners – signed up to the government’s proposal.

Daniel Pollack, the special master presiding over the negotiations, said it “stood solidly behind the deal,” praising President Macri for addressing this “long-festering problem.”

US Jack Lew also reportedly chimed in over the weekend, voicing his support of the Argentine government’s efforts to cut a deal with holdout investors.

“All this points toward a fresh attitude on the side of important stakeholders and we think it can help Argentina’s negotiating hand,” Alejo Czerwonko, emerging markets economist at the chief investment office at UBS Wealth Management.

MORE WORK TO BE DONE

Yet while investors cheered progress on last week’s arduous negotiations in New York between government officials and litigant investors, the country still faces an uphill battle as it works to bring other holdouts on board.

Elliott Management and Aurelius Capital Management, the most high-profile funds in the sovereign’s 14-year old battle with holdouts, have yet to accept the offer.

It was their lawyers who won a pari passu case in US Courts in 2012, effectively prohibiting Argentina from paying existing holders of restructured debt unless holdout investors were made whole as well.

The subsequent pari passu injunction effectively forced the country to default for a second time in a decade as the former president refused to bow down to what she described as “vulture funds”.

Recently elected President Mauricio Macri has taken a more conciliatory approach to the litigant funds, realizing the importance of regaining access to vital hard currency funding.

In the offer announced Friday, the government said it would pay holders of defaulted bonds without a pari passu injunction 150% of their principal claim.

On the other hand, accounts covered by the pari passu injunction will receive 72.5% of their total claim or 72.5% of the amount they have been awarded in US courts if they accept the terms by February 19. Thereafter, they will only garner 70%.

The deal is conditional upon US Judge Griesa lifting the pari passu injunction that gives the likes of Elliott and Aurelius considerable leverage in negotiations.

It is also subject to approval by Argentina’s Congress, which will need to amend a lock law that prohibits the country from offering better terms than those given to participants in the 2005 and 2010 exchanges.

New terms, however, were thought unacceptable for certain funds like Elliott and Aurelius who because of the nature of their Argentine holdings are seeking greater claims on past due interest on which there is no judgment.

“Argentina bought Dart’s support by agreeing to pay its claim in full,” Mark Brodsky, chairman of Aurelius Capital Management, said in a statement.

“Aurelius would gladly accept such generosity, though we have always been willing to take a haircut.”

‘Me-too’ investors

With a clear offer on the table, a growing chorus of so-called ‘me-too’ investors holding defaulted debt are also clamoring for payment and complaining they have not been invited to participate in settlement negotiations.

For now, analysts think President Macri should have little trouble persuading what is now a more compliant Congress to agree to haircuts proposed in Friday’s deal.

“The proposed haircut of 27.5%-30% of the total claim for par passu injection holders is affordable, in terms of political cost, for the administration,” wrote Barclays analysts on Monday.

Barclays analysts speculated that Elliott and Aurelius may simply have kept quiet on Argentina’s recent offer, as a negotiating tactic.

If too many investors sign on to the deal, Congress may think the president has been too soft and hence force the government to return with a tougher deal, the UK bank said.

“For the pari passu injunction to be lifted, you need the major funds at the table,” said Sean Newman, a US based senior portfolio manager at Invesco, which holds Argentina exchange debt.

Newman sees an eight point upside on the discount bond if the injunction is lifted and past due interest starts being paid again.

Back to contents

8. EMERGING MARKETS: ARGENTINA: A RARE BRIGHT SPOT (Barron’s)
By Dimitra DeFotis
8 February 2016

Unlike many of its South American neighbors, Argentina has enjoyed some good news of late.

The Argentine government last week agreed to pay down $1.5 billion on defaulted debt to Italian bondholders who had sought $2.5 billion. At the same time, Buenos Aires’ emissaries met in New York with remaining bondholders to try to resolve a long, contentious battle over more than $9 billion in defaulted-debt claims. The claims — pitting the country against a small group of hedge funds that have held out for better terms — stem from Argentina’s default on $29 billion in debt in 2001.

The fight is far from over, but the progress was a rare breath of fresh air amid reports from South America about Brazil’s frightening Zika virus and Venezuela’s looming debt crisis. Since taking office in December, Argentina’s reform-minded President Mauricio Macri has devalued the peso, cut energy subsidies, and secured billions in financing to reduce the country’s deficit. The center-right successor to former Peronist President Cristina Fernandez de Kirchner still must convince his Congress to settle the default claims, but a number of market observers think the business could get resolved by the middle of the year. That would help Argentina return to the global capital markets and lift investing prospects, especially for bonds.

Following last week’s news, Standard & Poor’s raised its ratings on Argentina’s local-currency sovereign debt.

Some dollar-denominated Argentine bonds maturing in the next few years that were issued under Argentine law now look attractive, says Sean Newman, a senior portfolio manager at asset manager Invesco. The bonds generally have traded at a discount to equivalents in Brazil, but that spread should contract.

“With a lack of other policy choices, opposition parties have to . . . accept reasonable proposals to resolve the holdout issue,” says Newman. “I prefer Argentine bonds issued under local law, as there are still risks to a settlement being reached with holdouts.”

Bank of America Merrill Lynch bond analysts Jane Brauer and Sebastian Rondeau expect a settlement could amount to a 20% haircut for holdout bondholders governed by U.S. law and a 30% haircut for European-law holdouts. They like discounted, dollar-denominated Argentine government bonds subject to U.S. law. They wrote last week that roughly $15 billion in new Argentine bond issuance this year may be needed to pay holdouts and finance the fiscal deficit, and too much supply could dampen returns. But they still expect a rally in higher-yielding Argentine bonds, assuming a settlement by June.

Argentine Finance Minister Alfonso Prat-Gay has said the holdout investors’ terms are unacceptable on $7 billion in past-due interest. But Nomura bond strategist Siobhan Morden points to last week’s deal with Italian bondholders — which shaved interest payments by two-thirds — as possible precedent for other agreements.

For equity investors, Argentina’s menu of offerings remains limited. The thinly-traded Global X MSCIArgentina exchange-traded fund (ticker: ARGT) can languish without generating a quote even on a busy news day. The fund, which rose nearly 1% last week, is down roughly 5% so far this year, which is slightly better than the decline of emerging markets overall.

Back to contents

9. ARGENTINA’S OFFER TO HOLDOUTS: 2 MORE TAKERS (Barron’s Blog)
By Dimitra DeFotis
8 February 2016

On Friday, Argentina’s government presented a formal offer to holdout creditors after a week of meetings in New York.

But the Global X MSCIArgentina exchange-traded fund ( ARGT) was down 2.8% just before the close of trading, despite the positive movement in the debt case as markets submit to selling pressure. Among Argentina’s largest publicly-traded companies trading in the U.S., YPF (YPF) was down more than 5%, and MercadoLibre (MELI) was down 5.7%. Banks, however, were higher including Banco Macro (BMA), up 1%, and BBVA Banco Frances (BFR), up nearly 1%. Empresa Distribuidora y Comercializadora Norte or Edenor ( EDN), an Argentine electric utility, was up nearly 5%.

Eurasia Group provides the details from the Ministry of Finance: a $6.5 billion cash payment, representing a 25% haircut on average of the full claim. The government will issue debt to raise the funds. Eurasia Group notes that two holdout investors in Argentina’s defaulted debt, Dart Management and Montreux Partners, accepted the deal. Eurasia Group writes:

“The government’s proposal includes a base offer–which includes payment of the full principal plus an additional 50% payment of the claim–and an offer for those with pari-passu rulings: a 30% haircut for those with rulings prior to 1 February 2016, to be reduced to 27.5% if an agreement is signed before 19 February. … The very complimentary statement from Special Master Daniel Pollack on 5 February has been seen by many as evidence that the court could have a more constructive attitude towards Argentina, but we have no way of evaluating whether this will indeed occur. It is important to remember that investors have been misled by a common sense approach to the judge’s action, only to be later disappointed …

The key issue to watch now is Judge Thomas Griesa’s decision on whether Argentina’s more constructive approach merits reinstatement of a stay that would open access to markets, increase the government’s leverage and potentially entice more holdouts toward a deal …

The second precondition in this deal is congressional approval. Congress does not need to approve the specific deal, but needs to reform two laws (the Lock Law and the Law of Sovereign Payment) that ban the government from making offers to holdouts better than those of the 2005 and 2010 restructurings. Macri’s PRO party has a fairly weak position in congress, but should be able to obtain enough support to get the deal through …”

Back to contents

10. ARGENTINA INFLATION AND THE 30% LIMIT (Business News Americas)
9 February 2016

Argentina finished 2015 with inflation of about 27-31%, according to the referential regional indices the new government published to make up for the lack of a national one.

And even though President Maruicio Macri said one of his priorities was to normalize prices, the first signals show 2016 could also end up with inflation of over 25%.

The first annual salary negotiations have started and local media reported the government’s first goal was to agree to a 20-25% increase, knowing this number is key to containing inflation, which is out of control after years of printing money and private spending incentives under Cristina Fernández de Kirchner’s mandate.

Interior minister Rogelio Frigerio told a local radio station on Monday that the government still expects inflation to be around 25% this year, adding that wage negotiations could include a promise to open a new window of talks by mid-year if the CPI was running above 25%.

The unions, however, seem to be pushing the wage discussion towards a 30% hike. The head spokesperson of the rail workers union, Mario Calegari, said that “in the situation we are in, we can’t accept a percentage below 30.”

Macri assumed power in December and two of the first measures he took were to get rid of the official FX rate, sending the Argentine peso down from around 10 per US dollar to 14, a move that pushed prices on imported goods higher.

And this month saw the energy ministry decide to abolish most of the subsidies on electricity consumption, another decision that will have an impact on prices.

Former central bank president Martín Redrado said recently that Macri’s honeymoon would end as soon as the union negotiations started.

Macri has decided to face this situation asking for prudence. “My commitment is to lower inflation”, he pledged.

Back to contents

11. ARGENTINA BOND BATTLE DRAGS ON AS ELLIOTT SPURNS MACRI OFFER (Bloomberg Business)
By Katia Porzecanski & Chiara Vasarri
February 8, 2016

Ø Prat-Gay predicts funds will make concessions in coming days

Ø Aurelius says offers vary widely for different creditors

The 15-year dispute between Argentina and holders of its defaulted bonds is set to drag on after the biggest holdout creditors refused to accept the government’s terms.

Hedge-fund billionaire Paul Singer’s Elliott Management, along with Aurelius Capital Management, Davidson Kempner Capital Management and Bracebridge Capital, declined an offer made public on Feb. 5 that Argentine officials said would pay as much as $6.5 billion on $9 billion of holdout claims. The proposal, which was accepted by two of the six biggest hedge funds suing the country, was more generous than offers made by President Mauricio Macri’s predecessors in two restructurings after the 2001 default.

Argentina will remain locked out of international bond markets as long as the dispute is unresolved, limiting its ability to raise financing overseas and attract foreign investment to its dollar-starved economy. Finance Minister Alfonso Prat-Gay said in a radio interview over the weekend that he expects the remaining holdouts to make some concessions during the next few days, while Aurelius Chairman Mark Brodsky issued a statement signaling that the different terms offered to investors have left the two sides far from a deal.

While Argentina’s offer was “a very promising starting point, it may require additional negotiations down the road,” said Alejo Costa, the head strategist at Puente Hermanos, a Buenos Aires-based brokerage. “At the end of the day, it will depend on Elliott’s and Aurelius’s attitude toward an agreement.”

Court Orders

The hedge funds battling Argentina have put the nation in a bind. A U.S. court ruling means Argentina can’t make payments on notes issued in its two post-default debt swaps until the holdouts are paid in full because of a so-called equal-treatment clause in the bonds. Former President Cristina Fernandez de Kirchner refused to obey the order as it took effect in 2014, triggering the nation’s second default in 13 years.

Macri, who took office in December, has said he’s committed to reaching a fair deal with the holdouts after campaigning on a pledge to reverse his predecessor’s economic policies, which he blamed for stalling growth, inflation of more than 25 percent and a paucity of investment in the country.

The nation’s bonds have rallied in anticipation of a settlement, with benchmark bonds due 2033 reaching a record high of 116.7 cents on the dollar Monday.

Proposals Accepted

The proposal made public Friday was accepted by two funds — billionaire foam-cup magnate Kenneth Dart’s Dart Management Inc. and Montreux Partners. Talks between the government and representatives of the creditors took place last week at the office of court-appointed mediator Daniel Pollack in New York.

The terms offered by Argentina vary depending on whether the bondholders have an equal-treatment ruling against the government and if they have a court judgment that specifies how much they’re owed. Investors with the ruling who lack a judgment were offered as much as 72.5 percent on their claim, while those with a judgment would be paid 72.5 percent of the amount awarded by the court. Bondholders without an equal-treatment injunction were offered 150 percent of the face value of the bonds they own.

Once a New York court awards a judgment to an investor, the bonds start accruing interest equal to the average for a one-year Treasury note. Bonds that aren’t attached to a judgment accrue interest at a faster rate based on the securities’ original coupon as well as a statutory rate of 9 percent.

Attractive Offer

As a result of the distinction, Argentina’s offer is more attractive for investors such as Dart — who received a judgment on his $595 million of defaulted bonds in 2003 — because less of the claim is composed of accrued interest, allowing him to be repaid in full, Aurelius’s Brodsky said in a statement on Sunday.

Dart received a judgment for about $725 million, including interest, and by accepting 150 percent of the principal will be repaid about $890 million. His claim would currently be worth less than that, at about $850 million, according to data compiled by Bloomberg.

“Argentina bought Dart’s support by agreeing to pay its claim in full,” Brodsky said. “Aurelius would gladly accept such generosity, though we have always been willing to take a haircut.”

Kenneth Johns, an attorney for Dart, said in an e-mail that the two parties “were able to reach an agreement in principle settling our substantial unpaid judgment.”

“Argentina’s constructive approach to the negotiations this week, and the very significant settlement offer publicized on Friday, demonstrate the government’s genuine commitment to bringing this long-running dispute to an end,” he added.

Interest Claims

For investors such as Brodsky and Singer, most of their claim on their bonds that don’t have a judgment comes from the interest accrual. Some of the bonds Singer owns accrue interest at an annual rate of more than 100 percent, according to court documents.

Elliott also owns bonds with $1.7 billion in judgments. Stephen Spruiell, a spokesman for Elliott, declined to comment.

Argentina’s proposal offered to pay the creditors in cash raised from issuing bonds abroad, sales that would require them to drop or suspend the lawsuits that prevent the country from accessing international capital markets.

Prat-Gay said that each agreement he reaches will put additional pressure on the remaining holdouts to settle. With enough participation, the judge may be convinced to suspend the ruling against the nation, he said.

“Then, if one fund wants to hold out, they’re going to have a tough time,” Prat-Gay said in a interview on Radio Mitre.

The proposal came days after Argentina announced that it reached an agreement to pay 50,000 Italian bondholders 54 percent of their $2.5 billion claim on defaulted debt in cash. Those creditors also accepted payment of 150 percent of principal.

The Italian accord and the one reached Friday are subject to approval from Argentina’s Congress, which would also need to repeal a law that prevents the country from providing the holdouts with better terms than those the nation offered in restructurings.

Argentina and the remaining holdouts are “working constructively” to resolve their differences and reach an agreement, Pollack wrote in a statement Friday.

Argentina, which borrowed more money internationally than any developing nation in the 1990s, defaulted in late 2001 following a four-year recession. A one-to-one currency peg to the dollar had made local companies lose competitiveness after Brazil, its largest trading partner, devalued its currency in 1999.

“There’s still a long way to go in terms of the additional agreement with the other holdouts, but this is a very positive step towards that,” said Gerardo Rodriguez, a money manager at BlackRock Inc. in New York. “The negotiations haven’t been easy for anybody, so it’s going to take some time.”

12. COMEDIAN BECOMES FIRST PLUS-SIZE WOMAN TO WIN ARGENTINA’S ‘BEST BODY’ COMPETITION (People Magazine)
By Julie Mazziotta
02/09/2016

Mar Tarrés is breaking down body norms!

The plus-size comedian won Argentina’s annual “La Chica del Verano,” or “The Girl of the Summer,” competition, the first of her size to take home the top prize for the beach body battle.

Tired of hearing people criticize her body on her Facebook fan page, Tarrés, 28, entered the competition this year, undeterred by the past winners’ more Sports Illustrated Swimsuit Issue-type figures. (Although they too, are finally embracing a wider range of sizes this year with curvy model Ashley Graham).

But the road to winning wasn’t easy, Tarrés explains.

“I suffered a lot from comments online, it made me feel bad that my family had to read so many insults about my body,” she tells TN.

“[I realize it’s] a big social change of acceptance of body diversity, and that it would be a different person winning from what the media always puts out there as ‘stereotypically beautiful,’ ” she said on Facebook before winning.

Now she hopes that her win will inspire women of all different sizes to feel more confident and enter the competition in the future.

“The Girls of the Summer are us all, all of us are beautiful,” Tarrés tells TN. “I represent plus-size women and I hope that all of the competitions will include girls like us, because we want to take part. But I am very happy, very appreciative.”

“Today I didn’t win, inclusion won.”

Responder Responder a todos Reenviar Más

ARGENTINE UPDATE – Feb 2, 2016

3 febrero, 2016

1. ARGENTINA RESUMES TALKS WITH HOLDOUT CREDITORS AFTER LOAN AGREED (Financial Times)

2. ARGENTINA RESUMES HOLDOUT CREDITOR TALKS IN NEW YORK; THE COUNTRY FACES $9 BILLION IN CLAIMS FROM HOLDOUT CREDITORS (The Wall Street Journal Online)

3. PRESS RELEASE: STATEMENT OF DANIEL A. POLLACK, SPECIAL MASTER IN ARGENTINA DEBT LITIGATION, FEB. 1, 2016 (Dow Jones Institutional News)

4. CHILE TO EXPORT GAS, ELECTRICITY TO ARGENTINA (Business News Americas)

5. ARGENTINA TO SUBSIDIZE OIL EXPORTS TO SUSTAIN OUTPUT, JOBS (Platts Commodity News)

6. ARGENTINA’S LNG IMPORTS COULD SEE 20% DECLINE IN 2016 WINTER SEASON (Platts Commodity News)

7. ARGENTINA INFESTED WITH SWARMS OF LOCUSTS (ABC News)

1. ARGENTINA RESUMES TALKS WITH HOLDOUT CREDITORS AFTER LOAN AGREED (Financial Times)
By Benedict Mander
2 February 2016

Argentina resumed debt talks with a group of US hedge funds yesterday after securing a $5bn loan from Wall Street banks last week that will strengthen its hand in negotiations to end a decade-long legal dispute.

In a meeting in New York, finance secretary Luis Caputo, a former JPMorgan executive, was due to present an offer to the so-called holdout creditors , who rejected restructuring deals after Argentina’s 2001 default and won a legal victory in the US in 2012 that ruled that they should be repaid in full.

The bridge loan to Argentina’s central bank, which confirmed on Friday that foreign exchange reserves had jumped to more than $30bn, is another sign of investor confidence in the new market-friendly government of Mauricio Macri. HSBC, JPMorgan and Santander contributed $1bn each, while Deutsche Bank, BBVA, Citibank and UBS all lent $500m at an interest rate of about 6 points above the Libor rate.

The dispute with the holdouts is preventing Argentina’s return to the international capital markets. Reaching an agreement with the creditors led by US billionaire Paul Singer’s Elliott Management would put an end to Argentina’s second default this century in 2014, when the holdouts’ legal victory in the US prevented Argentina from continuing to service debt to holders of restructured debt.

An agreement could lead to upgrades by credit rating agencies and Argentina’s inclusion in emerging market bond indices. JPMorgan last week removed South America’s second-largest economy from its “frontier” market index.

“The most important credit constraint for Argentina remains its unresolved default resulting from the ongoing legal proceedings in the US. A resolution of the legal proceedings with holdout investors that would allow Argentina to freely access international capital markets would be a strong credit positive for the country,” said Gabriel Torres, a senior sovereign analyst at Moody’s, the credit rating agency.

Mr Macri, who attracted huge interest from investors at the World Economic Forum in Davos last month, has made solving the legal dispute a central part of his economic reforms, which included a 30 per cent devaluation in the overvalued peso in December after lifting strict capital controls in place since 2011.

Last week, the centre-right government also began removing costly electricity subsidies , with prices for consumers set to multiply by more than six times.

The previous populist government of Cristina Fernández de Kirchner presided over some of the cheapest electricity prices in the world, pushing the fiscal deficit last year to almost 8 per cent of gross domestic product.

Nearly 3 per cent of GDP has been ploughed into subsidising domestic energy consumption, with electricity bills for many households costing as little as $3 a month.

Any agreement with the holdouts will then have to be approved by the opposition-dominated congress, with delicate negotiations with the divided Peronist movement expected to follow. Despite his tough economic reform programme, Mr Macri, who was previously mayor of the city of Buenos Aires, enjoys approval ratings of 71 per cent after his first month in office, according to Poliarquia, a local pollster.

The holdouts’ own bonds had a face value of about $6bn in 2001, but accumulated interest means that the value of Argentina’s holdout claims is now estimated to be more than $20bn.

2. ARGENTINA RESUMES HOLDOUT CREDITOR TALKS IN NEW YORK; THE COUNTRY FACES $9 BILLION IN CLAIMS FROM HOLDOUT CREDITORS (The Wall Street Journal Online)
By Taos Turner
2 February 2016

BUENOS AIRES—Argentina faces $9 billion in claims from holdout creditors entangled in a legal battle against the country in the U.S., a court-appointed meditator said late Monday.

The estimate, which comes from Daniel Pollack, a New York-based attorney who is trying to help the parties resolve a dispute, is almost a $1 billion less than Argentina had previously acknowledged.

Mr. Pollack said Argentine officials, including Finance Secretary Luis Caputo, met in his office for four hours with holdouts including Elliot Management Corp, Aurelius Capital Management LP, Bracebridge Capital, Montreux Partners, Dart Management and Davidson Kempner.

“Ideas were discussed, informally, for the resolution of the claims, which now total approximately $9 billion,” Mr. Pollack said. “No agreement has been reached as yet. No specific date or time has been set for resumption of negotiations but it is possible that they will continue this week.”

Earlier in the day, Argentina said it planned to make an offer to the holdouts this week and that it wanted the creditors to agree to reduce the amount of punitory interest applied to the debt owed to them.

The dispute stems from Argentina’s decade-old refusal to offer full payment on bonds that the holdouts bought after the country defaulted on them in 2001.

Argentina’s president, Mauricio Macri, is eager to end the conflict because it is preventing the country from borrowing money abroad and raising financing costs for both the public and private sectors.

3. PRESS RELEASE: STATEMENT OF DANIEL A. POLLACK, SPECIAL MASTER IN ARGENTINA DEBT LITIGATION, FEB. 1, 2016 (Dow Jones Institutional News)
1 February 2016

NEW YORK, Feb. 1, 2016 /PRNewswire/ — Daniel A. Pollack, Special Master presiding over settlement negotiations between the Republic of Argentina and its Bondholders, issued the following statement tonight:

“Negotiations between the Republic of Argentina and its major ‘holdout’ Bondholders were held in my offices today. In attendance for the Republic of Argentina were the Secretary of Finance, Luis Caputo; the Vice Chief of the Cabinet, Mario Quintana; and the Undersecretary of Finance, Santiago Bausili. In attendance as ‘holdout’ Bondholders were principals of Elliott Management, Aurelius Capital, Bracebridge Capital, Montreux Partners, Dart Management and Davidson Kempner. The meeting commenced at 1:00 pm and concluded at approximately 5:00 pm. Ideas were discussed, informally, for the resolution of the claims, which now total approximately $9 billion. No agreement has been reached as yet. No specific date or time has been set for resumption of negotiations but it is possible that they will continue this week. In my capacity as Special Master I will continue to meet with the parties, individually, and, possibly, together, in an attempt to help them reach agreement. No further statement will be issued tonight.”

4. CHILE TO EXPORT GAS, ELECTRICITY TO ARGENTINA (Business News Americas)
1 February 2016

Chile will begin exporting 5Mm3/d of natural gas to neighboring Argentina under an arrangement lasting from May-September of this year.

The deal is meant to ensure gas supplies for Argentina during the South American winter, Chile’s energy minister Máximo Pacheco told local paper La Tercera.

The gas will come from the Mejillones LNG import terminal in Chile’s northern Antofagasta region (II) and the Quintero LNG terminal (pictured) in central Valparaíso region (V).

Mejillones gas supplies will be dispatched via the existing Norandino pipeline, while gas from Quintero will be shipped through the GasAtacama pipeline.

Chilean national oil company Enap, which is a part-owner of Quintero, will export the gas to Argentine state energy company Enarsa.

BACKGROUND

It was through these same two pipelines that Argentina formerly exported gas to Chile.

Argentina was Chile’s main provider of natural gas until 2007, when Argentina abruptly cut off supplies amid declining domestic production and rising demand.

Now, despite possessing the world’s second-largest recoverable shale gas resources, Argentina must import piped gas from Bolivia and LNG from global suppliers in order to keep up with local demand.

Industrial consumers in Argentina have reportedly been forced to ration gas consumption during the winter months, in order to ensure gas supply for homes.

Imports from Chile under the new agreement equal roughly 20% of Argentina’s current LNG imports, and about 40% of consumption in Buenos Aires province, Pacheco said.

The export deal will inject US$180mn annually into the Chilean economy, according to Pacheco.

ELECTRICITY

Chile will also begin exporting electricity in the coming months via an existing cross-border transmission line owned by Chilean energy firm AES Gener.

Chilean authorities will allow the export of up to 200MW of electricity, Pacheco said, although the connection has a capacity of 600MW.

Argentina has been forced to rely on imported electricity from Uruguay and Brazil in recent weeks amid surging summer temperatures.

5. ARGENTINA TO SUBSIDIZE OIL EXPORTS TO SUSTAIN OUTPUT, JOBS (Platts Commodity News)
By Charles Newbery
1 February 2016

Buenos Aires (Platts)–1Feb2016/909 pm EST/209 GMT Argentina’s government agreed Monday to subsidize oil exports to sustain production in the southern province of Chubut, as low crude prices threaten to sideline rigs and slash 5,000 jobs.

“We’ve reached a satisfactory agreement,” Jorge Avila, general secretary of the Union of Private Oil Workers in Chubut, said in televised comments after meeting with national and provincial authorities and oil company representatives in Buenos Aires.

The national and provincial governments “vowed to pay a $10/b subsidy,” he said.

Of this, the national government will handle $7.50/b and Chubut the remainder, he added.

The meeting came after nearly two weeks of talks on how to sustain oil production in Chubut, which accounts for about 30% of the country’s 532,000 b/d of crude output. A plunge in global oil prices to less than $32/b has pushed export prices in Chubut to as low as $20/b, according to union data.

Faced with shrinking profits and even losses, oil companies in the province like state-run YPF, BP-controlled Pan American Energy, Chile’s Sipetrol and Argentina’s Tecpetrol said they would have to lay off workers.

Avila’s union has estimated that the job losses could reach 5,000.

Now with the agreement, the companies will maintain production and jobs for six months while a longer-term solution is found, Chubut Governor Mario Das Neves said on television after the meeting.

“We are going to follow this issue closely,” he said.

With the six-month truce, the union will call off plans for a strike that could have interrupted oil and natural gas deliveries.

Argentina had been subsidizing oil exports at $3/b in 2015, but the new government of Mauricio Macri did not renew the scheme after taking office in December.

Instead, his government cut domestic prices by 10% to $54.90/b for heavy crude — such as what is produced in Chubut and Santa Cruz — and to $67.50/b for light crude, thanks to a pricing agreement with refiners and the government aimed at sustaining production. Refiners, in turn, increased product prices by 6% in January and will do by another 6% in March.

Argentina is trying to rebuild oil production after a 20% decline over the past decade, while also sustaining output at refineries to meet demand.

6. ARGENTINA’S LNG IMPORTS COULD SEE 20% DECLINE IN 2016 WINTER SEASON (Platts Commodity News)
By J. Robinson
1 February 2016

Houston (Platts)–1Feb2016/256 pm EST/1956 GMT Argentina’s imports of LNG could decline by 20% or more in the 2016 winter season compared with last year, as the result of a recently announced agreement to import natural gas from neighboring Chile, local media in both countries reported Monday.

From May through September, Chile will export 5.5 million cu m/day of gas to Argentina under the accord reached Saturday.

Gas to be exported from Chile will be sourced on the global LNG market — mostly likely from Asian suppliers, according to local media reports — and delivered to both of the country’s import terminals, GNL Mejillones in the north and GNL Quintero in central Chile.

The gas will be delivered to Argentina via existing pipelines that cross the international border in the Argentinian provinces of Salta in the north and Mendoza in central Argentina.

In the 2015 winter season, running from May to September, Argentina imported the LNG equivalent of 3.8 Bcm of gas, according to data from Platts Analytics.

Assuming gas demand remains stable this year, imports from Chile, which would total roughly 836 million cu m, would cut Argentina’s LNG demand by upwards of 22% during the winter months.

While the gas import/export agreement reached between Argentina’s energy minister, Juan Jose Aranguren, and Chilean counterpart Maximo Pacheco made headlines Monday, the countries also agreed on additional plans to further energy-related cooperation.

The two nations agreed to expand bilateral oil and gas exploration and development activities in the southern region of Patagonia, and will seek out new ways improve the integration of their electricity grids.

In 2004, Argentina’s exports of natural gas to Chile were halted as a result of declining national production. Over the last decade, Argentina’s gas output has fallen by approximately 20%, making it a net importer of natural gas.

Argentina produces around 117 million cu m/d of gas while consuming an average 130 million cu m/d. The national deficit is bridged through pipeline imports from Bolivia and LNG imports to the country’s two terminals — Escobar in the north of Buenos Aires province and Bahia Blanca in the south.

7. ARGENTINA INFESTED WITH SWARMS OF LOCUSTS (ABC News)
By Stevie Borrello
Feb 1, 2016

The recent images and videos of locusts swarming farms and villages in Argentina are not part of a Hollywood movie. These images are very much real.

Thousands of locusts are infesting farmlands in Catamarca, Santiago del Estero, Tucuman and Córdoba. The locusts first arrived in Argentina in Santiago del Estero last July. This video shows thousands of locusts swarming across a field. Other videos show locusts covering trees and exteriors of buildings.

“The last government didn’t care about this situation. This is changing with the new government,” Juan Pablo Karnatz, a member of the Board of Rural Confederations of Argentina, wrote in an email to ABC News.

This is the worst locust attack in the country in over 50 years, according to the Rural Confederations of Argentina. There are currently more than 100 outbreaks in Argentina that have affected more than 700,000 hectares of land.

Government officials in Argentina have been grappling with how to control the infestation. SENASA, the government agricultural inspection agency, has created a hotline for people to call if they spot any locusts.

If locusts are not fumigated before they mature, “they can become millions and eat all the production of the farms. They eat all they can get,” Karnatz wrote.

Karnatz believes the plague can come under control this year “but not eliminated.”

SENASA official Rafael Rodríguez Prados said in a statement on Jan. 7 (translated from Spanish), “We know that the locust is a voracious pest that threatens crops, pastures and natural forests and we understand that control is a task that involves us all. That’s why we invited provincial institutions, municipal, communal and producers to participate in this meeting to define coordinated actions necessary for success against the scourge.”

There are also warnings of locust outbreaks in northwest Africa, the Horn of Africa and Yemen, according to a press release from the United Nations. The heavy rains from El Nino and tropical cyclones Chapala and Megh could potentially cause two generations of breeding to occur in those areas if the heavy rains continue this year.

Wednesday

1. AFTER 14 YEARS AT ODDS, ARGENTINA AIMS TO SETTLE DEBT WITH HEDGE FUNDS (The New York Times)

2. ARGENTINA RESUMES HOLDOUT CREDITOR TALKS IN NEW YORK; COUNTRY FACES $9 BILLION IN CLAIMS FROM HOLDOUT CREDITORS (The Wall Street Journal Online)

3. ARGENTINA TO PAY ITALIAN ‘HOLDOUT’ CREDITORS (Financial Times (FT.Com))

4. ARGENTINA SETTLES FIRST OF $9 BIL IN DEBT DEFAULT CLAIMS (Barron’s Blog)

5. ARGENTINA REACHES CASH DEAL WITH ITALIAN CREDITORS OVER DEFAULTED DEBT (Reuters News)

6. COMING BACK TO A GRILL NEAR YOU: ARGENTINE STEAKS (Reuters News)

7. ARGENTINE PRESIDENT’S NEW SECURITY AGENDA LIKELY TO PROVOKE TERRITORIAL COMPETITION BETWEEN DRUG GANGS, RAISING VIOLENT CRIME RISKS (IHS Global Insight Daily Analysis)

8. COMING BACK TO A GRILL NEAR YOU: ARGENTINE STEAKS (The New York Times)

10. ARGENTINA: WHY THIS TIME MAY BE DIFFERENT (Seeking Alpha.com)

11. UNITED ARAB EMIRATES STRENGTHENS TIES WITH ARGENTINA’S NEW GOVERNMENT (Inter Press Service)

12. GEVO ENTERS JOINT VENTURE TO DEVELOP BIOFUELS PLANTS IN ARGENTINA (The Denver Post)

Back to contents

1. AFTER 14 YEARS AT ODDS, ARGENTINA AIMS TO SETTLE DEBT WITH HEDGE FUNDS (The New York Times)
By Alexandra Stevenson
3 February 2016

After a bitter face-off for more than a decade between Argentina and a group of disgruntled New York hedge funds, both sides have come to the negotiating table with fresh hopes of a resolution.

But the dispute, which has left Argentina largely cut off from international markets, still promised a few twists as a new round of talks took place this week in Manhattan.

On Tuesday, Argentina struck a deal to pay $1.35 billion to a group of Italian investors whose bonds the country defaulted on in 2001, according to news reports.

The deal is the first settlement with so-called holdout creditors who have not participated in earlier restructurings over debt from nearly 15 years ago. But Argentina has yet to come to an agreement with the New York hedge funds — holdouts led by the billionaire Paul E. Singer’s Elliott Management.

A stalemate involving the creditors and Argentina’s last president, Cristina Fernández de Kirchner, led the country to default on its debt again in 2014. The new administration of President Mauricio Macri has indicated that it wants to resolve the debt as part of a bigger move to reform Argentina’s economy.

Luis Caputo, the newly appointed finance secretary, and other senior government representatives met this week with principals at the hedge funds — including Mr. Elliott’s NML Capital unit, Aurelius Capital, Montreux Partners, Dart Management and Davidson Kempner — in Manhattan, according to a court-appointed arbiter Daniel A. Pollack. The group is seeking a resolution for claims totaling around $9 billion, he added.

In dispute is how much Argentina should pay in interest.

At a news conference in Buenos Aires announcing the deal with Italian bondholders, Argentina’s economic minister, Alfonso Prat-Gay, touched on the question of interest payments. ”We have said that we will respect the bond principal and that we are going to be firm in negotiating the interest, and in this particular agreement we have achieved just that.”

But, Mr. Prat-Gay added, ”The difficulty that we have right now is that some bondholders want to be paid an interest rate that, under any type of judicial criteria, is unacceptable.”

The battle between Argentina and its holdout creditors stems from 2001, when the country defaulted on billions of dollars in debt. Argentina offered to exchange the bonds it defaulted on for new bonds worth significantly less, a move that holdouts rejected. NML Capital sued Argentina seeking full repayment — principal and interest — and a Manhattan district court judge ruled that whenever Argentina paid one group of bondholders, it would also have to pay the holdouts.

This ruling could complicate Argentina’s deal with Italian holdout creditors. As part of the deal reported on Tuesday, Argentina will pay 150 percent of the original $900 million that the Italian bondholders hold from Argentine debt issued more than a decade ago. These details were reported by Bloomberg and Reuters, citing Task Force Argentina, the representative for the bondholders.

There are other issues that stand to complicate negotiations. Mr. Caputo is expected to publicly announce a proposal for the New York hedge funds this week. But these holdouts have requested that Argentina sign a nondisclosure agreement promising not to discuss the negotiations publicly.

Under President Macri, who was sworn in as president in December, the government has already taken steps to reform the economy, removing capital controls on its currency, the peso. It has also made efforts to rebuild relationships with the financial community. Representatives from Argentina held meetings with members of the International Monetary Fund during the World Economic Forum in Davos, Switzerland, seeking to reset frayed relations under Ms. Fernández de Kirchner.

”I want to insist that after so many years of conflict, we are ready to reach a settlement agreement in fair conditions,” Mr. Macri said at a news conference during the forum in Davos on Jan. 22.

The negotiations between Argentina and its creditors are being watched closely by the investment world. On Tuesday, another New York hedge fund, Gramercy, filed a $1.3 billion claim against Peru over what Gramercy claimed is that government’s refusal to properly repay defaulted debt.

Back to contents

2. ARGENTINA RESUMES HOLDOUT CREDITOR TALKS IN NEW YORK; COUNTRY FACES $9 BILLION IN CLAIMS FROM HOLDOUT CREDITORS (The Wall Street Journal Online)
By Taos Turner
2 February 2016

BUENOS AIRES—Argentina faces $9 billion in claims from holdout creditors entangled in a legal battle against the country in the U.S., a court-appointed meditator said late Monday.

The estimate, which comes from Daniel Pollack, a New York-based attorney who is trying to help the parties resolve a dispute, is almost $1 billion less than Argentina had previously acknowledged.

Mr. Pollack said Argentine officials, including Finance Secretary Luis Caputo, met in his office for four hours with holdouts including Elliot Management Corp., Aurelius Capital Management LP, Bracebridge Capital, Montreux Partners, Dart Management and Davidson Kempner.

“Ideas were discussed, informally, for the resolution of the claims, which now total approximately $9 billion,” Mr. Pollack said. “No agreement has been reached as yet. No specific date or time has been set for resumption of negotiations, but it is possible that they will continue this week.”

Earlier Monday, Argentina said it planned to make an offer to the holdouts sometime this week and that it wanted the creditors to agree to reduce the amount of punitory interest applied to the debt owed to them.

The dispute stems from Argentina’s decade-old refusal to offer full payment on bonds that the holdouts bought after the country defaulted on them in 2001.

Argentine President Mauricio Macri is eager to end the conflict because it is preventing the country from borrowing money abroad and raising financing costs for both the public and private sectors.

Back to contents

3. ARGENTINA TO PAY ITALIAN ‘HOLDOUT’ CREDITORS (Financial Times (FT.Com))
By Benedict Mander
2 February 2016

Argentina made its first agreement with a group of “holdout” creditors that rejected debt restructurings after the 2001 default on Tuesday, moving a step closer to regaining unfettered access to international capital markets.

The new government of President Mauricio Macri, who has vowed to normalise relations with the rest of the world, will pay a group of Italian bondholders $1.35bn in cash. That represents 150 per cent of the value of the $900m in bonds that Argentina defaulted on 15 years ago.

The deal sets a tough precedent for parallel negotiations taking place in New York between Argentina and another group of holdouts led by US billionaire Paul Singer’s Elliott Management, who are seeking to be paid around $3.50 on the dollar, or a total of around $9bn.

Alfonso Prat-Gay, finance minister, said last month in Davos that Argentina would offer the group of US hedge funds $1.20 on the dollar, although a formal proposal is due to be made this week.

The dispute with the US hedge funds remains an obstacle to Argentina’s return to the capital markets after they won a legal victory in New York in 2012 that prevented the South American country from paying other creditors before paying the holdouts in full. This led to Argentina’s second default this century in 2014.

“We are going to be tough in the negotiation [with the US hedge funds] over the interest,” said Mr Prat-Gay at a press conference on Tuesday. He was highlighting that Argentina was only paying a third of the accumulated interest that the Italian bondholders have been demanding at the International Court for the Settlement of Investment Disputes — so far without success — or a total of $2.5bn in principal and interest.

“There are some who want to charge an unacceptable interest rate,” added Mr Prat-Gay, referring to the US hedge funds.

More than 92 per cent of bondholders accepted debt restructurings in 2005 and 2010 that implied losses of about 70 per cent of the original value of their bonds. The remaining holdouts who refused the restructurings own debt with a total face value of more than $6bn at the time of the default. By some estimates, with interest included, those bonds could now be worth more than $20bn.

“After 14 long years, we are gratified to see this affair end in a manner that will result in a fair settlement of the claims of the Italian bondholders. We appreciate the willingness of the administration of President Macri in Argentina to move swiftly and maturely to deal with this longstanding problem,” said Nicola Stock, president of Task Force Argentina.

TFA represents approximately 50,000 Italian retail investors, most of whom are retired and hold on average $25,000-$50,000 in bonds each. Of the original 180,000 bondholders represented by TFA, most accepted restructuring deals or have died.

The proposed agreement will be submitted for approval by Argentina’s congress, which reconvenes in March, as well as board members of TFA.

Back to contents

4. ARGENTINA SETTLES FIRST OF $9 BIL IN DEBT DEFAULT CLAIMS (Barron’s Blog)
By Dimitra DeFotis
2 February 2016

Representatives of the Argentine government agreed to pay a group of Italian bondholders $1.35 billion to settle a fraction of the $9 billion in holdout Argentina debt default cases under negotiation in a U.S. court.

The Global X MSCIArgentina exchange-traded fund ( ARGT) was down 2.4% today, while Argentina bank Banco Macro ( BMA) was down 2.7%, BBVA Banco Frances ( BFR) was down 2.3% and Grupo Financiero Galicia ( GGAL) was down nearly 2%. State-controlled oil producer YPF ( YPF) was down 2.6% along with the fall in oil prices today.

Argentine representatives were in New York Monday to negotiate with holders of defaulted Argentine debt; the cases are governed by U.S. law. Those pursuing monies are among a minority of investors who refused prior settlement offers from Argentina after it defaulted on debt. Those investors including prominent hedge funds that the former Argentine government and many in Argentina have called “vultures,” including Elliot Management, Aurelius Capital Management, Bracebridge Capital, Montreux Partners, Dart Management and Davidson Kempner, according to The Wall Street Journal.

But new President Mauricio Macri, installed in December, is keen on settling the cases and expanding Argentina’s access to global capital markets. Macri doesn’t control Argentina’s Congress, so it is possible that the debt terms agreed to will be stalled. That said, his economic reforms thus far have been major: lifting capital controls, devaluing the Argentine peso and spending on energy infrastructure.

The Italian creditors sought $2.5 billion in principal and interest on defaulted notes from 2001, but accepted 150 percent of the $900 million principal value, Reuters reports, adding:

“Argentine Finance Minister Alfonso Prat-Gay earlier said the Italian investors’ holdings accounted for 30 percent of all the debt that is subject to legal claims in a United States federal court and 15 percent of the defaulted debt that was not restructured in 2005 and 2010. Argentina defaulted on $100 billion of debt in 2002.”

Back to contents

5. ARGENTINA REACHES CASH DEAL WITH ITALIAN CREDITORS OVER DEFAULTED DEBT (Reuters News)
By Richard Lough and Stefano Bernabei
2 February 2016

BUENOS AIRES/ROME, Feb 2 (Reuters) – Argentina has reached a deal to pay $1.35 billion in cash to a group of Italian creditors who hold unpaid sovereign debt stemming from the South American country’s record default in 2002, the investors said on Tuesday.

The deal, which is subject to approval in Argentina’s Congress, represents a payment of 150 percent on the $900 million principal value of the defaulted bonds.

“That means the entire nominal value plus 50 percent interest,” Nicola Stock, president of Task Force Argentina which grouped together some 50,000 bondholders, told Reuters.

Even though newly elected President Mauricio Macri does not hold a majority in Congress, Stock said he expected lawmakers to greenlight the deal swiftly once it returns from recess in early March.

Finance Minister Alfonso Prat-Gay earlier said the Italian investors’ holdings accounted for 30 percent of all the debt that is subject to legal claims in a U.S. federal court and 15 percent of the defaulted debt that was not restructured in 2005 and 2010. Argentina defaulted on $100 billion of debt in 2002.

In New York, Argentine Finance Secretary Luis Caputo said mediated talks with New York hedge funds leading litigation in the U.S. courts for full payment were “making progress.”

He said Argentina could make an offer to the funds on Wednesday or Thursday, though there are no signs a deal is close.

Asked how far apart the two sides were, Caputo said: “I wish I knew.”

While the agreement with Italian creditors is a boost for Macri, it may not strengthen his government’s negotiating hand.

“Argentina still has no leverage in that they want the deal more than the bondholders,” said Siobhan Morden, head of Latin America fixed income strategy at Nomura.

Argentina needs a deal to emerge from default and tap global credit markets at more affordable rates.

Last month, Prat-Gay said the previous government’s failure to reach a deal with holdout creditors had cost the economy, with creditor claims in New York rising to $9.9 billion from $2.943 billion initially.

Prat-Gay stressed on Tuesday that Argentina was committed to finding a quick and fair settlement with the U.S. investors.

The preliminary accord with some 50,000 Italian bondholders underlines the divergent views among the hedge funds and other “me-too” claimants who have joined the litigation about what an acceptable agreement looks like.

Back to contents

6. COMING BACK TO A GRILL NEAR YOU: ARGENTINE STEAKS (Reuters News)
2 February 2016

BUENOS AIRES, Feb 2 (Reuters) – Argentina could reclaim a strong presence on dining tables worldwide by exporting up to twice as much beef in the next two years, after the new center-right government cut export taxes and quotas on the red meat, industry groups said.

Exports of world-famous Argentine steaks have tumbled, largely due to the trade controls imposed by the former left-leaning government which designed to keep local butchers well supplied and suppress prices.

A decade ago, Argentina was the world’s third biggest beef exporter, with annual shipments of about 771,000 tonnes.

Argentina’s Meat Industry and Trade Chamber (Ciccra) estimated beef exports will increase to 300,000 tonnes in 2017 from 200,000 tonnes last year, while the Aacrea association of meat producers forecast 350,000 tonnes. Agriculture consultancy group Tonelli & Associates put the figure at 400,000 tons.

The groups spoke to Reuters last week.

“Argentina is returning to the market,” Mario Ravettino, president of the Consortium of Meat Exporters ABC, declared.

Argentina lifted restrictions on beef in the second week of January, a month after center-right Mauricio Macri took office on a platform to liberalize the spluttering economy.

Ricardo Negri, secretary for agriculture, livestock and fisheries said in a telephone interview that Argentina hoped to start shipping beef to the United States and Canada after both lifted their own restrictions on Argentine beef. It would also increase shipments to established markets such as Russia and China, he said.

An increase in exports could prove a boon for foreign meat packers operating in Argentina, including Brazilian firms JBS and Marfrig Global Foods.

“There’s a change of mood in the industry,” said Miguel Schiariti, president of the meat packers Ciccra chamber. “Expectations are running high, prices are improving and producers are betting on increased activity.”

In South America, Argentina lags behind Brazil and its much smaller neighbors Uruguay and Paraguay in beef exports.

Argentina’s decline as a meat exporter underlines the impact of former President Cristina Fernandez’s protectionist policies since 2008 on the country’s external beef trade as farmers switched to cash crops such as soy.

The U.S. Department of Agriculture estimated that in 2016 Argentine beef exports will increase 15 percent to 265,000 tonnes.

Victor Tonelli of Tonelli & Associates forecast Argentina’s herd would in five years grow to 58 million head of cattle, its highest since 2008, from the current 51.5 million.

Meat industry chamber Ciccra said a dip in the number of heifers slaughtered in December from a year earlier could suggest farmers were taking the first steps toward increasing their cattle stock.

Back to contents

7. ARGENTINE PRESIDENT’S NEW SECURITY AGENDA LIKELY TO PROVOKE TERRITORIAL COMPETITION BETWEEN DRUG GANGS, RAISING VIOLENT CRIME RISKS (IHS Global Insight Daily Analysis)
By Laurence Allan
2 February 2016

A high-profile prison break in late December 2015 focused attention on the Argentine government’s new security strategy.

IHS perspective

Significance

On 22 January, President Mauricio Macri declared a 12-month nationwide-security state of emergency, in the aftermath of a highly publicised prison escape in Buenos Aires.

Implications

The 22 January move also signals a wider range of organisational and capacity restructuring aimed primarily at pushing back drug-trade-related violent crime.

Outlook

In a context of public-spending austerity, efforts to dampen the rapid increase of organised drug trafficking face funding and co-ordination challenges which are likely to dampen the effectiveness of the plan in the two-year outlook.

On 28 December 2015, three convicted murderers in a high-profile case escaped the Buenos Aires province prison of General Alvear, sparking a 13-day manhunt before recapture. Subsequently, seven high-ranking officers from the provincial police senior leadership were pushed into compulsory retirement by the Ministry of Security amid criticisms across the political spectrum of their effectiveness, The issues surrounding the event highlighted widespread worries about the rising trend of violent crime in Argentina, and that the case indicated direct links between criminal networks, the police, and political actors.

Special forces officers waiting for recaptured murder convicts Lanatta and Schillaci outside the Federal Court Building, Buenos Aires, Argentina, 11 January 2016. PA.25220297

Benefitting from comparatively good infrastructure, a plethora of major ports, and with the relocation of major drug traffickers to the country from Colombia and Mexico, Argentina has grown in importance as a transit point for trafficking cocaine to major consumer markets in North America and Europe. Argentina is also a growing market for consumption itself, notably of the cocaine derivative paco, driving a spike in violence since 2013, most notably in Rosario. Criminal groups are proliferating, amid a territorial dispute for control of the growing local narcotics consumption market. There is also evidence to connect local groups to Mexican cartels, such as the Sinaloa cartel. The recurrent presence of Colombian contract killers suggests transnational connections are getting denser and more complex.

Argentina’s official data from mid-2015 assessed a murder rate of 8.8/100,000 residents, a 16% year-on-year increase over 2014. Most crime indicators now show deterioration, especially in hotspots in Buenos Aires province and Santa Fe. Although still far lower than in comparable cities in neighbouring Brazil – which display murder rates as high as 60/100,000 – Greater Buenos Aires has a murder rate of 10.58/100,000 and Rosario City climbed in 2015 to 15.24/100,000. In terms of public perception, the Catholic University Social Debt Observatory found that 75% of Argentines felt “in imminent danger of being victims of crime”, up 20% between 2010 and 2014.

On 22 January, President Mauricio Macri declared a 365-day nationwide state of emergency, with Decree 228/16 outlining the key points of Macri’s new security policy.

Key policy features

Decree 228/16 is based on a heightened effort to respond to increasingly sophisticated security challenges posed especially by organised crime and drug trafficking.

The decree authorises the Ministry of Security to call up retired federal, border, and airport police personnel. The decree involves the security, defence and transport ministries – and the customs office and AFIP tax office when necessary – in the task of reinforcing security mechanisms, while it allows the faculty to acquire all material means to increase border control. President Macri also relaunched international co-operation, specifically with Israel, on security and defence technology co-operation.

Outlook and implications

Key challenges to the new strategy are notably centred on the lack of sufficient federal funds, given expected austerity. Although the greater budgetary flexibility noted for the cabinet chief should facilitate operational objectives, the government’s overarching economic strategy to control public spending is likely to restrict investment in the new security strategy at least through 2016. That will also bleed into the sensitive question of co-ordination between federal and provincial police, who are ultimately overseen not by the federal government but by the provincial authorities. In the case of Buenos Aires province, that hurdle is mitigated by the presence of a close ally of the president in the provincial governor. However, this advantage only applies in half of Argentina’s provinces.

In the two-year outlook a rise in violence is nevertheless to be expected. If Macri’s strategy unfolds to plan, pressure on drug gangs will generate an ugly backlash, especially in hotspots like Rosario and parts of Greater Buenos Aires. This will most likely come in the form of redistribution of power and territory between gangs, with a heightened likelihood of incidental injury risks to bystanders, and the potential that drug gangs squeezed out of their main areas of operation may branch out into other revenue-generating practices. Regional experience indicates that extortion of individuals and businesses and kidnapping risks would be the most likely areas of such diversification.

Increased control at points of entry (air, land, and sea) to prevent the entrance of drugs. The old “North Shield” operation will be replaced and expanded by the “Border Operative”, although North Shield will remain active until 31 December 2016. The main geographical focus will be the northern part of the country, notably the 830-kilometre border with Colombia’s major cocaine-exporting neighbour Bolivia. New border operations will be permanent with a planned significant upgrade of radar coverage.

A new protocol for the armed forces in Argentine airspace marks a step change for the military in domestic crime prevention which, since 1983, have had tight limits imposed on their actions on domestic soil and airspace. The armed forces are now authorised to “identify, warn, intimidate, and use force (as a last resort) with intruders in the Argentine airspace”. Despite the creation of a Human Security Cabinet, it is clear the thrust of the policy is that of a “war on drugs”. Other experiments such as the so-called “Medellín model”, which is focused more on urban planning, physical connectivity, and social integration than in command and combat, are being introduced in Córdoba. This is clearly a departure from the national model advanced by Macri, and is likely to test co-ordination between national and provincial-level authorities, especially given that Córdoba’s governor, José Manuel de la Sota, aspires to leadership of the main national political opposition.

The Ministry of Security will have full operational control over the criminal response strategy. Critically, the executive cabinet chief is empowered to reassign budget items to the Ministry of Security in order to provide the “necessary” material means to implement the plan “effectively”. The financial and operational relationship between police and political provincial powers is as yet undecided, but the budgetary power assigned to the cabinet chief looks likely to make overall co-ordination and operational effectiveness more probable.

Back to contents

8. COMING BACK TO A GRILL NEAR YOU: ARGENTINE STEAKS (The New York Times)
By Richard Lough
Feb. 2, 2016

BUENOS AIRES — Argentina could reclaim a strong presence on dining tables worldwide by exporting up to twice as much beef in the next two years, after the new center-right government cut export taxes and quotas on the red meat, industry groups said.

Exports of world-famous Argentine steaks have tumbled, largely due to the trade controls imposed by the former left-leaning government which designed to keep local butchers well supplied and suppress prices.

A decade ago, Argentina was the world’s third biggest beef exporter, with annual shipments of about 771,000 tonnes.

Argentina’s Meat Industry and Trade Chamber (Ciccra) estimated beef exports will increase to 300,000 tonnes in 2017 from 200,000 tonnes last year, while the Aacrea association of meat producers forecast 350,000 tonnes. Agriculture consultancy group Tonelli & Associates put the figure at 400,000 tons.

The groups spoke to Reuters last week.

“Argentina is returning to the market,” Mario Ravettino, president of the Consortium of Meat Exporters ABC, declared.

Argentina lifted restrictions on beef in the second week of January, a month after center-right Mauricio Macri took office on a platform to liberalize the spluttering economy.

Ricardo Negri, secretary for agriculture, livestock and fisheries said in a telephone interview that Argentina hoped to start shipping beef to the United States and Canada after both lifted their own restrictions on Argentine beef. It would also increase shipments to established markets such as Russia and China, he said.

An increase in exports could prove a boon for foreign meat packers operating in Argentina, including Brazilian firms JBS and Marfrig Global Foods.

“There’s a change of mood in the industry,” said Miguel Schiariti, president of the meat packers Ciccra chamber. “Expectations are running high, prices are improving and producers are betting on increased activity.”

In South America, Argentina lags behind Brazil and its much smaller neighbors Uruguay and Paraguay in beef exports.

Argentina’s decline as a meat exporter underlines the impact of former President Cristina Fernandez’s protectionist policies since 2008 on the country’s external beef trade as farmers switched to cash crops such as soy.

The U.S. Department of Agriculture estimated that in 2016 Argentine beef exports will increase 15 percent to 265,000 tonnes.

Victor Tonelli of Tonelli & Associates forecast Argentina’s herd would in five years grow to 58 million head of cattle, its highest since 2008, from the current 51.5 million.

Meat industry chamber Ciccra said a dip in the number of heifers slaughtered in December from a year earlier could suggest farmers were taking the first steps toward increasing their cattle stock.

10. ARGENTINA: WHY THIS TIME MAY BE DIFFERENT (Seeking Alpha.com)
Feb. 2, 2016

Summary

· Argentina has earned a bad reputation in financial markets after several sovereign debt defaults over the last few decades.

· Continuous economic and political mismanagement have been the cause of these repeated disasters.

· A new business friendly Government plans to change things for good. Will it succeed?

· We introduce the investment alternatives available for US investors interested in Argentina.

Back in April 2015, we wrote about what lied ahead for Argentina, the third biggest economy in Latin America that had been an outcast from global markets since its last sovereign debt default in 2001. In our article, we suggested that three political scenarios were in sight, with more business friendly candidates Mauricio Macri and Sergio Massa with fewer chances of winning the National Election than ruling party’s candidate Daniel Scioli. We suggested that Macri and Massa would obviously be a better option for the economy and financial markets, but we were not optimistic about their chances.

In November, however, Mauricio Macri was elected President in a historical election. Mr. Macri’s party won all of the country’s important districts, defeating the Peronist Party for the first time in history in its home ground of Buenos Aires Province. This election was a game changer in many senses and local financial markets soared with the news, with local index MERVAL rising over 40% between October (when first round elections gave Macri the lead) and December (when he was finally elected). Much of these gains were lost in late December and early January as the combination of emerging markets meltdown and unpleasant but much needed economic measures brought investors back to short term views.

Track Record

We have stated that economic mismanagement has been the main cause of Argentina’s financial disasters over the last decades. Mismanagement has prevented the country from exploiting its vast array of natural and human resources. Some investors in Argentina and specialized managers in Wall Street believe this time may be different, as the new administration has announced plans to normalize the economy and its members have a very strong track record for execution.

The son of one of Argentina’s wealthiest businessman, Mr. Macri first high profile job was as a President of Boca Juniors, one of Latin Americas top football clubs and one of Argentina’s most valuable brands. Mr. Macri took over an almost bankrupt institution with very poor results and in 8 years turned it into one of the world’s most respected football brands. Under his management, Boca Juniors became world football champions in 2000 and 2003, beating heavyweights Real Madrid and AC Milan.

In 2007, Mr. Macri was elected as mayor of Buenos Aires City, Argentina’s Capital and ruled for two consecutive terms, being reelected in 2011. Under his management, the city undertook several infrastructure projects which were funded with budget surpluses and debt. With Argentina’s federal government banned from issuing debt in international markets, Buenos Aires had a better debt rating than its federal counterpart for much of the last decade. Mr. Macri’s tenure as BA mayor landed him at spot a the presidential race.

Helping Mr. Macri solve Argentina’s economic puzzles is Alfonso Prat Gay, a former J.P. Morgan (NYSE:JPM) economist and investment banker who served as President of Argentina’s Central Bank from 2002 to 2004 and was in charge of managing the aftermath of the country’s debt default and economic collapse of 2001. As head of the Central Bank, Mr. Prat Gay managed to lower inflation from 40% to 5% in two years. He leads a team of US schooled and trained professionals.

First Steps in the Right Direction

Almost two months into the new administration, the Government has managed to solve some of the most urgent economic puzzles.

In December, Mr. Prat Gay swiftly announced the end of the foreign currency controls that had been in place since 2011 and had had disastrous effects on the economy (we wrote about them here). Surprisingly, after individuals and business were allowed to freely buy foreign currency for the first time in four years, the Argentina Peso soared, reflecting strong confidence in the new administration.

Dwindling foreign currency reserves, which had been another major issue, are also being addressed. Last week, a consortium of global banks including JP Morgan (JPM), HSBC (NYSE:HSBC), Santander (NYSE:SAN), BBVA (NYSE:BBVA), Deutsche Bank (NYSE:DB) and UBS (NYSE:UBS) signed a $5B credit facility with Argentina’s Central Bank.

Regarding Argentina’s ongoing dispute with a group of US based hedge funds in relation with 2001 defaulted bonds, which has prevented the country from tapping global markets for more than a decade, Government officials expect to reach a deal in the short term and Mr. Macri has publicly pledged to do so. This will most likely affect Argentina’s credit ratings, with a significant upside potential in sovereign bonds.

Investment Alternatives

Having being an outcast from global financial markets for more than a decade, there are not that many tools for investing in Argentinean assets for global investors. There is no liquid ETF tracking the Argentinean stock index, but there are thirteen Argentina based companies trading in US markets through ADRs and two companies doing so directly:

– Banco Frances (NYSE:BFR) – Banking

– Banco Macro (NYSE:BMA) – Banking

– Cresud (NASDAQ:CRESY) – Agriculture and Food

– Edenor (NYSE:EDN) – Utilities

– Banco Galicia (NASDAQ:GGAL) – Banking

– IRSA (NYSE:IRS) – Real Estate

– Pampa Energia (NYSE:PAM) – Energy and Utilities

– Petrobras Argentina (NYSE:PZE) – Oil and Gas

– Telecom Argentina (NYSE:TEO) – Telecommunications

– Tenaris (NYSE:TS) – Industrial

– Ternium (NYSE:TX) – Industrial

– TGS (NYSE:TGS) – Gas

– YPF (NYSE:YPF) – Oil and Gas

– Mercadolibre (NASDAQ:MELI) – E-commerce

– Globant (NYSE:GLOB) – Technology

In a series of articles over the next weeks, we will introduce each of these companies to US investors that most probably never heard of them due to lack of coverage from US research firms and analysts, with a fundamental analysis of each and our fact based conclusion regarding their investment merit.

Back to contents

11. UNITED ARAB EMIRATES STRENGTHENS TIES WITH ARGENTINA’S NEW GOVERNMENT (Inter Press Service)
By Fabiana Frayssinet
Feb 3, 2016

The new government of Argentina and the United Arab Emirates (UAE) are strengthening the relationship established by the previous administration, at a time when this South American country is seeking to bring in foreign exchange, build up its international reserves and draw investment, in what the authorities describe as a new era of openness to the world.

Bilateral ties will be boosted during a visit to the Argentine capital by the UAE’s foreign minister, Sheikh Abdullah bin Zayed Al Nahyan, on Feb. 4, the start of his Latin America tour which will also take him to Ecuador, Colombia, Panama and Costa Rica before he flies out of the region on Feb. 12.

After several high-level meetings on Feb. 5, the minister’s visit will end with the signing of five agreements on taxation, sports, cooperation between the state news agencies Telam (Argentina) and WAM (UAE), and an Emirati loan to the southern province of Neuquén.

Mauricio Macri, who was sworn in as president of Argentina on Dec. 10, already indicated his interest in stronger ties when he met on Jan. 20, during the World Economic Forum in Davos, Switzerland, withHamad Shahwan al Dhaheri, executive director of the private equities department of the Abu Dhabi Investment Authority (ADIA).

ADIA, considered the second-largest sovereign wealth fund in the world, manages the excess oil revenues of the UAE, a federation of seven emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain.

The centre-right Macri, of the Cambiemos coalition, and Al Dhaheri“discussed the prospects opening up for Argentina and were enthusiastic about this new era for the country,” Telam reported from Davos.

The news agency was referring to the end of 12 years of government by the late Néstor Kirchner (2003-2007) and his widow and successor, Cristina Fernández (2007-2015), of the Front for Victory, the Justicialista (Peronist) Party’s centre-left faction, which defines itself as anti-neoliberal.

“Argentina has to position itself as a serious, predictable interlocutor,” this country’s foreign minister, Susana Malcorra, said in Davos.

“The question of economic opening, the search for investment and business opportunities is essential in our agenda,” she stressed.

According to a report from its embassy in Buenos Aires, the UAE has a significant presence in international capital markets through different investment institutions, such as ADIA, Dubai Ports World, Dubai Holding and Abu Dhabi’s International Petroleum Investment Co.

The UAE is a timely interlocutor for Argentina, Luis Mendiola, an expert on the Middle East, the Arab world and Africa with the Argentine Council for Foreign Relations (CARI), underlined in an interview with IPS.

“Their biggest problem is the extraordinary abundance of capital…the question is where to put it to get the best returns on the extraordinary surplus capital they produced during nearly a decade and a half of high oil prices,” added Mendiola, who served as ambassador to Saudi Arabia from 1996 to 2005.

These funds, he said, could go into major infrastructure projects in areas like housing, energy, transport and communications.

In January 2015, the authorities in the southern Argentine province of Neuquén reported that they had secured an 18 million dollar loan from the Abu Dhabi Fund for Development, to finance the Nahueve Hydroelectric Project for the promotion of irrigation in new productive areas, among other aims.

The two countries established diplomatic ties in 1975 and opened embassies in 2008. But relations moved to a new plane when President Fernández visited Abu Dhabi in January 2013, where she met with UAE President Khalifa bin Zayed al Nahyan.

During that visit, cooperation agreements were signed in the area of food, with the opening of the Emirati market to non-traditional Argentine products, and this country opened its first business office in the UAE.

In 2014, as the Argentine-Arab Chamber of Commerce informed IPS, trade between Argentina and the UAE amounted to 228 million dollars, with this South American country enjoying a surplus, exporting 198.9 million dollars in mainly foodstuffs and steel pipe and tube products.

But Mendiola believes there is greater potential to tap because besides boasting one of the highest per capita incomes in the Gulf, the UAE is a business hub which re-exports products to third countries and large markets, such as Saudi Arabia, India, Iran and Pakistan.

Bilateral ties were reinforced in April 2014, with a visit to Argentina by Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and emir of Dubai.

A memorandum of understanding for cooperation in the peaceful use of nuclear energy was signed during that visit.

On that occasion, Fernández emphasised the Argentina forms part of the “exclusive club” of nations “that can produce nuclear energy, but that do so on a non-proliferation basis.”

The then president also referred to the UAE’s “enormous interest” in investing in Argentina and financing projects aimed at bolstering food security.

In November 2015, with support from the local government, five family farming cooperatives from Argentina took part in an international specialty food festival in Dubai.

During the meeting in Buenos Aires, agreements were also reached to promote tourism initiatives and projects in renewable energy – an area in which the UAE, despite its status as one of the world’s largest oil producers, is considered a pioneer among the Gulf countries and even at the international level, Mendiola noted.

“The Emiratis are very good at forging ahead and moving into new areas, and in that sense they are a model, at least in the Gulf region,” he added.

During his visit to Argentina, Al Maktoum remarked that his country did not invest “according to preferences or political motives, but based on economic questions.”

For that reason Mendiola said he was not “surprised” by the UAE’s interest in Latin America “because the Gulf countries in general have always had extremely pragmatic foreign policies which are at the same time modest, in terms of maintaining a low profile.”

“I think the difference now is they are taking advantage of the fact that there is a new government in Argentina, which presents itself to the world as very different from the last one, and that is raising a lot of interest because they have an extraordinary level of reserves as well as investment abroad,” he said.

Mendiola pointed out that the UAE did not have a “clear” presence in Latin America until recently, unlike in Africa and Asia.

“Up to now, South America was a caboose for the Gulf countries, from the point of view of their economic interests. And the change in government without a doubt awakened curiosity and interest in seeing how to best take advantage of these opportunities,” he added.

Back to contents

12. GEVO ENTERS JOINT VENTURE TO DEVELOP BIOFUELS PLANTS IN ARGENTINA (The Denver Post)
By Alicia Wallace
02/02/2016

First facility targeted to start production in 2017

Gevo, a Douglas County-based developer of biofuels as substitutes for jet fuel and plastics, has inked a licensing agreement to develop production facilities in Argentina, the company announced Tuesday.

Gevo signed a licensing and joint development agreement with Porta Hnos S.A. to develop several plants in Argentina that can produce biofuel isobutanol from corn.

Financial terms were not immediately disclosed.

The first plant, slated to come online by 2017, has an expected annual production of 5 million gallons of isobutanol. Gevo is projecting about $1 million in annual revenue — from royalties, marketing fees, and yeast sales — once the Porta-owned plant is operational.

The production capacity of any additional plants and the projected costs and revenue associated with those facilities have yet to be disclosed, Gevo officials said.


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

Responder Responder a todos Reenviar Más

ARGENTINE UPDATE – Feb 1, 2016

2 febrero, 2016

1. TWISTING INQUIRY INTO BUENOS AIRES BOMBING TAKES NEW TURN (The New York Times)

2. ARGENTINA TO RESUME TALKS WITH ‘HOLDOUTS’ (Financial Times (FT.Com))

3. ARGENTINA SEALS $5 BLN BANK LOAN AS HEADS INTO HOLDOUT TALKS (Reuters News)

4. ARGENTINA RAISES POWER TARIFFS IN DRIVE TO SLASH SUBSIDIES (Reuters News)

5. DIAZ REUS ANNOUNCES MEMBERS OF ARGENTINA SOVEREIGN DEBT CLASSES ASKED TO SUBMIT INFORMATION FOR U.S. CLASS ACTIONS (Business Wire)

6. ARGENTINA RISK: RISK OVERVIEW (Economist Intelligence Unit – Risk Briefing)

7. ARGENTINA RISK: ALERT – RISK SCENARIO WATCHLIST (Economist Intelligence Unit – Risk Briefing)

1. TWISTING INQUIRY INTO BUENOS AIRES BOMBING TAKES NEW TURN (The New York Times)
By Jonathan Gilbert
Feb. 1, 2016

BUENOS AIRES — For more than two decades, an investigation into the suicide bombing of a Jewish center here in 1994 that killed 85 people has faced setbacks and controversy. It caused an intractable rift between Argentina and Iran. A former president has been put on trial, accused of orchestrating a cover-up. And a prosecutor involved in the case died last year in murky circumstances.

But now, Argentina’s new government is pledging to finally get to the bottom of a case that cost the country about $3.5 million last year alone, and that took on a life of its own, swallowing up many who touched it.

President Mauricio Macri, who took office in December, has revamped the government department assigned to the bombing investigation and has vowed to introduce legislation that would allow for the trial of suspects in absentia.

The question is whether those efforts, which face considerable legal hurdles and political opposition, will translate into lasting results in the long-running case.

The president wants to “re-establish the commitment of the Argentine state” to solving the attack, said Mario Cimadevilla, who has been appointed to head the investigative department

The unit was created in 2000 to lend support from the executive branch to prosecutors leading the inquiry, for instance by collating evidence from government agencies. In recent years, it had largely been sidelined.

Mr. Cimadevilla has new powers that include the ability to propose legislation and furnish information to investigators working on the death last year of Alberto Nisman, the prosecutor overseeing the case, which may shed new light on the bombing. In 2006, Mr. Nisman blamed the bombing on the Iranian government.

Mr. Cimadevilla’s first task has been drafting a bill to try defendants in absentia, which the government expects to send to Congress when it reconvenes in March. If approved, it would allow suspects abroad who refuse to cooperate with the bombing investigation to be tried in Argentina’s courts.

“We don’t want trials to be halted because the defendant isn’t there,” Mr. Cimadevilla said. “That is denying justice.”

Mr. Macri’s opponents have accused him of trying to score political points by seeking to close the case with the swift convictions of eight former officials in Iran whom Mr. Nisman suspected of masterminding the bombing.

Sergio Burstein, whose estranged wife died in the attack, said the government was acting prematurely by drafting the bill when the prosecutors who replaced Mr. Nisman seem far from concluding their investigation and are still trying to glean evidence from a trial involving a former president, Carlos Saúl Menem. Mr. Menem is accused of conspiring to conceal a possible Syrian connection to the bombing.

Alejandro Rúa, a lawyer for Active Memory, a group of victims’ relatives, said Mr. Macri’s administration wanted a verdict. “We don’t want a verdict,” Mr. Rúa said. “We want the truth, and to get to it you have to investigate.”

Others say Mr. Macri’s efforts are designed to endear him to Jewish leaders with whom his party is perceived as having close ties.

The chief Jewish umbrella organization here, known by its acronym, DAIA, supports the idea of a trial in absentia. It presented a similar bill in 2014, and Mr. Cimadevilla said the government’s proposal would draw on that document.

“There needs to be a close to the case; if not, the dead are never going to rest in peace,” Ariel Cohen Sabban, the president of DAIA, said at a recent gathering in a plaza here to commemorate a year since Mr. Nisman’s death.

Mr. Macri does not have a majority in Congress, so he will need to negotiate with lawmakers from other blocs to pass the legislation. He could get some cross-party support, but it is unclear how much political capital he will want to invest in the bill when he is also trying to push through other important measures, said Juan Cruz Díaz, a director at the Cefeidas Group, a political risk analysis firm.

Mr. Nisman, the lead prosecutor on the investigation from 2005 until his mysterious death a year ago from a gunshot to the head, accused the former Iranian officials of authorizing the bombing of the Jewish center and Hezbollah, the Lebanese Shiite movement, of executing it.

Other unproven theories point to Syrian involvement or a so-called local connection, which once involved a former chief of Argentina’s intelligence agency and a group of police officers. These suspects were among 22 people acquitted in 2004, but the ex-intelligence chief, Hugo Alfredo Anzorreguy, is back in court together with Mr. Menem. (At least one fact has been established: Carlos Alberto Telleldín, an Argentine car salesman, was the last known registered owner of the Renault van that was loaded with explosives and driven into the Jewish center headquarters.)

Former President Cristina Fernández de Kirchner signed a contentious bilateral pact with Iran in 2013 so a jointly appointed commission could interrogate the Iranian suspects in Tehran. It was unclear how any subsequent trial would have proceeded.

Mrs. Kirchner said the agreement was the only way of enticing Iran to collaborate in the investigation. But Jewish leaders here, some victims’ relatives and the political opposition criticized the arrangement, saying it would be too easy for the Iranians to absolve themselves of a crime committed in Argentina if the investigation was shifted to their own country.

The pact was approved by lawmakers, but it was declared unconstitutional in 2014 by a two-judge panel that ruled it was an overreach of the executive branch into a judicial investigation. The new government recently dropped an appeal by Mrs. Kirchner’s administration of that ruling.

Even if passed, a bill allowing trials in absentia would — like the pact with Iran — face challenges in the courts, experts say. Trials in absentia are not explicitly addressed in Argentina’s Constitution, but they would violate its provisions for due process, said Raúl Gustavo Ferreyra, a professor of constitutional law at the University of Buenos Aires.

However, when the two-judge panel ruled against the pact with Iran, one of them highlighted how the Inter-American Commission on Human Rights once approved the extradition of a defendant from Costa Rica after he was convicted in absentia in France; he was given the right to appeal and a new trial. The Constitution has a provision to incorporate this type of international precedent.

“If you guarantee there can be a full review of the ruling, that would give it constitutional validity,” said Francisco Castex, a professor of criminal law here.

Even if trials eventually proceed, experts note that it is unlikely Iran would turn over citizens convicted in the case.

“It’s inconsequential,” Carlos Escudé, an Argentine political scientist who has written about the bombing investigation, said of the bill. “It’s as if the government is saying, ‘The show must go on.’ But the Iranians would never give themselves up.”

2. ARGENTINA TO RESUME TALKS WITH ‘HOLDOUTS’ (Financial Times (FT.Com))
By Benedict Mander
1 February 2016

Argentina will resume debt talks with a group of US hedge funds on Monday after securing a $5bn loan from Wall Street banks last week that will strengthen its hand in negotiations to end a decade-long legal dispute.

Finance secretary Luis Caputo, a former JPMorgan executive, is due to present an offer to the so-called holdout creditors, who rejected restructuring deals after Argentina’s 2001 default and won a legal victory in the US in 2012 that ruled that they should be repaid in full.

The bridge loan to Argentina’s central bank, which confirmed on Friday that foreign exchange reserves had jumped to more than $30bn, is another sign of investor confidence in the new market-friendly government of Mauricio Macri. HSBC, JPMorgan and Santander contributed $1bn each, while Deutsche Bank, BBVA, Citibank and UBS all lent $500m at an interest rate of about 6 points above the Libor rate.

The dispute with the holdouts is preventing Argentina’s return to the international capital markets. Reaching an agreement with the creditors led by US billionaire Paul Singer’s Elliott Management would put an end to Argentina’s second default this century in 2014, when the holdouts’ legal victory in the US prevented Argentina from continuing to service debt to holders of restructured debt.

An agreement could lead to upgrades by credit rating agencies and Argentina’s inclusion in emerging market bond indices. JPMorgan last week removed South America’s second-largest economy from its “frontier” market index.

Mr Macri, who attracted huge interest from investors at the World Economic Forum in Davos last month, has made solving the legal dispute a central part of his economic reforms, which included a 30 per cent devaluation in the overvalued peso in December after lifting strict capital controls in place since 2011.

Last week, the centre-right government also began removing costly electricity subsidies, with prices for consumers set to multiply by more than six times.

The previous populist government of Cristina Fernández de Kirchner presided over some of the cheapest electricity prices in the world, pushing the fiscal deficit last year to almost 8 per cent of gross domestic product. Nearly 3 per cent of GDP has been ploughed into subsidising domestic energy consumption, with electricity bills for many households costing as little as $3 a month.

Any agreement with the holdouts will then have to be approved by the opposition-dominated congress, with delicate negotiations with the divided Peronist movement expected to follow. Despite his tough economic reform programme, Mr Macri, who was previously mayor of the city of Buenos Aires, enjoys approval ratings of 71 per cent after his first month in office, according to Poliarquia, a local pollster.

The holdouts’ own bonds had a face value of around $6bn in 2001, but accumulated interest means that the value of Argentina’s holdout claims is now estimated to be more than $20bn.

3. ARGENTINA SEALS $5 BLN BANK LOAN AS HEADS INTO HOLDOUT TALKS (Reuters News)
By Walter Bianchi and Sarah Marsh
29 January 2016

* Argentina gets $5 bln loan from int’l banks to bolster reserves
* Deal strengthens negotiating hand as goes into debt talks

BUENOS AIRES, Jan 29 (Reuters) – Argentina’s central bank said on Friday it had sealed a deal for a $5 billion, one-year loan from international private banks, bolstering its low foreign reserves as the country heads into talks with creditors suing over unpaid debt.

The South American country is virtually shut out of global credit markets because of its long-running legal dispute in U.S. courts with creditors over debt it defaulted on in 2002.

President Mauricio Macri, who took office last month, has said he hopes to reach an agreement early this year, enabling Argentina to re-gain access to capital markets. In the meantime, his government has secured alternative financing.

This commercial bank loan “facilitates the central bank’s capacity to confront external shocks and thereby avoid disruption in the local market,” the regulator said in a statement.

The loan will be backed by Bonar 2022, Bonar 2025 and Bonar 2027 notes in the central bank’s portfolio, it added.

Argentina’s foreign reserves rose to $30.071 billion on Friday from $25.241 billion the previous day, the central bank said in a separate statement after the local markets’ close.

The interest rate on the commercial bank loan will be the Libor rate plus 6.15 points, said a source at a bank involved in the deal who asked not to be identified.

The banks HSBC, JPMorgan Chase & Co. and Santander will contribute $1 billion each, while Deutsche Bank, BBVA, Citibank and UBS will lend 500 million each, the source said.

Argentina has said it will present a proposal to settle its legal debt battle next week to the U.S. court-appointed mediator Daniel Pollack.

Finance Secretary Luis Caputo, a former Deutsche Bank executive, has already traveled to the United States to meet with Pollack next week, the Finance Ministry said on Friday.

“There will be informal meetings on Monday and Tuesday with Pollack and possibly with the holdouts,” the ministry said. “We do not know yet when the proposal will be presented. These meetings will be held without lawyers present.”

Argentina originally hoped the talks would take place the week of Jan. 25 but the holdouts asked for them to be postponed a week due to “logistical difficulties”.

4. ARGENTINA RAISES POWER TARIFFS IN DRIVE TO SLASH SUBSIDIES (Reuters News)
29 January 2016

BUENOS AIRES, Jan 29 (Reuters) – Argentina’s energy minister on Friday announced new power rates on the back of subsidy cuts that could see the bills of some consumers jump six-fold, saying that a near total freeze on tariffs in parts of the country had left the power grid “on the brink of collapse.”

Minister Juan Jose Aranguren said the government of newly-elected Mauricio Macri targeted reducing subsidies by $4 billion this year as part of a drive to reduce a gaping deficit that widened sharply under the government of former President Cristina Fernandez.

“The subsidies for the generation of electricity in 2015 was around $10 billion, which is just under 2 points of gross domestic product,” Aranguren told a news conference. “With our new tariff policy…we aim to save $4 billion.”

The federal government only controls rates in the capital and its suburbs. Provincial governments outside of Buenos Aires set their own rates.

Aranguren said the old subsidy system had favoured residents of the capital Buenos Aires, who typically pay rates five times lower than in other provinces because rates there have been largely frozen for more than 13 years.

He said that a household in the capital which consumed 180 kilowatts per month would see its bill rise to 150 pesos ($10.74) from 25 pesos – a price the minister noted was roughly the same as a cup of coffee.

There will be cost-saving incentives for consumers who reduce their consumption from last year.

Leading utility firms Edenor and Edesur, which distribute power to metropolitan Buenos Aires have posted losses in four of the past five fully reported financial years as power rates stayed rock bottom even as inflation surged.

The new rate structure comes after the government set new wholesale prices for electricity that will apply nationwide from Monday.

Aranguren said that the rates would be reviewed again in six months time.

Argentina has spent $51 billion on power subsidies since 2003, Aranguren said.

5. DIAZ REUS ANNOUNCES MEMBERS OF ARGENTINA SOVEREIGN DEBT CLASSES ASKED TO SUBMIT INFORMATION FOR U.S. CLASS ACTIONS (Business Wire)
29 January 2016

NEW YORK–(BUSINESS WIRE)–January 29, 2016– Counsel representing classes of certain holders of defaulted Argentine sovereign bonds have announced that the federal court in New York City has asked class members to identify themselves to class counsel as part of the process for the court to determine the total amount of damages owed to the classes. Class members can identify themselves by requesting and sending in a Proof of Claim, as discussed below.

In 2001, the Republic of Argentina defaulted on multiple series of Global Notes and Bonds. Argentina has since failed to pay the principal and interest due on those bonds.

Today’s announcement concerns the nine series of defaulted bonds identified in the chart below. Lawsuits are pending before the United States District Court for the Southern District of New York (Judge Griesa) concerning each of these series of bonds.

The Court has certified each lawsuit as a class action. The members of each class are beneficial holders of any amounts of the bonds who held the bonds as of the relevant starting date listed below (or earlier), and continuously hold at least some amount of that original holding through today.

Description ISIN Number Starting Date of Holding
—————————- ———— ————————
1. Republic of Argentina 11% US040114AN02 January 16, 2004
Global Notes due October 9,
2006
—————————- ———— ————————
2. Republic of Argentina 7% US040114GF14 January 16, 2004
Global Notes due December
19, 2008
—————————- ———— ————————
3. Republic of Argentina 9.75% US040114AV28 January 22, 2004
Global Notes Due September
19, 2027
—————————- ———— ————————
4. Republic of Argentina 11.75% US040114GA27 February 4, 2004
Global Notes Due June 15,
2015
—————————- ———— ————————
5. Republic of Argentina 11% US040114AZ32 February 4, 2004
Global Notes Due December 5,
2005
—————————- ———— ————————
6. Republic of Argentina 8.375% US040114AH34 February 10, 2004
Global Notes Due December
20, 2003
—————————- ———— ————————
7. Republic of Argentina US040114GD65 March 17, 2004
12.375% Global Notes Due
February 21, 2012
—————————- ———— ————————
8. Republic of Argentina XS0043120582 March 17, 2004
Floating Rate L+0.8125
Global Notes Due March 2005
—————————- ———— ————————
9. Republic of Argentina XSO113833510 December 19, 2006
European Medium Term Note
Bond, 9.25% Due July 20,
2004
—————————- ———— ————————

The court has already found that Argentina is liable to class members for unpaid principal and interest. The court now seeks to identify the individual class members as part of the process to calculate the amount of damages for each class.

All beneficial holders of any bonds in any of the classes who have held any amount of bonds continuously from the “start date” through today are requested immediately to contact Class Counsel to obtain the Proof of Claim form that they can use to identify themselves and the amount of their class holdings. The deadline to send in Proof of Claim forms is February 29, 2016.

Individuals or institutions holding bonds in series 1-8 in the above chart should contact Class Counsel Marta Colomar Garcia at mcolomar@diazreus.com, 00-1-305-375-9220.

Individuals or institutions holding bonds in series 9 in the above chart should contact Jason A Zweig at jasonz@hbsslaw.com or 00-1-708-628-4958. Mr. Zweig’s firm has been appointed by the Court to represent the class with respect to the bonds in series 9 above. Holders of interests in series 9, can also obtain a claim form at https://www.hbsslaw.com/cases/argentine-bonds/pressrelease/argentine-bonds-hagens-berman-urges-argentine-bond-holders-to-file-claim-for-damages-in-class-action-lawsuit.

Bondholders who submitted “opt-out” notices or who have filed individual lawsuits or arbitrations should not submit a Proof of Claims form.

Information provided will be used only for this litigation and will not be filed in the public court records. The court may also request additional information at a later time.

Current bondholders who wish to remain in the classes and eventually be eligible to claim a share of any class recovery should not sell or transfer their bonds. Bonds that are sold or transferred will not be part of the classes.

Bondholders should not call or write to the court with questions about the Proof of Claim process.

6. ARGENTINA RISK: RISK OVERVIEW (Economist Intelligence Unit – Risk Briefing)
29 January 2016

RISK RATINGS Current Current Previous Previous
Rating Score Rating Score
Overall assessment C 56 C 58
Security risk C 43 C 43
Political stability risk C 50 C 50
Government effectiveness risk C 46 C 46
Legal & regulatory risk C 52 C 52
Macroeconomic risk E 90 E 90
Foreign trade & payments risk C 50 D 61
Financial risk C 58 D 62
Tax policy risk D 62 D 62
Labour market risk D 64 D 64
Infrastructure risk C 47 C 47

Note: E=most risky; 100=most risky.The risk ratings model is run once a quarter.

OVERALL ASSESSMENT

Argentina’s rating remains at C, following recent improvements reflecting moves by the new president, Mauricio Macri, to address macroeconomic imbalances and restore confidence in policymaking and in the environment for business. In the short term, policy adjustments under a new administration will increase the risk of social unrest, keeping political stability risk high. In the short term, macroeconomic risk and financial risk will also remain high, reflecting high market risk, weak confidence in banks and a recent history of sovereign default. Interventionism in response to economic distortions will decline in the medium term, and legal and regulatory risk will improve as a result, as will foreign trade and payments risk. Strong unions, frequent strikes and inflexible labour rules will heighten labour market risk. Infrastructure will remain a relative strength, although in the short term weak energy output will maintain the risk to this area.

Security risk

Security risk is less of a concern than in much of Latin America, but the perception that the security environment is deteriorating is rising. Crime rose sharply during the 2001 crisis and has not come down since. Despite recent reforms, the police are still regarded as ineffective, or occasionally complicit in some crimes. On the hard left, foreign capital and the banking system are still demonised for the part they played in the historic 2001 crisis. But the risk of direct action against representatives of these groups has faded. The illegal drugs trade generally does not pose a direct threat to businesses but is a growing source of violence and corruption. Argentina’s large Jewish population makes it a potential target of terrorism perpetrated by Islamic extremists.

Political stability risk

Reflecting the scale of economic mismanagement under the previous government, led by Cristina Fernández de Kirchner, which had produced stagflation and strong currency devaluation pressures, the adjustment process taking place under President Mauricio Macri will be a difficult one, involving politically unpopular austerity measures, including a scaling back of fiscal expenditure. Resistance among Argentina’s powerful unions to austerity, and, in particular, to efforts to rein in nominal wages in bargaining rounds next year, will be strong. The risk of social unrest will therefore remain high in the near term.

Government effectiveness risk

Weak institutions are a shortcoming of the political system. One by-product of a strong presidential system is weak congressional oversight of the executive. There is a long history of political interference with the judiciary, although in a recent positive development, the Supreme Court had ruled a controversial reform-seen as an attempt by the former administration of Cristina Fernández de Kirchner to exert greater control over the court system-unconstitutional. Discretionary transfers have given the administration the upper hand in managing relations with the provinces, although provincial leaders still have the potential to be disruptive in Argentina’s federal political system. The low quality of the bureaucracy is expected to persist, assuming a long-awaited public-sector reform is delayed indefinitely, and could hinder implementation of government policies. Increases in investment spending have been poorly targeted, as political considerations take precedence.

Legal & regulatory risk

Confidence in the rules of the game remains weak after almost a decade of populist policies intended to maximise voter support at the expense of trust in contract rights. The president, Mauricio Macri, who took office in December, will attempt to restore confidence in the framework for doing business, but this will take time, and will be complicated by sovereign default, which restricts the government’s ability to make amends with creditors and investors in order to attract fresh inflows of much-needed dollars. The Macri administration will work to dismantle the distortionary controls implemented over the course of recent years, and to reduce the perceived risk of expropriation of foreign assets. Government participation in “strategic” sectors such as energy will persist.

Macroeconomic risk

The Macri administration has begun the process of macroeconomic adjustment required to reduce inflation, improve external competitiveness and avoid an eventual balance-of-payments crisis. After only a week in office, the new government began to remove foreign-exchange controls, allowing the peso to devalue by around 30% in mid-December. This rapid adjustment is intended to provide clarity, transparency and a strong signal of the government’s commitment to change. But economic adjustments, which will also include monetary and fiscal tightening, will be politically difficult and, in the short term, will subdue activity. This will, however, be rewarded with a boost to investor confidence, assuming that the new government also works to exit default (eliminating the foreign-financing constraint) and strengthen confidence in the rule of law, which has been eroded by years of discretionary policy interventionism. Together, these policies should set the economy on a more solid long-term footing.

Foreign trade & payments risk

President Mauricio Macri’s government marks the start of a shift away from unpredictable and distortionary trade measures as the new government works to promote trade and investment via clear rules of the game. Controls are being eliminated quickly. However, there are some external sector risks stemming from a still-weak balance-of-payments position. The balance of payments has deteriorated in recent years on the back of an increasingly overvalued peso, persistently low foreign direct investment, negative portfolio flows and high levels of capital flight. Measures to increase competitiveness, boosting the trade balance and to improve investor confidence, bolstering investment inflows, will take some time to bear fruit. This means that liberalisation measures could be vulnerable to setbacks if pressure on the peso increases above expectations, for example if the authorities fail to secure a quick settlement with holdout creditors.

Financial risk

Access to financing remains a weakness, as an history of crisis has reduced confidence in the domestic financial system dramatically, and improvement in the outlook period will be gradual. Regulation and supervision have been strengthened since the 2001-02 crisis, with weaknesses, including a high level of exposure to public-sector debt and a high level of dollar-lending not backed by dollar revenue streams, having been addressed. But this has not produced a recovery in longer-term deposits that would lead to growth in longer-term finance. This is against a background of adverse policy decisions (such as the 2008 nationalisation of the private pension funds) and a deterioration of the public finances. The latter makes crowding out by the public sector a likely problem, at least until public-sector external financing constraints are removed via a negotiated settlement with holdout creditors.

Tax policy risk

Tax policy has become increasingly unpredictable and complex, and is also costly and inefficient. According to the World Bank’s latest Doing Business report (for 2016), in Argentina a medium-sized company takes 405 hours per year to prepare, file and pay its taxes, compared with an OECD average of 177 hours, and pays a total tax rate (including labour contributions) of 137% of profits (the OECD average is 41%). Under President Mauricio Macri, a reduction and eventual elimination of the most distortionary taxes, such as agricultural export taxes, will be likely. But a broad-and politically difficult-reform to increase the consistency and equity of the system (which has been distorted by a decentralisation of expenditure to the provinces and a centralisation of revenue to the central government) has long been put off and remains extremely unlikely to be addressed in the forecast period. As a result, tax evasion and informality will remain high.

Labour market risk

Argentina’s relatively well-educated, productive and flexible labour force is an asset to the country’s business environment (and makes the labour market Argentina’s highest ranking category in the business environment rankings). However, reflecting the political difficulty of reforms to simplify labour regulations and a highly unionised labour market that produces a high incidence of strikes, its ranking has deteriorated for the forecast period. In the short term, difficult economic adjustments that will produce a decline in real wages and a reduction in purchasing power will translate into a high level of strikes (notably in public services such as transport and education), led by politically powerful trade union leaders. President Mauricio Macri faces a tough task in tackling union power, and we expect little progress on reducing the extent of wage and other labour market regulation.

Infrastructure risk

Argentina’s strengths include a well-developed telecommunications and information technology network, and relatively low property rental costs, but physical infrastructure has suffered over the past decade from a lack of investment. This is partly the result of a long-standing failure to adjust a plethora of tariffs frozen during the 2001-02 economic crisis. Although the Fernández government took a more active role in public works, this has proved insufficient to prevent the emergence of bottlenecks, particularly in energy. We currently assume that external financing constraints will ease once a deal with holdout creditors is agreed, allowing Argentina to exit default. Combined with improvements in contract rights and with government incentives this should help to boost investment both in transport infrastructure and in energy. However, such projects will take time to come on stream, raising the risk that infrastructure bottlenecks will become a constraint on growth in the meantime.

7. ARGENTINA RISK: ALERT – RISK SCENARIO WATCHLIST (Economist Intelligence Unit – Risk Briefing)
29 January 2016

SECURITY
Drug-related violence increases
Moderate probability; Moderate impact; Risk intensity = 9

The Macri administration has made the reduction of drug-trafficking related violence a priority, but tackling the growing problem will not be easy. Argentina has had a major role in recent years as a transshipment point for the trafficking of cocaine between other areas of Latin America, including Paraguay, and Europe, and public perceptions of crime are rising. President Mauricio Macri has proposed an increase in security force staffing and a specific national anti-drugs agency to combat the issue. But measures to tackle drug-trafficking will also require strenuous efforts to reduce public-sector corruption and strengthen institutions, and this will prove extremely challenging. In this context, and although the Macri administration has put greater emphasis on the problem than his predecessor, there is a risk that drug-related violence continues to increase in the outlook period.

POLITICAL STABILITY
Unrest increases amid difficult economic adjustment measures
High probability; Moderate impact; Risk intensity = 12

Argentina has a long recent history of public protest, and with difficult economic adjustments on the cards in 2016, involving a loss of consumer purchasing power, further unrest is a strong risk in the next year. There are a number of possible triggers for discontent. One of these will be annual wage negotiations, which for the most part take place in the second quarter of each year. The government will be pressing for below-inflation wage rises, but negotiations will be extremely difficult assuming devaluation pushes (already high) inflation up further, towards 40%. Another trigger could be political opposition to efforts to agree a deal with holdout creditors. The issue of negotiating with holdouts, who are called ‘vultures’ in Argentina for buying the country’s defaulted debt at extremely depressed prices and seeking payment in full in the courts, is politically charged. The previous government, led by Ms Fernández, vowed never to give in to the holdouts. However, a deal to repay them is vital for Argentina to exit default and access external credit, and Mr Macri will undoubtedly take a pragmatic stance as he seeks to allow the country to finally resolve the question of default almost 15 years on from the 2001-02 crisis. The matter risks igniting political tensions and could prove an issue for the left to rally around in 2016.

GOVERNMENT EFFECTIVENESS
The legislature seeks to limit presidential power to rule by decree, creating the possibility of legislative gridlock and a stalled reform agenda
Moderate probability; High impact; Risk intensity = 12

The executive has substantial powers to rule by decree in Argentina. Extraordinary decree powers were first given to the executive during the deep economic crisis of 2001-02, and have been extended by a pro-government legislature dominated by the various factions of the Peronist party ever since. Ms Kirchner frequently made use of her decree powers. They have also been used during long congressional recesses (Congress is, for example, typically in recess from mid-December until March). The election of a president from outside the dominant Peronist party raises the risk that decree powers will be eliminated at some point in 2016-17. President Mauricio Macri has already issued some controversial decrees. The first was an attempt to appoint two Supreme Court justices by decree in January. Mr Macri noted that the Chief Justice had requested the rapid filling of the two vacant seats to avoid judicial paralysis, and stated that Congress would have the opportunity to approve the temporary appointments once it returned to work in March. The use of the decree for key judicial appointments nonetheless was criticised by many influential legislators. Mr Macri also modified by decree the Media Law, one of the more controversial reforms passed by the Fernandez administration. The law had placed a number of restrictions on media holdings, which Mr Macri has overturned. The president also removed political appointees to the telecommunications and media regulatory bodies by decree. These moves were criticised by Ms Fernandez’s Frente para la Victoria (a faction of the Peronist party), which has a large presence in both houses of Congress. Mr Macri continues to emphasise that immediate action is necessary in a host of areas to reform weak and politicised institutions, and that Congress will have the opportunity to approve or reject reforms when it returns in March. However, his methods leave him open to criticism that he does not respect Congress. This raises the risk that Congress moves to eliminate presidential decree powers. Amid heightened tensions with Congress, it also raises the risk that the reform agenda becomes stalled in the legislature.

LEGAL & REGULATORY
Failure to secure negotiated settlement with holdouts scuppers efforts to improve relations with investors and creditors
Moderate probability; High impact; Risk intensity = 12

Argentina’s sovereign default in July 2014 rendered essentially useless recent attempts to resolve a series of disputes in order to access external credit. These efforts included an agreement with the Paris Club in 2014 to restructure outstanding defaulted debt with creditor countries, payment of US$5bn in bonds in compensation to Spain’s Repsol for the expropriation of the company’s share in Yacimientos Petrolíferos Fiscale and the resolution of a series of claims involving the World Bank’s International Centre for the Settlement of Investment Disputes. We assume that the Macri administration will work from 2016 to exit default (by arriving at a deal with holdout creditors) and normalise relations with creditor countries. But Mr Macri may have a hard time getting quick approval in the legislature for a deal with holdout creditors. Legislative approval is required to overturn the so-called lock law, which forbade the government from offering better terms to creditors than those presented during the 2005 and 2010 restructurings. There is a risk therefore that efforts to improve relations with creditors and investors across the board are scuppered.

MACROECONOMIC
The authorities fail to engineer a smooth transition to a more sustainable growth environment
High probability; Very high impact; Risk intensity = 20

Policy tightening, along with peso adjustment, will eventually have a beneficial impact on net exports. We also assume that some efforts will be made by the new government to address the problem of legal and regulatory uncertainty, which should set the stage for renewed strong growth in fixed investment, supporting an acceleration of GDP growth to an annual average of almost 4% in 2018-20. There are large downside risks to this forecast as attempts by the new administration to reduce economic distortions and engineer a relatively smooth adjustment to a lower inflation environment could prove extremely challenging amid an increasingly thin reserves cover. Import cover has been weakened by the use of reserves to shield the peso from currency pressures and to repay external debt, and the authorities have little firepower to defend the peso at present. There is also some upside risk, however, as investment could take off beyond expectations from 2017 onwards if macroeconomic adjustment goes smoothly and President Mauricio Macri takes rapid steps to restore confidence in the rule of law.

FOREIGN TRADE & PAYMENTS
Government fails to make progress on a free-trade agreement (FTA) with the EU
Moderate probability; Moderate impact; Risk intensity = 9

Mr Macri is likely to promote trade liberalisation that could speed up progress on the agreement of an FTA between the EU and the Mercado Común del Sur (Mercosur, the Southern Cone customs union). An EU-Mercosur free-trade deal was first mooted 20 years ago, but has made little headway in the face of growing trade protectionism in the past decade, particularly on the part of Argentina under Cristina Fernández de Kirchner. Mr Macri’s election will provide some fresh impetus to talks, which Uruguay, Paraguay and, more recently (in an about-turn from the government’s previous policy), Brazil have shown a strong interest in pursuing. During a visit by Mr Macri to Brazil in early December, strategy towards an EU-Mercosur FTA will have been high on the agenda, as will a generalised improvement of bilateral relations that could help to prop up the struggling automotive sectors in both countries. However, there will remain a number of obstacles to a deal, and Mr Macri may have to expend political capital elsewhere, suggesting strong risks that the FTA fails once again to get off the ground in 2016.

FINANCIAL
Peso overshooting occurs as the authorities attempt to engineer moderate currency adjustment
High probability; High impact; Risk intensity = 16

Currency adjustment under a new government has always been on the cards, and began in earnest in mid-December, when the authorities removed foreign-exchange controls and allowed the peso to devalue by 30% in one day on December 17th, to Ps13.8:US$1. The authorities are hoping that the rapid removal of controls will engender confidence in the transparency of policymaking, limiting US dollar outflows and eventually attracting new capital. However, the success of this strategy in coming weeks will require the build-up of a stronger reserves cushion to defend the peso from overshooting as the shift to a dirty float proceeds. The government states that it is expecting up to US$25bn in dollar inflows in the coming months with which to bolster the reserves. Sources of US dollars include a deal with farmers to liquidate hoarded soybean stocks, moves to convert renminbi to dollars under a currency swap agreement with China, and a proposed US$5bn loan from foreign banks. Despite these projected inflows, the rapid elimination of controls introduces risks of foreign-exchange market volatility in 2016, given the scale of pent-up demand for dollars to pay for imports to remit profits and for savings, and given the fact that current-account dynamics will remain poor for some time. However, our baseline forecast assumes a relatively orderly currency adjustment, with further gradual weakening over the course of the year, bringing the peso to Ps17.3:US$1 by the end of 2016. This adjustment should help to reverse the accumulated real appreciation of the peso over the past five years, which has eroded external competitiveness, and bring the real trade-weighted exchange rate close to 2012 levels.

TAX POLICY
Deterioration of provincial finances forces further ad hoc revenue-raising measures
High probability; Moderate impact; Risk intensity = 12

Reforms to the system of revenue-sharing with the provinces are badly needed to secure the stability of the tax system but are a political minefield, and continued delays on a comprehensive reform are in prospect. The opposition tried in 2010 to increase the percentage of revenue from the financial transactions tax that is transferred automatically to the provinces, from 15% to 54% of total, but the bill failed to prosper in a divided Congress. The executive has instead announced a series of rollovers of provincial debt. In December 2013 the government signed an agreement with 18 provinces to refinance Ps75bn (US$11.5bn) in debt, in an attempt to alleviate the tricky financial situation facing most provinces. The latest agreement (signed with all provinces, except Santa Fe, San Luis, La Pampa, Santiago del Estero, Formosa and the city of Buenos Aires—the capital—which do not owe debts to the central government) seeks to roll over debt originated in another restructuring programme, the so-called Programa Federal de Desendeudamiento de las Provincias Argentinas y de Asistencia Financiera, signed in 2010. In 2011 the government modified this programme, granting a longer grace period and scheduling the first debt-service payment for January 2014. The current weakness of the provincial finances would have made it extremely difficult for the provinces to comply with this commitment. The latest restructuring was not unexpected. We expect that the provinces’ weak finances will be another major challenge for the central government in 2015. However, we still do not expect the administration to take up the extremely difficult task of reforming the system of revenue-sharing between the provinces and the central government. This raises concerns that further measures will need to be taken to assist the provinces. Without a more comprehensive reform, weaknesses in the provincial finances will sustain the need for further central government bailouts and thus raise the risk of periodic ad hoc measures at the national level to increase tax revenue.

LABOUR MARKET
Skills shortages worsen
Moderate probability; Moderate impact; Risk intensity = 9

Skills shortages have become more of a problem for business in the past decade, compounded by a lack of effective training programmes in both the public and private sectors. Secondary and tertiary enrolment is very high by regional standards, but educational outcomes are not as strong as would be expected given these rates, and vary widely by province. At the same time, access to job training tends to be unequal and informal. In this context, and given our expectation of a pick-up in investment and employment late in the outlook period, skills shortages risk becoming a serious problem for business.

INFRASTRUCTURE
Despite recent intervention in the electricity sector, power shortages persist
Very high probability; Moderate impact; Risk intensity = 15

The risk of energy shortages will persist in the short term at least, given historical disincentives to investment in the sector and long project completion times. Demand for electricity and gas has soared in the past decade, owing to rapid economic growth and a freeze in tariffs for residential consumers, which will be removed only very gradually. Some major projects have recently been completed, including hydroelectric projects at Yacyretá and Caracoles, and a third nuclear plant, Atucha II. Beyond this, prospects are less certain. Despite Argentina’s vast hydroelectric potential, no further large projects are under way, notwithstanding a US$15bn deal with China announced in 2015 to construct a fourth and fifth nuclear reactor in the country, a deal that is to be reviewed by President Mauricio Macri and sent to Congress for approval. Argentina’s public sector does not currently have the financing capacity to drive forward major projects, and an improvement in the environment for private investment in gas, a key feedstock for the electricity sector, is required. Although we assume that these improvements will be forthcoming, in the form of tariff increases that make production more profitable and a clearer, more stable regulatory environment, production will take time to come on stream, and demand is likely to outstrip supply until the second half of the forecast period, steadily reducing the margin of excess capacity. In the short term at least, this will maintain dependence on imports, and increase exposure to weather-related problems at existing hydropower facilities.

Responder Responder a todos Reenviar Más

ARGENTINE UPDATE – Jan 28, 2016

31 enero, 2016

1. YAHOO IS SHUTTING OFFICES IN MEXICO, ARGENTINA TO TRIM COSTS (Bloomberg News)

2. ARGENTINA’S CLARIN PUSHES INTO MOBILE MARKET WITH NEXTEL BUY (Reuters News)

3. BRAZIL SEEKS FREE AUTO TRADE WITH ARGENTINA (Reuters News)

4. YAHOO TO SHUT ARGENTINA AND MEXICO OFFICES (Reuters News)

5. YAHOO TO CLOSE ARGENTINA, MEXICO OFFICES (The San Francisco Chronicle)

6. ARGENTINA’S BANKING SECTOR POISED FOR M&A (Business News Americas)

7. ARGENTINA’S MACRI MAKES UTILITY MOVE AHEAD OF ‘CHOPPIER’ POLITICS: TENEO (Barrons)

8. NEW ARGENTINA SUBSIDIARY JOINS ACTON INSTITUTE IN GLOBAL THINK TANK RANKINGS (Acton.org)

1. YAHOO IS SHUTTING OFFICES IN MEXICO, ARGENTINA TO TRIM COSTS (Bloomberg News)
By Brian Womack
January 28, 2016

Yahoo! Inc. is shutting down two offices in Latin America, seeking to trim costs by scaling back some international operations.

The Web portal will close sites in Mexico and Argentina, while keeping open offices in Brazil and Florida, according to a statement Thursday. The number of employees affected wasn’t disclosed, though the company said the offices are small.

“Yahoo is focused on maximizing growth,” the Sunnyvale, California-based company said. “Latin America is an important region for Yahoo and we will continue to invest in the people and products there.”

After more than three years of unsuccessful efforts to revive growth, sales remain in a slump, and pressure is mounting on Chief Executive Officer Marissa Mayer. The CEO is set to unveil a new plan to streamline the company’s operations by next week — one that’s likely to include job cuts, a person familiar with the matter said earlier this month.

Yahoo is scheduled to report fourth-quarter earnings on Feb. 2. Analysts estimate that revenue, minus sales passed on to partners, declined 20 percent to $948.2 million.

2. ARGENTINA’S CLARIN PUSHES INTO MOBILE MARKET WITH NEXTEL BUY (Reuters News)
By Maximiliano Rizzi and Richard Lough
Jan 28, 2016

Argentine media firm Grupo Clarin S.A. said on Thursday its subsidiary Cablevision has taken full ownership of Nextel Communications Argentina, the country’s fourth-largest mobile telephone company.

Clarin’s move to take 100 percent ownership of Nextel gives it a greater stake in Argentina’s mobile market, in which Nextel holds a 3 percent share.

In a notice to the country’s market regulator, Clarin said Cablevision, Argentina’s leading cable-TV provider, exercised an option to buy an additional 51 percent stake in Nextel.

The deal is subject to approval by Argentina’s media watchdog ENACOM, established by new President Mauricio Macri who has eased restrictions on media ownership since he entered office in December.

Nextel faces much larger competitors in Argentina, such as Claro, owned by America Movil, Telecom Argentina’s Personal, and Telefonica’s Movistar.

Clarin on Sept 14 bought an initial 49 percent stake in Nextel, a subsidiary of NII Holdings Inc, a Latin American mobile service provider. Days later the-then AFTIC media regulator rejected the deal, but that decision was later suspended by a local court.

Clarin had been locked in a years-long battle with former President Cristina Fernandez that centred on the so-called Audiovisual Media Law introduced in 2009 that curbed media ownership. Clarin said Fernandez was taking deliberate aim at the company.

In its first month in power, Macri’s government dissolved the AFTIC watchdog and began easing restrictions laid out in the Audiovisual Media Law.

The law capped corporate ownership of the broadcasting market, with the controls also applying to the cable sector.

3. BRAZIL SEEKS FREE AUTO TRADE WITH ARGENTINA (Reuters News)
By Silvio Cascione
Jan 28, 2016

The Brazilian government will propose the full liberalization of vehicle trade with Argentina from July, newspaper Valor Econômico reported on Thursday.

Brazilian Trade minister Armando Monteiro will travel to Buenos Aires in February to make a formal offer, Valor added, without saying how it obtained the information.

The press offices of the Brazilian and Argentinian governments were not immediately available to comment.

Officials in both countries are already working on a potential deal, which was discussed by Finance Ministers Nelson Barbosa and his Argentinian counterpart Alfonso Prat-Gay last week at the World Economic Forum in Davos, Valor said.

Brazil also plans to propose a deal to allow companies from both countries to participate in public tenders under the same conditions as local firms, Valor reported.

The two states have imposed quotas on bilateral automobile trade despite being major partners in South America’s trading bloc Mercosur.

Brazil and Argentina are among the region’s most protectionist countries, but are moving to open their economies.

Argentina’s recently-elected President Mauricio Macri has vowed to reduce trade barriers with his country’s key trade partner.

His Brazilian counterpart Dilma Rousseff is aggressively trying to open up new markets abroad in an attempt to revive an economy mired in its worst recession in nearly 30 years.

4. YAHOO TO SHUT ARGENTINA AND MEXICO OFFICES (Reuters News)
Jan 28, 2016

Yahoo Inc plans to close its offices in Argentina and Mexico, a company spokeswoman said on Thursday.

The company will maintain its Latin American operations through its teams in Brazil and Coral Gables, Florida.

Yahoo declined to specify how many jobs were affected, but said the offices were “small sales-focused”.
Technology news website TechCrunch first reported the closures.

5. YAHOO TO CLOSE ARGENTINA, MEXICO OFFICES (The San Francisco Chronicle)
By Wendy Lee
29 January 2016

Yahoo said Thursday it plans to shut down its offices in Argentina and Mexico, as the struggling tech giant looks for ways to trim expenses.

The move was part of Yahoo’s focus on “maximizing growth,” the company said in an e-mailed statement. “Latin America is an important region for Yahoo and we will continue to invest in the people and products there,” the company said, adding that its teams in Brazil and Miami “remain vital” to Yahoo.

Yahoo declined to say how many employees would be affected, but said these were “small sales-focused offices.” A person familiar with the business said there were roughly 8 people in the Argentina office.

On Tuesday, Yahoo CEO Marissa Mayer is expected to unveil her future plans for Yahoo, moves that will likely include layoffs, people familiar with the matter said. Mayer has been under pressure to turn around the struggling tech giant and sales results in the fourth quarter are expected to be weak.

6. ARGENTINA’S BANKING SECTOR POISED FOR M&A (Business News Americas)
28 January 2016

The banking sector in Argentina is likely to see a new wave of M&A activity in the next few years, a top bank executive told BNamericas.

The economic and financial reforms that the government of President Mauricio Macri is pursuing are set to increase competition among banks and trigger deal-making, said Norberto Rodríguez (pictured), board member at largest private sector bank Santander Rio.

The upcoming M&A activity could involve deals among local banks as well as foreign banks coming to Argentina, Rodríguez said, including institutions from other Latin American nations that view the Argentine market as attractive and with significant future potential.

Santander Rio will look at acquisition opportunities when they arise, but the bank’s main focus is on organic growth, he said.

“We have shown that you can gain market share through organic growth and it’s cheaper than buying market share through acquisitions,” said Rodríguez. A corporate culture clash is a significant risk when purchasing another bank, he added.

The subsidiary of Spanish banking giant Santander has a loan and deposit market share of around 10% in Argentina; the bank sees this as a floor and not a ceiling, said Rodríguez, who believes Santander can outperform the market in the coming years.

Santander Rio’s organic growth plan in Argentina entails opening some 40 branches a year – as it did in 2015 – for the near future, focusing on small and remote underserved towns.

7. ARGENTINA’S MACRI MAKES UTILITY MOVE AHEAD OF ‘CHOPPIER’ POLITICS: TENEO (Barrons)
By Teresa Rivas
January 28, 2016

Earlier this week, Argentina announced subsidy cuts for wholesale distributors through the end of April, an expected part of its push for fiscal consolidation, Teneo Intelligence’s Nicholas Watson writes.

While exact prices increases aren’t yet clear, they could be fairly substantial for some residents; yet they are so low now that new tariffs will still be below generating costs, Watson explains. He writes that another round of increases will likely take place after this structure expires in three months, but keeping inflation down is a major government concern, and could slow future cuts.

Moreover, though President Mauricio Macri has made plenty of changes early in his administration, political conditions are also poised to become more difficult next month, which explains the need to make moves now.

More detail from Watson’s note:

President Mauricio Macri retains the political latitude to push ahead with his gradual fiscal reduction plan. A recent poll put the president’s approval rating at 71%. Macri’s recent trip to Davos was a success, with Argentina widely seen as a relative bright spot amid an otherwise gloomy panorama for EMs; Macri brought back a major investment pledge from Coca-Cola, and has talked of up to USD 20bn in investment inflows in 2016. The government will also look to introduce palliative measures when congressional sessions start on 1 March; these include measures to reduce VAT on basic goods and lower the threshold at which income tax becomes payable. These measures will be essential if inflation is seen to jump significantly in the early part of this year.

However, the political window for adjustments will not remain open for long. The political waters are set to become choppier from late-February. First, collective salary negotiations with the Buenos Aires provincial teachers’ union are set to begin in mid-February; these negotiations usually set a marker for other union wage talks extending into March. The inflationary effects of December’s devaluation and the subsidy cuts will make this year’s wage talks challenging for the government. Second, former president Cristina Fernandez (2007-15) is planning to launch her new foundation in late-February; the launch event will mark Fernandez’s re-entry into the political fray as she attempts to position herself as the strongest opponent to Macri within the broad Peronist movement. Although the Peronists are split, which offers Macri an opportunity to leverage divisions for political gain, Fernandez remains a formidable adversary.

The Global X MSCI Argentina exchange-traded fund (ARGT) is climbing 1.2% in recent trading. Among utilities with ADRs, Empresa Distribuidora y Comercializadora Norte S.A. (EDN) is up 1.6% and Pampa Energia (PAM) is up 2%.

8. NEW ARGENTINA SUBSIDIARY JOINS ACTON INSTITUTE IN GLOBAL THINK TANK RANKINGS (Acton.org)
January 28, 2016

GRAND RAPIDS, Mich. (Jan. 28, 2016)—The Acton Institute made another strong showing in a leading ranking of global think tanks which showed the Grand Rapids-based research and educational institution among the best organizations of its kind in the United States and abroad. Acton’s new Argentina subsidiary in Buenos Aires, Instituto Acton, made its first appearance among the “best independent think tanks” category. The University of Pennsylvania’s Think Tanks and Civil Societies Program (TTCSP) released its 2015 Global Go-To Think Tanks Report today.

Highlights from the 2015 University of Pennsylvania report:

Acton Institute is 9th (out of 90) in the Top Social Policy Think Tanks ranking (9th in 2014).
Acton Institute is 29th (out of 75) in the Top Think Tanks in the United States (29th in 2014).
In Top Think Tanks Worldwide, Acton ranks 155th (out of 175) (previously unranked).
10th in Best Advocacy Campaign (11th in 2014) for PovertyCure.
17th (out of 61) in Best Think Tank Conference (17th in 2014) for Acton University.
Instituto Acton was ranked 100th (out of 144) Best Independent Think Tanks.
The Think Tank & Civil Societies Program maintains comprehensive data on more than 6,500 think tanks worldwide, of those more than half are considered in the ranking, but fewer than 300 organizations make it into the final report. Free market think tanks had a strong presence on the report this year, taking top spots in several categories in the U.S. and internationally.

While the TTCSP has been in existence for more than 25 years, this is the program’s 9th ranking report. James G. McGann, director of the program said that the goal of this research and report is “to increase the profile and performance of think tanks and raise the public awareness of the important role think tanks play in governments and civil societies around the globe.”

The program has a rigorous ranking criteria which includes: the “quality and commitment of the think tank’s leadership;” the “quality, number, and reach of its publications;” the think tank’s “reputation with policymakers;” its “media reputation;” its “ability to produce new knowledge;” “financial stewardship;” and the organization’s “impact on society.”

The Go-To Think Tank Report also included some interesting facts about think tanks: 30 percent of all think tanks are located in North America and 27 percent are in Europe. The United States has the most think tanks with 1,830, followed by China with 429. In the United States, Washington, D.C., has the most of any state or district with 396 and Michigan is home to 30 other think tanks besides Acton.

The full report here: http://www.timbro.se/pdf/2015-Go-To-Think-Tank-Report.pdf

Impacts

A recession is likely this year and growth thereafter will remain muted.

The continuing economic malaise in Brazil will also be a drag on manufacturing recovery.

The political panorama is currently fluid but is likely to solidify in opposition to Macri.

Outlook

Despite some international applause for new President Mauricio Macri’s efforts to roll back the policy choices of the 2003-15 Kirchner governments, domestic opinion is broadly sceptical and short-term expectations poor.

Macri’s tendency to opt for decrees thus far – an approach adopted by his predecessor, who was much criticised for it – is likely to stiffen opposition, especially in provinces where his government, characterised as pro-finance and pro-business, is not seen as representative of views outside the capital.

The dominant Peronist party is in some disarray and in search of new leadership, leaving an opening for Macri to reach accords with at least some factions. However, the party will regroup quickly; governing without at least some Peronist backing is likely to prove near impossible.

Responder Responder a todos Reenviar Más
Hacer clic en Responder, Responder a todos o Reenviar

ARGENTINE UPDATE – Jan 22, 2016

23 enero, 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.

Back to contents

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”.

Back to contents

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.

Back to contents

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.”

Back to contents

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.

Back to contents

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.”

Back to contents

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.”

Back to contents

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.

Back to contents

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.

Back to contents

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.

Back to contents

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)

Back to contents

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.

Back to contents

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.

Back to contents

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.

Back to contents

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.

Back to contents

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

Responder Responder a todos Reenviar Más
Hacer clic en Responder, Responder a todos o Reenviar

ARGENTINE UPDATE – Jan 12 & 13, 2016

14 enero, 2016


TUESDAY

1. ARGENTINA COPS SNARE REMAINING FUGITIVES IN 15-DAY MANHUNT (Reuters News)

2. ARGENTINA SAYS WON’T MAKE OFFER IN WEDNESDAY’S DEBT TALKS: REPORT (Reuters News)

3. ARGENTINA LIFTS BEEF EXPORT QUOTAS, AGRICULTURE SECRETARY SAYS (Reuters News)

4. ESCAPED KILLERS RECAPTURED IN ARGENTINA (Fox News)

5. HOW MACRI CAN FIX ARGENTINA’S FOREIGN POLICY PROBLEM FILES (World Politics Review)

6. ARGENTINA CAPTURES FUGITIVE IN POLITICALLY-CHARGED MURDER CASE (Insight Crime.org)

1. ARGENTINA COPS SNARE REMAINING FUGITIVES IN 15-DAY MANHUNT (Reuters News)
By Richard Lough and Maximiliano Rizzi
Jan 11, 2016

BUENOS AIRES, Jan 11 (Reuters) – Argentine police commandos recaptured two of the country’s most notorious convicts in a rice mill plant on Monday, the vice governor of Santa Fe province said, ending a 15-day manhunt through backwater towns and flooded farm land.

Victor Schillaci and brothers Martin and Cristian Lanatta, who are convicted of drugs-related killings, escaped from jail on Dec. 27 in a prison break that raised questions about the political ties of the country’s narco gangs.

Security forces nabbed Martin Lanatta on Saturday, but his brother and Scillaci slipped through the dragnet, heaping embarrassment on President Mauricio Macri who had publicly celebrated the capture of all three.

They were finally cornered near the farming town of Cayasta in Santa Fe, 570 km (354 miles) north of the capital Buenos Aires, and appeared to have surrendered without a struggle.

“The two fugitives have been detained. Special forces from the Santa Fe police got them,” Vice Governor Carlos Fascendini told Radio del Plata.

The 15-day hunt had gripped the Argentine nation and news that it is over will ease pressure on Macri, who was left red faced after false information led officials to announce the search was over while two of the men remained on the loose.

Officials in the security ministry declined to comment ahead of a press conference by the minister.

State news agency Telam cited a local Cayasta official as confirming the mens’ capture.

Local TV channels broadcast a photograph of the two men, seated on the ground in scruffy clothing, with their hands behind their backs. Reuters could not immediately verify the image.

‘TRIPLE MURDER’

The three men were serving life sentences for the 2008 killing of three businessmen in the pharmaceutical industry, allegedly linked to an ephedrine trafficking gang. The high-profile case was dubbed “The triple murder.”

Ephedrine is used for the production of methamphetamine.

The search has focused attention on the growing muscle of drug gangs in Argentina, which drug-enforcement officials say has become an increasingly important transit point for the smuggling of South American drugs to Europe and the Americas.

Prosecutors said they had launched an investigation into whether narco gangs helped the three men in their prison break.

Macri, who took office on Dec. 10, last week accused the leftist government of former President Cristina Fernandez of “inaction or even complicity” with drug traffickers.

TV footage over the weekend showed security agents wading waist deep through flooded fields and raiding properties as hundreds of police intensified their search, backed by forces in boats and helicopters.

Martin Lanatta, now held in a maximum prison outside the capital, is due to talk soon to prosecutors about the escape.

“According to the medical carried out yesterday, he’s in a good enough state to make a statement,” said federal prosecutor Cristian Citterio.

2. ARGENTINA SAYS WON’T MAKE OFFER IN WEDNESDAY’S DEBT TALKS: REPORT (Reuters News)
By Richard Lough
Jan 11, 2016
Jan 11 Argentina does not expect to make an offer to U.S. hedge funds suing over unpaid debt when negotiations resume in New York on Wednesday, the daily La Nacion quoted the country’s cabinet chief as saying.

“We don’t plan to make an offer,” Cabinet Chief Marcos Pena told La Nacion. “This is a preliminary conversation.”

Pena’s office said he was in a meeting and not available to comment.
The funds, led by billionaire Paul Singer’s Elliott Management, are suing Argentina for full repayment of debt the country defaulted on in 2002. A large majority of creditors accepted about 30 cents on the dollar in 2005 and 2010 restructurings.
Finance Secretary Luis Caputo was to fly to New York later on Monday and was expected to meet with representatives of the so-called “holdout” funds in the office of the U.S. court-appointed mediator brokering the negotiations.

President Mauricio Macri, who took office on Dec. 10, faces a hard currency crunch and needs to resolve the decade-long legal battle to restore investor confidence and regain access to global credit markets. But he has promised Argentines he will haggle hard.
“All our problems shouldn’t rush us into making concrete advances,” Pena was quoted as saying.

Negotiations between the funds and former President Cristina Fernandez collapsed in July 2014, leading Argentina to fall back into default. Fernandez called the holdouts “vultures” bent on crippling the country’s economy in their pursuit of profit.

3. ARGENTINA LIFTS BEEF EXPORT QUOTAS, AGRICULTURE SECRETARY SAYS (Reuters News)
By Maximiliano Rizzi and Maximilian Heath
Jan 11, 2016

Argentina’s new government has informally lifted restrictions on beef exports imposed by the previous government in a bid to ensure reasonable prices at home, the secretary for agriculture, livestock and fisheries told Reuters on Monday.

Argentines are among the world’s most voracious beef eaters and local beef prices are a hot-button political issue. But farmers say the restrictions are not the solution, adding they have damaged profitability and prompted them to cut investment.

“There are no restrictions any more,” Agriculture Secretary Ricardo Negri said in a telephone interview, corroborating reports from farmers. The measure has not yet been officially published.

President Mauricio Macri, who took office last month, campaigned on a platform to reduce state intervention in Latin America’s third-largest economy and promised to end all export quotas. He has already lifted such restrictions on shipments abroad of wheat and corn.
Argentina’s powerful farming groups had fiercely opposed former President Cristina Fernandez over these quotas as well as hefty export taxes she introduced to boost low foreign reserves.
“The mood has changed in the sector, now that expectations are good, producers are ready to increase production,” said Miguel Schiaritti, the head of Argentina’s meat industry chamber. “They are exporting without the state imposing any restrictions.

Under Fernandez’s government, exporters had to register their export request and wait for approval. Now they no longer need to wait, said Schiaritti.
Beef exports will likely only rise slightly in 2016 from their current level of around 200,000 tonnes per year, growing more strongly in following years, Schiaritti said.

“We must wait a while, exports will change in the first few months but only slowly,” he said.

4. ESCAPED KILLERS RECAPTURED IN ARGENTINA (Fox News)
January 11, 2016

Security forces in the central Argentine province of Santa Fe on Monday caught Cristian Lanatta and Victor Schillaci, the two convicts who were on the lam for 15 days from a maximum security prison where they were serving a life sentence for a triple murder.

“The two fugitives are back in custody,” provincial Lt. Gov. Carlos Fascendini announced Monday on Radio del Plata.

He said the two fugitives were trapped by provincial special forces near the rural town of Cayasta, where the first escapee, Martin Lanatta, was nabbed last Saturday.

The detention was not immediately confirmed by Security Minister Patricia Bullrich, after the mix-up last Saturday when she announced that Cristian Lanatta and Schillaci had been captured, then had to deny it just hours later.

Nonetheless, Cayasta Deputy Mayor Veronica Devia said in a radio statement that they had been caught in a rice-growing region just a short distance from where Martin Lanatta was detained on Saturday.

The Lanatta brothers and Victor Schillaci pulled off the jailbreak 15 days ago at a maximum security prison in Buenos Aires, where they were serving life sentences for the triple murder of Sebastian Forza, Damian Ferron and Leopoldo Bina. All were involved in a case of trafficking ephedrine, an ingredient in synthetic drugs such as methamphetamine.

5. HOW MACRI CAN FIX ARGENTINA’S FOREIGN POLICY PROBLEM FILES (World Politics Review)
By Christopher Sabatini, Amy Williams
Monday, Jan. 11, 2016

Argentina’s new president, Mauricio Macri, inherits a host of problems and points of friction at home and abroad from his predecessors, Cristina Fernandez de Kirchner and, before that, her late husband, Nestor Kirchner. But in contrast to the daunting domestic economic issues his new administration faces—just 0.4 percent economic growth in 2015 and an economy projected to shrink by 0.7 percent in 2016, on top of inflation estimated at 20 percent—the international hangover of nearly 13 years of Kirchner governments looks relatively easy to fix.

International spats were an extension of the angry, polarizing rhetoric and policies of Kirchnerismo that voters rejected on Nov. 22. In the coming year, Macri’s administration must deal with three specific problem files: mending fences with the United Kingdom over Argentina’s Falkland Islands saber-rattling; resolving the unpaid debt with American hedge funds; and improving relations with the United States. Even with some political restraints at home, the former mayor of Buenos Aires and scion of a well-known Argentine businessman should be up to the task, if he can apply his no-drama demeanor that won him the presidency to Argentina’s foreign policy, which is in sore need of repair.

The trouble goes back to Nestor Kirchner’s election in 2003, which came in the midst of one of Argentina’s worst economic disasters. In January 2002, the previous government had been forced to end its strict dollar-to-peso exchange rate, wiping out citizens’ savings and leading to a contraction of GDP of almost 20 percent from 1998 to 2002. Shortly after reaching office, Kirchner declared default and stopped all payments on the country’s debt.

It was just the start of a nationalist correction to a decade of pro-market and pro-U.S. policies. Kirchner demanded that former creditors take a 66 percent haircut to settle the debt, railed against the International Monetary Fund and, in 2005, facilitated an anti-U.S. demonstration when Argentina hosted the Summit of the Americas.

After she succeeded him, Nestor’s wife Cristina ramped up those battles, while also aggressively and publicly reasserting Argentina’s claims on the Falklands, a string of rocky islands home to some 2,000 people and half a million sheep just 300 miles off its coast. Its citizens are British, but Argentina has claimed the islands as its own since the U.K. asserted control over them in the 19th century. In 2012, while on a visit to London, Kirchner took out an advertisement in British newspapers claiming that British control over the islands was “a blatant exercise of 19th century colonialism” and demanding that the U.K. return the stolen land to Argentina, regardless of the wishes of the residents, or “colonists,” as she calls the islanders.

Other rhetorical and international stunts severely strained Argentine-British relations. All along, the U.K. has maintained that it “will always be there to defend” the Falklands. In a 2013 British referendum on the political status of the island, 99.8 percent of Falklanders expressed their desire to remain a part of the United Kingdom.

Some chalked Kirchner’s Falklands rhetoric up to her need to distract Argentinians from the problems at home, including declining economic growth and inflation. While partly true, it was also part of a larger modus operandi of the government in which it reflexively relied on a sense of victimhood and stoked fear of international conspiracies against Argentina.

The contrast in governing styles alone between the Kirchners and Macri should ease the challenge of correcting this kind of isolating foreign policy. But Macri can also take a few steps to restore Argentina and the Southern Cone to the good graces of the international community.

First, when it comes to the U.K., Argentina’s foot-stomping over the Falklands was ineffective and polarizing. Argentinians feel passionately about the Falklands, but they do not support a military effort to retake them. For that reason, Macri reiterated Argentina’s claims to the islands on Jan. 3, but he also emphasized the need to continue negotiations. Just taking Argentina’s rhetoric down a notch and behaving more professionally would go a long way in improving bilateral relations, which couldn’t be any worse than they were.

Falklanders have already welcomed Macri’s approach as a change of course from the bellicose, impractical attitude of the previous administration. Who controls the island will always remain a point of tension, but Argentine-U.K. relations, and even broader South American relations with the U.K., should not be reduced to the rocky outcroppings in the South Atlantic.

Second, in dealing with Argentina’s holdout creditors, Macri’s government should benefit from its private-sector pedigree. His new Cabinet lacks the knee-jerk response to international creditors that characterized Kirchner’s, from his new finance minister, Alfonso Prat-Gay, a former JP Morgan executive, to the new energy and mining minister, Juan Jose Aranguren, a former CEO of Shell Argentina.

Macri’s government desperately needs to find new sources of capital, given the empty bank accounts that Kirchner left them. The Kirchners termed the creditors who had refused to sign on to the 2005 and 2010 buy-outs of the debt “vulture funds,” largely because the creditors had bought up the bonds on a secondary debt market. Several American hedge funds refused to yield to Argentina’s debt restructuring and demanded full payment on the defaulted bonds. In 2012, and again in 2014, a judge in New York ruled in the hedge funds’ favor, unleashing a barrage of Kirchner’s vitriol against them.

Macri possesses none of that penchant for political posturing when it comes to fixing Argentina’s finances. At the same time, with only $26 billion in Argentina’s Central Bank reserves and reportedly much less in liquid assets, the country will need, very soon, to ingratiate itself back into capital markets. For their part too, the hedge funds will also likely be more inclined to resolve the dispute, wishing to get some payout and finding a less antagonistic partner on the other side of the negotiating table.

And third, Macri will need to mend relations with the United States, which have been under strain given the Kirchners’ many moves to challenge and denounce Washington, from allying with hard-line leftist governments in Venezuela, Ecuador and Bolivia to stoking conspiracy theories about American meddling in Argentina’s affairs. All of that played well in a country with the highest level of anti-Americanism in the hemisphere—just under a majority.

But there are concrete areas in which the U.S. and Argentina can improve relations. There are genuine opportunities for constructive collaboration against the drug trade, given allegations of increased narcotics trafficking across Argentina, and against corruption, with growing complaints by U.S. companies in Argentina that they have been asked for bribes or been threatened by officials.

Any job is made easier when the person before you underperformed, and that’s the situation Macri finds himself in. Thirteen years of Kirchnerismo may have left Argentina’s economy in tatters, but it also left Macri with a lot of room to maneuver.

6. ARGENTINA CAPTURES FUGITIVE IN POLITICALLY-CHARGED MURDER CASE (Insight Crime.org)
Written by Arron Daugherty
Monday, 11 January 2016

Argentina authorities have captured one of three recently escaped fugitives serving time for the politically-charged “Triple Crime” murder case.

Martín Lanatta was arrested near the town of Cayastá in central eastern Santa Fe province, after being injured in a car crash, the BBC reported.

Lanatta, his brother Cristian and Víctor Schillaci escaped from General Alvear prison on December 27. The men were serving time for the murder of three pharmaceutical businessmen that became known in Argentina as the “Triple Crime.”

Authorities continue to search Cayastá and surrounding area for the remaining fugitives but have yet to capture them.

InSight Crime Analysis

The recapture of Martín Lanatta and the ongoing hunt for his fellow fugitives has the potential to damage both of Argentina’s major political camps.

The Triple Crime occurred in 2008, during the administration of former President Cristina Fernández de Kirchner.

In an interview prior to his escape, Cristian Lanatta claimed the former Chief of the Cabinet, Aníbal Domingo Fernández, had ordered the murders in a bid to consolidate control over ephedrine trafficking in Argentina. This was not the first time Fernández was accused of being involved in the Triple Crime or trafficking ephedrine, a precursor chemical for manufacturing methamphetamine and other designer drugs.

With the case once again in the media, Argentina’s newly-elected President Mauricio Macri may choose to highlight Fernández’s long-time connection to Kirchner and her political movement, known locally as Kirchnerismo.

This narrative of corruption under Kirchnerismo could be particularly useful as Macri moves to consolidate Buenos Aires’ federal and local police forces into one department and continues an aggressive government audit, which has resulted in the slashing of thousands of state jobs.

On the other hand, although the case began under Fernández de Kirchner’s watch, any further developments have the potential to reflect badly on Macri. During Martín Lanatta’s recapture, the Macri administration incorrectly reported that all three fugitives had been captured. Opponents were quick to paint his administration as inept and local newspaper Pagina/12 attributed the mistake to a lack of coordination between police forces.

Macri likely realizes the potential political damage an extended pursuit of the fugitives presents. Authorities have arrested the head of General Alvear prison and several of the fugitives’ family members, and are reportedly looking at a group of Buenos Aires police for suspicion of helping the fugitives escape.

WEDNESDAY

1. ARGENTINA SEEKS TO END DISPUTE WITH CREDITORS (The Wall Street Journal)

2. ARGENTINE PESO RALLIES ON HOLDOUT TALKS (Financial Times)

3. ARGENTINA SEEKS TO END LEGAL CONFLICT WITH CREDITORS, MACRI SAYS (Bloomberg News)

4. ARGENTINA’S MACRI SAYS WANTS END TO DEBT BATTLE WITH U.S. CREDITORS (Reuters News)

5. WHY PETROBRAS ARGENTINA & YPF ZIG WHEN OIL PRICES ZAG (Barron’s)

6. DEMOCRATORSHIP IN ARGENTINA (Open Democracy)

1. ARGENTINA SEEKS TO END DISPUTE WITH CREDITORS (The Wall Street Journal)
By Ryan Dube
January 12, 2016

Talks With Holdout Bondholders, Which Start Wednesday in New York, Aim to End Long Dispute

BUENOS AIRES—Argentine President Mauricio Macri’s government on Wednesday starts negotiations with creditors to end a long, bitter dispute and permit the country to tap financial markets for the first time in years, helping its battered economy recover.

“We are ready to bring the matter to a close and negotiate a solution,” Mr. Macri said Tuesday. “I hope we can rapidly leave this issue behind because it limits our ability to grow.”

Officials will meet in New York with bondholders that had rejected previous debt restructurings following Argentina’s huge 2001 default.

The meeting will include Argentina’s finance secretary, Luis Caputo, U.S. hedge funds that successfully sued Argentina for full repayment of the soured securities, and Daniel Pollack, a mediator appointed by U.S. District Judge Thomas Griesa, who has overseen the case. Attorneys for a group of small Argentine creditors who also won court judgments in the U.S., where the bonds were issued, are also expected to participate.

Ending the long-running saga is seen as crucial if Mr. Macri is to jumpstart a stagnant economy mired in double-digit inflation driven by the generous spending policies of his predecessor, Cristina Kirchner, and hobbled by a lack of access to capital markets. A settlement would lower borrowing costs for the government and corporations as Mr. Macri looks to overturn 12 years of populist policies.

But the negotiations also carry political risk for a fledgling government in a country where many consider the creditors “vultures” out to gut Argentina.

“Everybody wants a face-saving solution,” said Claudio Loser, an Argentine economist and former Western Hemisphere director at the International Monetary Fund. He said the government “wants to solve the problem, but politically they don’t want to appear [to be] selling off to the quote-unquote vultures.”

The conflict is rooted in the 2001 default of some $100 billion of debt, at the time the largest sovereign default in history. The government convinced investors in 2005 and 2010 to exchange almost 93% of the defaulted bonds for new debt valued at about 33 cents on the dollar.

The holders of the remaining 7% of the bonds have held out, hoping for a better deal. They include U.S. hedge funds such as Elliott Management Corp., which is headed by Paul Singer, and Aurelius Capital Management LP. Both snatched up debt on the cheap, betting they could get Argentina to pay the full amount.

Elliott and Aurelius declined to comment.

The holdouts also include thousands of smaller creditors in Argentina and Europe who bought the sovereign bonds at full value before the default. A settlement with all of the holdout creditors could cost Argentina about $10 billion, according to economists.

Guillermo Nielsen, a former finance secretary who led the 2005 restructuring, said the Macri administration would likely cushion the blow of the payout by swapping the defaulted securities for new bonds rather than paying in cash.

“Argentina can’t pay in cash, it is going to have to pay in bonds,” Mr. Nielsen said. “There will be a negotiation over what type of bonds Argentina is going to use to make the payments.”

The talks have raised hopes for holdout creditors such as Carlos Ulla, who has waited almost 15 years for Argentina to pay back the savings that he and his late father lost in the default.

“There is a lot of hope since Mauricio Macri’s election because clearly this is a government that is interested in returning to international markets,” said Mr. Ulla, a 57-year-old lawyer from Argentina’s northeastern city of Santa Fe. “I expect to receive 100%.”

A deal would likely require approval from lawmakers to overturn legislation that prevents Argentina from providing the holdouts with better terms than previous restructurings. That could be a challenge in a Congress full of Kirchner loyalists.

Axel Kicillof, Mrs. Kirchner’s former finance minister and a current congressman, described the holdout creditors as “intransigent” and their demands for full payment “unfair.”

“If the government goes and negotiates, that doesn’t seem bad to me,” Mr. Kiciloff said in an interview. “What would be bad is if they go against the interests of Argentina.”

Arturo Porzecanski, a professor of international economics at American University who has closely tracked the bond dispute, doubts there will be a quick settlement. He recalled Finance Minister Alfonso Prat-Gay’s criticism of the restructurings in a 2013 court briefing as “extremely generous” to the bondholders due to an annual dividend linked to the country’s economic performance.

Mr. Porzecanski also pointed to the Macri administration’s recent efforts to secure a loan from international banks worth some $5 billion by using its central bank to sidestep the court judgments, sending a bad message to holdout creditors. “That makes me skeptical that one or two trips to New York and they are going to smoke the peace pipe,” he said. “Don’t hold your breath.”

Argentina’s Finance Ministry declined to make Mr. Prat-Gay available for an interview. Mr. Prat-Gay has previously said the government would be tough in negotiations.

The Finance Ministry on Tuesday said it would hire a new law firm to lead negotiations with the holdout creditors. It said officials will meet with potential firms this week. Cleary Gottlieb Steen & Hamilton, which was leading the case, will continue to provide legal services.

For investors, the prospect of Argentina settling its debt battles will mean a large chunk of new emerging-market debt offerings, says Gorky Urquieta, co-head of the emerging-markets debt team at New York-based Neuberger Berman, which holds Argentine bonds that were exchanged for the defaulted debt.

Some Argentine companies have already been shopping themselves to foreign investors in anticipation of a deal with creditors. The firms expect a settlement would lead ratings companies to lift corporate debt in Argentina above its CCC status, making it easier to attract foreign investors.

Alberto Bernal, chief emerging-markets and global strategist at Miami-based XP Securities, says many international investors would be happy to finance Argentine companies if a deal is reached. He expects a settlement this year, but says that would require creditors accepting less than the full value for their bonds.

That won’t work for Horacio Vazquez, a 59-year-old electrical engineer who lost $73,000 and his job in the 2001 default. Months before, he had invested in sovereign bonds after seeing government advertisements.

The years that followed saw him fighting for his savings to be repaid, which attracted scorn from a government that mocked him and other small Argentine holdouts as unpatriotic.

“This has gone from being an economic necessity to a fight over principles,” he said at a Buenos Aires café. “After waiting 14 years, if the government doesn’t offer something convincing, we’ll continue without a deal.”

2. ARGENTINE PESO RALLIES ON HOLDOUT TALKS (Financial Times)
January 12, 2016

The Argentine peso is on a winning streak this week.

The currency – which only became a free floating currency less than a month ago – has risen 2.3 per cent against the dollar over the past two trading sessions, making it the world’s best performing major currency this week.

So what’s behind the bullishness? Two words: holdout creditors.

Argentina is due to restart talks with its holdout creditors on Wednesday and expectations are running high that a deal can be reached that would finally allow the country to put an end to a decade long debt stand-off.

Argentina has been locked out of international capital markets since its 2001 default. And the country defaulted again in August 2014 after former president Cristina Fernandez de Kirchner refused to abide by a US court ruling that barred it from servicing its restructured bonds without first settling with creditors who rejected the terms of the country’s 2001 default.

But under Mauricio Macri, Argentina’s new president who was swept into office on his promises to abandon Ms Kirchner’s populist policies, a resolution is now looking like a real possibility.

Since taking office, Mr Macri has wasted no time. His administration has moved quickly to cut most farm taxes and lift capital controls. He reiterated on Tuesday his desire to settle with the holdout creditors.

He said in a press conference, according to Bloomberg:

It’s very important that we resolve the problems of the past. We want to stop being a country that’s branded as not honoring its pledges and we want to resolve all outstanding issues.

Analysts say a deal with holdout creditors would help usher the country’s return to international capital markets and allow Argentina to shore up its dwindling hard currency reserves.

3. ARGENTINA SEEKS TO END LEGAL CONFLICT WITH CREDITORS, MACRI SAYS (Bloomberg News)
By Charlie Devereux
January 12, 2016

* Macri says Argentina’s vision on arrears has changed
* Argentina wants debt mediator to find reasonable holdout deal

Argentina has turned a page and wants to end a decade-long legal battle with holdout creditors left over from the 2001 default, Argentine President Mauricio Macri said.

Macri said he wants Daniel Pollack, who was appointed by a New York court to mediate an accord between Argentina and a group of bondholders led by billionaire hedge fund owner Paul Singer, to help facilitate a “reasonable deal” in order to end the conflict and open the doors to foreign investment once again in the South American country. Finance Secretary Luis Caputo will meet with Pollack and representatives of the holdout creditors in New York tomorrow to restart talks.

Macri, who took office a month ago, said the stance taken on the issue by his predecessor Cristina Fernandez de Kirchner “wasn’t rational” and that he hoped Pollack would help the two parties find common ground. In July 2014, Fernandez refused to abide by a U.S. court’s ruling to pay the holdouts in full when servicing restructured debt, causing Argentina to default for a second time in 13 years.

“It’s very important that we resolve the problems of the past,” Macri said in a press conference in Buenos Aires. “We want to stop being a country that’s branded as not honoring its pledges and we want to resolve all outstanding issues.”

While Argentina managed to restructure about 93 percent of its debt by imposing a 70 percent discount on creditors, Singer’s Elliott Management and other bondholders refused the offer and sued in court for better terms. Creditors have said they would accept repayment in bonds.

4. ARGENTINA’S MACRI SAYS WANTS END TO DEBT BATTLE WITH U.S. CREDITORS (Reuters News)
By Richard Lough and Jorge Otaola
Jan 12, 2016

Argentina will tell the mediator brokering debt negotiations with U.S. investment firms suing the country over unpaid debt that it wants to resolve the decade-long legal battle, President Mauricio Macri said on Tuesday.

Talks between Argentina, which is in default on some sovereign bonds, and U.S. hedge funds led by billionaire Paul Singer’s Elliott Management are set to resume on Wednesday.

“We don’t want to remain listed as a defaulter, we want to resolve all outstanding issues,” Macri told a news conference.
Macri took office on Dec. 10 after ousting the leftist government of President Cristina Fernandez, who refused to settle with the funds that spurned debt restructurings following Argentina’s record $100 billion default in 2002.

The center-right leader who advocates free-market policies said Argentina would tell mediator Daniel Pollack that the change in government had brought a “shift in the vision that we Argentines have toward our debt.”

Negotiations between the funds and Fernandez collapsed in July 2014, leading Argentina to fall back into default. Fernandez denigrated the holdouts as “vultures” bent on picking on the carcass of the country’s earlier monster default.

5. WHY PETROBRAS ARGENTINA & YPF ZIG WHEN OIL PRICES ZAG (Barron’s)
By Dimitra DeFotis
January 12, 2016

Argentina’s government has a grip on asset prices and the country’s currency, but has negotiated a 12% price reduction for local oil in dollars and a gasoline price increase of 6% in pesos.

While the international price of crude, Brent, has tumbled 17% so far in January to a recent $30.81, and the U.S. benchmark is trading at nearly the same level, Raymond James pegs Argentina’s Medanito oil price at $67.50 per barrel and Escalante oil at $55 per barrel. That’s one reason that Argentine energy producers have outperformed international oil prices of late: YPF (YPF) is down 11% this year and Petrobas Argentina (PZE) stock is flat. Over the past 12 months, Brent prices and YPF shares are eachs down about 40%, but Petrobras Argentina shares are up more than 18%.

The Global X MSCI Argentina exchange-traded fund (ARGT) was a relative winner over the past year, thanks in part to regime change: it fell 7% in that time span, while the iShares MSCI Emerging Markets ETF (EEM) fell 24% in the same time period.

Raymond James, which has market outperform ratings on YPF and Petrobras Argentina, says that with the Argentine peso depreciation of roughly 40% since mid-December after a new and more conservative Argentine government took office, prices in pesos should remain higher. Raymond James writes:

“Although still at a premium to international benchmarks, we expect oil prices to remain stable after this initial reduction. According to the press, prices at the pump will remain stable in February, but should regain momentum in March. In-line with this, we believe that prices at the pump will follow inflation this year, but should decrease in U.S. dollar terms, as devaluation exceeds the inflation rate. All in all, we expect to see margin pressure at the refining level …

The government has agreed with companies to increase pricing at the pump by 6% (in pesos) to partially offset the devaluation effect on refiners’ operating expenses (due to the higher price paid in pesos for oil purchases). In addition, and as mentioned previously, oil prices would fall in U.S. dollar terms, but this should be more than offset by the devaluation effect (12% oil price decline versus 40% devaluation).”

6. DEMOCRATORSHIP IN ARGENTINA (Open Democracy)
By Federico M.Rossi
12 January 2016

Mauricio Macri said he would renew Kirchnerism’s ways while preserving its social policies, but it has immediately become clear why he sold colour balloons during the campaign.

Macri’s government started with an unprecedented pressing by the Executive Branch: it is the first government since 1983 that has not convened the customary special sessions at the National Assembly. Lacking a majority in both chambers of parliament, he took the decision to impose a winner-takes-all logic.

By abolishing taxes on food exports, he quickly paid his allies for their support with a sharp reallocation of income to the agribusiness sector. As expected, this has caused a massive and uncontrolled price rise in the country’s supermarkets. The other radical measure is the deregulation of imports, by which he has paid its coalition of transnational corporation CEOs faster than – even they – expected.

On the other hand, Macri has done little to fulfill his campaign promises to another sector that supported him: the middle classes who were looking for change. The only measure taken has been the opening of the currency market, but it has come with a massive devaluation. This will undoubtedly generate a higher concentration of the economy in the agribusiness and the transnational corporate and exporting sectors, for which there are no limits in currency transactions.

Moreover, one of the stronger promises made during Macri’s campaign was the scrapping of the income tax on wages. But it has not been removed and it is gradually being left out of the government’s agenda. The unions are already fighting for a mere compensatory bonus, which is a very limited measure compared to the previous fight for the right not to be double-taxed. If unions do not react promptly and change strategy, the situation will substantially worsen for the working population.

The alliance for the adjustment

Macri’s strategy to implement an unpopular adjustment is based on a tripartite agreement: legal consent, a gag on information and repression. The control strategy of the Judiciary is the most controversial of all the crucial decisions Macri has made so far. The appointment of two Supreme Court judges with a barely legal procedure which has only been used previously during the nineteenth-century oligarchic system and twice by the military dictatorship has prompted rebuff from the Unión Cívica Radical (Radical Civic Union – UCR), all the opposition parties and even the Supreme Court itself. The control of the Supreme Court is crucial because it would allow Macri to skip Congress through permanent vetoes and avoid the Judiciary’s interference with his advance on the Legislative Branch. The control of the Judiciary has carried on with two new decrees by Macri that hinder the implementation of the Criminal Procedure Code and disempower the Attorney General’s Office. Macri will most probably come up with further reforms by decree during the summer.

Second in this strategy, the gag on information, began with the accession of several high-ranking Clarín and La Nación managers to government posts. This move is to be completed with the annulment of the Broadcasting Act, which has been praised by the United Nations and the Organization of American States as a global example for freedom of expression and pluralism. In order to abolish it, Macri decreed the intervention of the Agency for the Control of the Audiovisual Communication Services and its equivalent for the Internet, thus violating the autonomy of these entities and virtually liquidating the effective implementation of the law. This is intended to ensure that market domination by both communication groups will not be threatened and also to ensure their access to the State, which is something that was previously denied them.

The third leg of this strategy is the most classic of all. The handbook for all the adjustments includes strong repression. Nobody ever passively accepts getting poorer, so it must be imposed by force. The Cambiemos alliance knows this perfectly well from experience, for many of its members were also members of Fernando De la Rúa’s government. So much so, that Macri quickly sent in the police to the always difficult Northern provinces. The move went quite wrong and produced the first 43 victims of Macrismo. But this did not stop the Minister of Security, Patricia Bullrich, who declared a state of emergency so as to give added means to the security forces – and repression, consequently, arrived quickly for workers at the Cresta Roja poultry company. These emergency security measures are being approved by most governors because they know full well that the sub-national authorities are the first victims of any uprising against adjustment policies.

Democratorship

This mix of fast decisions has to do with Macri’s attempt to impose a reduction cycle of social and civic rights leading to a democradura (democratorship), a sort of low-intensity democracy functioning in a non-republican way. This reduction of the social role of the State – which the country has already experienced in the past – combined with a violation of the democratic procedures of the Republic is an explosive recipe for a young democracy like Argentina.

How is it possible, then, that a president who just won by 680,000 votes is now imposing adjustment policies? The problem comes from presidentialism – a system that puts the president in the position of a total winner even if he is not. Macri has no legitimacy to impose structural adjustments because he won by a very narrow margin and did not reach a majority in either House of Congress. This demeanor is encouraged by an autocratic style of government that is characteristic of governors and that Macri was quick to reproduce as governor of Buenos Aires and is now trying to do the same at national level. Macri presents himself, and so does a part of the local and international press, as a modern liberal politician, a pro-market democrat with a social conscience, a business and family man who understands his role as statesman. This, however, is only the façade: he is, really, a socially conservative and rightwing neoliberal who says what people want to hear while he gradually leads us to a democratorship.

The solution would have been different in a parliamentary system. Macri would have been leading the largest minority in a coalition with Kirchnerism, and he would have had to negotiate a joint government or call elections again after a year of transitional government. This would have been much more representative of the election results.

Organizing social resilience

The difference between contemporary Argentina and that of the past is that Argentines have an experience of over 12 years of a center-left government that massively included popular and middle-class sectors, previously excluded during the Washington Consensus period. This important part of society is now very active and politicized and it is certainly resisting many of Macri’s changes aimed at establishing a democratorship. A first expression of its strength was to be seen the day before Macri’s inauguration, when hundreds of thousands filled the Plaza de Mayo in Buenos Aires on the last day of Cristina Fernández de Kirchner’s mandate. The very same people organized the first protest against the adjustment and in defence of the freedom of expression on December, 14. And it was them again who assembled in Plaza Congreso on December, 17, to reject the adjustment, oppose the appointments by decree to the Supreme Court, and to voice their disapproval of Macri’s attempt to cancel the Broadcasting Act. Popular resistance led to the January, 6, massive march to demand the opening of Congress in January, which showed a high level of coordination with the Kirchnerista benches and received large media attention, as well as that of Macri’s government.

It became clear in those fleeting days that the small margin with which Macri won did not mean a changing of the cycle, but the sharp imposition of a new era. The story has not been written yet and the coming period will be characterized by the legislative and union battles, as well as the cultural and territorial ones. Social resilience – i.e., the ability of the population to rally and defend its acquired rights before the aggression which we are undergoing – is key to avoiding the possibility of living in a more unjust society.

It will be crucial for organized actors to uphold the depth of the cultural incorporation – as “rights” and not “aid” – of the changes produced by the inclusive policies of the previous presidencies. We should not trust that this will happen naturally, for the government has already started the battle in these fields. Organized resilience on the part of society may alone put a brake on a new attempt by the Right to undermine the democratic State and to commodify social relations.

Responder Responder a todos Reenviar Más

Camioneta de Gendarmería ploteada

9 enero, 2016

Sorprendidos estamos desde hace 13 días con las noticias de la fuga de 3 condenados. Hoy me pegunto ¿tuvieron tiempo y tranquilidad suficiente los tres implicados para secuestrar a un ingeniero Agro-nomo, llevarlo a su casa, quitarle su camioneta, y colocarle falsas inscripciones para simular que pertenecía a la GENDARMERÍA? VER http://www.clarin.com/politica/martin_lanatta-triple_fuga_0_1501050093.html
Quizás la camioneta ya estaba ploteada (disfrazada con inscripciones falsas) desde tiempo atrás, y los fugitivos viajaron para recibirlo del “ploteador” porque para mantenerse oculto de la policía, disfrazarse de 3 Gendarmes movilizados en camioneta de Gendarmería era algo tan frecuente en Santa Fé, que nadie sospecharía de sus ocupantes ni les pediría exhibir documentación, por creerlos integrantes del abnegado y eficaz cuerpo de Gendarmería Nacional.

ARGENTINE UPDATE – Dec 31, 2015

2 enero, 2016

1. ARGENTINA’S ‘LITTLE TREES’ GETTING CHOPPED DOWN BY NEW PRESIDENT (Los Angeles Times)

2. ARGENTINA’S NEW PRESIDENT : A FAST START (The Economist)

3. ARGENTINA SEES WHEAT, CORN CROPS SETTING RECORDS UNDER NEW RULES (Bloomberg News)

4. ARGENTINA: CROP QUOTAS QUASHED; AUTO TAX CUTS; MACRI SHOW OF STRENGTH? (Barron’s)

5. PACKAGED FOOD IN ARGENTINA (PR Newswire (U.S.))

6. PREHISTORIC GIANT ARMADILLO SHELL FOUND IN ARGENTINA (Discovery Online)

1. ARGENTINA’S ‘LITTLE TREES’ GETTING CHOPPED DOWN BY NEW PRESIDENT (Los Angeles Times)
By Andres D’Alessandro and Chris Kraul
December 30, 2015

It didn’t take Argentina’s new president very long to ruin Lorena Garcia’s business.

Garcia, a money changer, is one of legions whose livelihood was turned upside down when Mauricio Macri, in one of his first acts as president, eliminated a subsidized exchange rate for the Argentine peso.

“The golden age is over,” Garcia said in a low voice, a calculator by her side, as she sat in her jewelry shop on Florida Street. Her district in central Buenos Aires has long been home to legions of “arbolitos,” or “little trees,” as money changers are known here, in a reference to the green of the U.S. dollar.

The buying and selling of dollars has long been an under-the-table, technically illegal side business at shops like hers. Business boomed under Macri’s predecessor, Cristina Fernandez de Kirchner, who kept the official dollar exchange rate at an artificially low level, as much as 50% under the market value, in a bid to restrain inflation.

Before Dec. 16, when Macri’s center-right government abolished the subsidized rate, the peso was officially trading at about 9.5 to the dollar, but shops like Garcia’s were offering around 14 to the dollar. Once Macri’s changes went into effect, the peso’s value floated to about 13 to the dollar, close to the rate on the “blue market,” as the off-books money changers were known.

Almost instantly, some two thirds of the arbolitos closed up shop, by Garcia’s estimate. Although she continues to change money for tourists and informal business owners who keep their cash under the official radar, volume is down sharply.

“This has happened before and arbolitos have always come back,” Garcia said.

The elimination of an official exchange rate was one of Macri’s first acts after taking office on Dec. 10. He made no secret during his campaign of his plans to scrap much of Fernandez’s left-leaning economic policies and wasted little time in doing so, blaming them for Argentina’s dismal economy, which currently suffers from stagnant growth and 28% inflation.

Despite the pain felt by Garcia and other moneychangers, Macri’s policy shifts have generated positive public response overall, pollsters say.

“According to a survey we did for a private firm, we figure that the Mauricio Macri government now can count on 60% support,” said Analia del Franco of the Analogias polling firm in Buenos Aires.

In his short time in office, Macri has slashed high taxes on farm goods, eliminated some export controls and moved to cut a yawning budget deficit caused partially by Fernandez’s expansive spending on social-welfare programs. The red ink this year will equal 7% of the country’s total economic output, economists expect.

Macri has been busy dismantling some of Fernandez’s foreign policies as well. He scolded Fernandez’s former ally Venezuela for alleged human rights abuses at a recent meeting of regional leaders and has reiterated his campaign pledge to improve relations with the United States, a frequent rhetorical punching bag for his populist predecessor.

Among the sectors most pleased with Macri is Argentina’s farm and cattle sector, which chafed under controls implemented by Fernandez that were designed to limit many goods’ access to export markets in a bid to keep overall demand, and thus prices, low for domestic consumers.

“There is a strong optimism,” said Jaime Campos, president of Argentina Business Assn., a leading trade group, in an interview with Clarin newspaper. “We are confident that the government will do things correctly. [Macri has] a team that is well prepared, integrated and that knows the issues.”

Campos also applauded Macri’s efforts to reach out for better relations with Brazil and Chile while “keeping a distance from countries that don’t respect human rights,” a reference to Venezuela.

At the meeting of South American leaders earlier this month, Macri called on Venezuelan President Nicolas Maduro to release political prisoners, including Leopoldo Lopez, the former Caracas borough mayor jailed since February 2014 on incitement to violence charges, which Lopez and his supporters say are trumped up.

Fernandez was a staunch defender of Venezuela’s socialist policies and a close colleague of that country’s late president, Hugo Chavez.

Macri also served notice that he won’t repeat Fernandez’s friendly gestures to Iran, whose officials are suspected of having planned the 1994 bombing of a Jewish community center in Buenos Aires that left 85 dead.

Soon after taking the oath of office, Macri said he would not try to block, as Fernandez did, a 2014 ruling by a federal prosecutor that an agreement between Iran and Argentina regarding the bombing investigation was unconstitutional. The prosecutor said the agreement Fernandez made with Iran shielded certain suspects from international arrest warrants.

Macri also made friends among some U.S. investors by indicating he was open to settling a $100-billion bond default dating back to 2002 by making good on unpaid judgments.

White House aides have been quoted as saying that President Obama is considering a Latin America trip next year that will include a stop in Argentina, partly in recognition of Macri’s stated desire to improve bilateral relations.

In another move cheered by many free-speech advocates, Macri said he will “normalize” the calculation of government economic data, a reference to allegations that Fernandez pressured government statisticians to paint a rosier economic picture than warranted.

Not all Argentines approve of Macri’s market-friendly policies. Although Fernandez herself has been silent, groups of her supporters have organized three marches since Macri took power to protest his changes in telecommunications policy, his upcoming judicial appointments and other changes.

“These economic measures produce the transfer of millions from Argentine workers to large exporters and to financial powers who benefit from the liberalization of the economy [and] put at risk the workers, their savings, production and jobs,” said a joint statement issued by several workers groups closely associated with Fernandez.

And some economists also warn that Macri’s domestic policy changes could exacerbate Argentines’ financial pain, at least in the short term. Few expect the current high inflation rate to moderate over the next few months and some warn that the economy could shrink over the first six months of 2016, before resuming growth by the end of next year.

But Macri says the first dividends of his more market-friendly policies have begun to arrive; he announced this month that private firms had committed $500 million in new investment in energy projects. Foreign oil and natural gas companies by and large stayed away from Argentina’s promising oil reserves during Fernandez’s administration because of her price controls and history of having nationalized energy firms.

“People and markets have reacted positively,” said Mariano Gorodisch, a Buenos Aires-based financial analyst and journalist. “Signs of confidence indicate an improved future.”

2. ARGENTINA’S NEW PRESIDENT : A FAST START (The Economist)
Jan 2nd 2016

Mauricio Macri’s early decisions are bringing benefits and making waves

MAURICIO MACRI, who took office as Argentina’s president in December, has wasted little time in undoing the populist policies of his predecessor. On December 14th he scrapped export taxes on agricultural products such as wheat, beef and corn and reduced them on soyabeans, the biggest export. Two days later Alfonso Prat-Gay, the new finance minister, lifted currency controls, allowing the peso to float freely. A team from the new government then met the mediator in a dispute with foreign bondholders in an attempt to end Argentina’s isolation from the international credit markets.

This flurry of decisions is the first step towards normalising an economy that had been skewed by the interventionist policies of ex-president Cristina Fernández de Kirchner and her late husband, Néstor Kirchner, who governed before her. They carry an immediate cost, which Mr Macri will seek to pin on the Kirchners. Some of the new president’s other early initiatives are proving more controversial.

The economic reforms seem to be working. Farmers who had hoarded grain in the hope that the tariffs would be lifted are now selling, replenishing foreign-exchange reserves that had been drained to defend the artificially strong peso. The newly freed currency fell by more than 30%, a further boost to exporters. It has stabilised at around 13 pesos to the dollar. “Substantive” talks with holdout bondholders starting in early January could lead to a return to credit markets in 2016.

But the devaluation has pushed up the inflation rate, already more than 25% when Mr Macri took office. To rein it back, on December 15th the central bank raised interest rates on short-term fixed deposits by eight percentage points to 38%. The government hopes to persuade business and trade-union leaders to keep tight control of prices and wages. But that may prove difficult: the unions are fragmented and little disposed to help Mr Macri, a centre-right politician; businesses may balk at holding down prices. Barclays, a bank, expects the economy to contract by 1.1% in 2016. But increased foreign investment should lead to renewed growth of 3.5% in 2017.

Mr Macri’s attempts to bring fresh talent into institutions dominated by Ms Fernández’s kirchneristas have run into resistance, from both foes and allies. On December 14th, with the Senate in recess, Mr Macri temporarily appointed by decree two Supreme Court judges. He then booted out the chief of the media regulator, Martín Sabbatella.

In both cases his motives were worthy. He wants independent jurists in the courts. Mr Sabbatella had clashed with Grupo Clarín, a big media group. Mr Macri thinks his removal will strengthen press freedom. But critics say he misused his authority. On the judges, at least, he has relented. He will now wait for the Senate’s approval.

Touring northern Argentina, where 20,000 people have been displaced from their homes by floods, Mr Macri blamed the former president, saying she had failed to invest in flood defences (see article). For now, Argentines are likely to believe their new president. However, if the economic slowdown is prolonged, the honeymoon will not be.

3. ARGENTINA SEES WHEAT, CORN CROPS SETTING RECORDS UNDER NEW RULES (Bloomberg News)
By Pablo Rosendo Gonzalez
December 30, 2015

* Output may easily double in future harvests, Minister says
* Country eliminated taxes and export permits that set quotas

Argentina is poised to double its wheat and corn crops after recently revised grain export policies, Buenos Aires Province Agriculture Minister Leonardo Sarquis said.

The government published a decree Tuesday in the official gazette ending its export permit policy.

President Mauricio Macri had eliminated export taxes on corn and wheat as well as bureaucratic export permits since assuming office on Dec. 10.

Export restrictions were implemented in the past decade under former presidents Nestor Kirchner and his wife Cristina Fernandez de Kirchner in a bid to boost government revenue and ensure domestic supplies. Local prices for both cereals slumped and farmers reduced wheat plantings, switching to crops that didn’t require export permits and weren’t taxed such as barley.

“Now that we have changed these wrong policies, the wheat planted area will be doubled by farmers,” Sarquis said in an interview. “Corn may take another year to double, but for sure we will have record crops of both cereals from now on.”

Buenos Aires province produces 70 percent of the country’s wheat.

Peso Devaluation

Argentina’s Agriculture Ministry is forecasting the current wheat crop to be 10.9 million metric tons. That’s below the 2007-08 record crop of 16.4 million, before the export permit policy was initiated.

The country’s record corn crop of 27 million tons was harvested in the 2013-2014 season, according to the Buenos Aires Grain Exchange. Argentina is the world’s fourth-largest corn exporter.

The export of grains has become more profitable for farmers after Argentina’s government lifted four years of currency controls, leading to the the biggest one-day peso devaluation in the last 14 years on Dec. 17.

In the last 10 days, Argentina, the world’s largest shipper of soybean derivatives, shipped three times the amount of grains and oilseed abroad that it sold in the entire month of November. It shipped $1.2 billion of grains and oilseed in the last 10 days compared with November exports of $451 million, according to the exporters’ group data.

Export taxes for soybeans were cut to 30 percent from 35 percent by Macri.

4. ARGENTINA: CROP QUOTAS QUASHED; AUTO TAX CUTS; MACRI SHOW OF STRENGTH? (Barron’s)
By Teresa Rivas
December 30, 2015

More Argentina news: Argentina’s President Mauricio Macri has already suspended limits on currency exchange, and made a big investment in the nation’s energy sector, but there are even more changes on the table as he plows through his first weeks in office.

Victor R. Caivano/Associated Press
Macri’s government has already cut excise taxes on new cars in an attempt to boost auto production, which could use a boost after years of lackluster growth thanks to economic weakness at home and in major trading partner Brazil.

Reuters’ Walter Bianchi has the details:

The government of Mauricio Macri will analyze the impacts of the lowered taxes after six months and modify them as needed, Production Minister Francisco Cabrera said.

A tax on cars that cost more than 350,000 pesos ($27,000) will fall to 10 percent from 30 percent while a tax on luxury vehicles that cost more than 800,000 pesos will fall to 20 from 50 percent, Cabrera said.

Elsewhere, Macri also eliminated limits on the amount of corn and wheat that Argentina’s farmers can export, which his government will believes will lift the country’s grains production to as much as 130 million tonnes a year during the president’s first term. Argentina currently produces around 100 million tonnes.

Farmers had sought the change under Marci’s predecessor, Cristina Fernandez, but she said the curbs were needed to keep domestic food needs met.

Reuters’’ Nicolas Misculin reports:

The new center-right administration of President Mauricio Macri eliminated taxes on corn, wheat and soy exports earlier this month, making good on a campaign pledge to take steps to encourage agricultural production.

The export quotas had curbed corn and wheat planting and resulted in the overplanting of soy in recent years.

New changes are coming quite quickly for Macri, who is already fulfilling a number of his campaign promises. Yet his swiftness may be more than simply appeasing those who voted for him.

Many predicted that Macri’s hands would be tied after a bitter election cycle that ended with Fernandez skipping Macri’s inauguration and many of her party still in power. As The Washington Post’s Frederic Puglie writes, Macri is bent on disproving those who thought he would be mired in red tape and opposition:

Mr. Macri evicted the head of the government’s powerful media regulation body, one of a handful of Fernandez-appointed officials who defied the new president’s call to resign. He reversed Argentina’s posture toward Venezuela by pushing Caracas to release political prisoners and tried to circumvent Congress by temporarily appointing two Supreme Court justices.

The flurry of activity is meant to show “gobernabilidad,” or the administration’s ability to govern despite a divided parliament dominated by Ms. Fernandez’s Front for Victory and other Peronists — who also hold much sway in Argentina’s powerful trade unions.

Finally, two of Argentina’s former transportation ministers will go to jail over a 2012 train crash in the capital of Buenas Aires that killed 50 people.

The New York Times’ Jonathan Gilbert has this brief:

Juan Pablo Schiavi, who held the post at the time, was given an eight-year sentence, convicted of causing the deaths. Ricardo Jaime, his predecessor, was given a six-year sentence, merged with punishment for a previous charge of receiving bribes while in government. Both were found guilty of fraudulent practices that jeopardized the management of train lines and led to the tragedy, a four-judge panel said. Nineteen others were convicted, including the driver of the train and Sergio Claudio Cirigliano, whose company operated the commuter line.

5. PACKAGED FOOD IN ARGENTINA (PR Newswire (U.S.))
30 December 2015

NEW YORK, Dec. 30, 2015 /PRNewswire/ — In 2015 packaged food in Argentina recorded retail volume growth of only 1%, which was in line with the natural growth of the population. The economic crisis played a key role in driving demand for packaged food, boosting the consumption of staples to the detriment of more sophisticated and added-value products. Products such as rice and pasta recorded good performances as these products are inexpensive, easy to prepare and can be combined with other foods. Moreover, the reduction in real wages…

Euromonitor International’s Packaged Food in Argentina report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data 2010-2014, allowing you to identify the sectors driving growth.

6. PREHISTORIC GIANT ARMADILLO SHELL FOUND IN ARGENTINA (Discovery Online)
By Carlos Spegazzini
December 30, 2015



A passer-by on Christmas Day found a meter-long shell on a riverbank in Argentina which may be from a glyptodont, a prehistoric kind of giant armadillo, experts said Tuesday.

A local man thought the black scaly shell was a dinosaur egg when he saw it lying in the mud, his wife Reina Coronel told AFP.

Her husband Jose Antonio Nievas found the shell beside a stream at their farm in Carlos Spegazzini, about 40 kilometers (25 miles) south of the capital Buenos Aires.

“My husband went out to the car and when he came back he said, ‘Hey, I just found an egg that looks like it came from a dinosaur,” she said.

“We all laughed because we thought it was a joke.”

Nievas told television channel Todo Noticias he found the shell partly covered in mud and started to dig around it.

Various experts who saw television pictures of the object said it was likely to be a glyptodont shell.

“There is no doubt that it looks like a glyptodont,” said paleontologist Alejandro Kramarz of the Bernadino Rivadavia Natural Sciences Museum.

“The animal became extinct thousands of years ago and it is very common to find their fossils in this region,” he told AFP.

330-Pound Beavers: What Earth Would Look Like Without Us

Glyptodonts are the ancestors of modern armadillos. They had big round armored shells and weighed up to a ton.

They lived in South America for tens of millions of years.

Kramarz estimated the specimen found by Nievas was relatively young at 10,000 years.

Back to contents


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

Responder Responder a todos Reenviar Más

ARGENTINE UPDATE – Dec 23, 2015

2 enero, 2016

1. BOTCHED VOTE IN ARGENTINA REFLECTS TROUBLE IN SOUTH AMERICA (The New York Times)

2. ARGENTINE GOLD MINER PRAISES MACRI FOR SCRAPPING GOLD TAX (Financial Times)

3. ANALYTICAL GUIDANCE: HOW ARGENTINA’S NEW PRESIDENT WILL REVIVE THE ECONOMY (Stratfor Global Intellinge)

4. MACRI-ECONOMICS IN ARGENTINA (Council on Foreign Relations)

5. MERCOSUR-EU TRADE TALKS COULD ADVANCE SLOWLY NEXT YEAR (Oxford Analytica)

1. BOTCHED VOTE IN ARGENTINA REFLECTS TROUBLE IN SOUTH AMERICA (The New York Times)
By Jonathan Gilbert
Dec. 22, 2015

BUENOS AIRES — Seventy-five team directors had placed their votes in envelopes, and Argentine soccer was moments from electing its first new leader after 35 years under the rule of Julio Grondona, a strongman of Latin American soccer politics who died in 2014. But hope quickly turned to despair: The 75 votes somehow produced a 38-38 tie, a stunning rejection of basic mathematics.

The botched election for the presidency of the Argentine soccer federation this month was viewed by many Argentines as a national disgrace. But in its dysfunction, it offered a view into the perils faced by the new figures battling to control the region’s influential soccer organizations in the wake of a sweeping corruption scandal, and how difficult it will be to coax leaders whom fans can trust out of what many consider a tainted talent pool.

Sepp Blatter during a news conference in which he said the FIFA ethics committee that suspended him “has no right.”

“I can’t trust any of them now — they’re all sullied,” said Patricia Rodríguez, 55, a travel agent, referring to Luis Segura and Marcelo Tinelli, the two candidates in the tied vote. “It’s such a shame, because I had great hopes.”

Ms. Rodriguez’s comments could be repeated all over South America. Of the more than 40 defendants charged in the United States Justice Department’s broad investigation of corruption in world soccer, more than half hail from South America. Every country in the continent’s 10-member confederation, Conmebol, has had at least one senior soccer official charged in the case. The defendants include the past three Conmebol presidents, three former presidents of the Brazilian national federation and the current or former presidents of the federations of Bolivia, Chile, Colombia, Ecuador, Peru and Venezuela.

In Argentina, the federation’s presidential election was rescheduled for last Friday, but in a turn that further exasperated the country’s fans, Mr. Tinelli won a court order postponing the vote indefinitely. For the moment, talks are reportedly underway between the candidates about forming a crisis committee to lead the federation until a new president can be selected.

Mr. Segura, 73, has been the interim president since Mr. Grondona’s death. But because he had been a vice president at the federation for more than a decade, he is largely viewed as a fusty continuation of Mr. Grondona’s leadership. Mr. Tinelli, 55, a popular television host and a relative outsider at the federation, has been proposing increased transparency. But the chaotic election process left many in Argentina skeptical that either man could realistically carry through needed reforms.

“They learned in Grondona’s shadow,” Javier Cantero, a former president of Independiente, one of Argentina’s so-called big-five teams, said of figures like Mr. Segura and some of the voters. Calling for overhauls that would make the federation’s dealings more open, Mr. Cantero added, “It’s a closed door locking in a putrid smell.”
Mr. Grondona cemented power by negotiating lucrative TV and advertising contracts for the federation, then used its financial clout to exert influence over club directors, said Hernán Castillo, who has written a book about Mr. Grondona. After rising to the presidency in 1979, during a military dictatorship, Mr. Grondona was re-elected eight times. Only one candidate, Teodoro Nitti, a former referee, ever officially stood against him; Mr. Nitti won just a single vote.

Allegations of corruption shadowed Mr. Grondona for years, but he was never convicted of a crime. Now, two of his closest aides are under house arrest — accused by the Justice Department of receiving kickbacks worth hundreds of thousands of dollars at a time from sports marketing executives in exchange for rights to the Copa Libertadores, South America’s premier club competition.

The charges against the men, the former Conmebol general secretaries José Luis Meiszner, 69, and Eduardo Deluca, 75, emerged on the day of the fumbled election. To those in favor of reform, the tied vote was a perfect symbol of a resistance to change that they fear will thwart even the most basic reforms.

“It’s a joke that they expect us to believe it was a mistake,” said Brenda Aznar, 26, a secretary for an accounting firm.
In neighboring Brazil, the federation president, Marco Polo del Nero, and two of his predecessors, Ricardo Teixeira and José Maria Marin, have been indicted.
Mr. Marin, who was detained in Switzerland in May, agreed to be extradited to the United States. But after Mr. del Nero — who is accused of receiving kickbacks from sports marketing executives — took a leave of absence to defend himself in the case, there have been calls in Brazil for his resignation and a new election to replace him.

There will also be elections at Conmebol next month; the organization sank into disarray when Juan Ángel Napout, 57, its Paraguayan president, resigned after his arrest in Switzerland and extradition to the United States this month. Mr. Napout has denied receiving millions of dollars in the kickback scheme. His two predecessors in the post, Paraguay’s Nicolás Leoz and Uruguay’s Eugenio Figueredo, had been indicted in May.

Hewing to pleas for reform, Wilmar Valdez, 50, the Uruguayan who was named Mr. Napout’s interim replacement until the elections, in which he will run, told the Argentine newspaper La Nación, “I want true change for South American soccer.”

Fans on the continent have little faith in such pledges, pointing to a tainted generation of soccer leaders.
Continue reading the main story Write A Comment
“The possibility for change is there,” said Nicolás Lobos, 28, who manages a restaurant in Buenos Aires. “But it’s difficult to frame it from the perspective of officials, who often veer away from the hopes of fans.”

Still, some observers said Argentines should be optimistic, highlighting the fact that there was a competitive election at all, even if it produced a comical result and will have to be repeated.

“Soccer is the people’s sport, but the discussion was always a closed one,” said Ezequiel Fernández Moores, a sports columnist for La Nación. “At last, after 35 years of monopoly power, there’s a public debate.”

2. ARGENTINE GOLD MINER PRAISES MACRI FOR SCRAPPING GOLD TAX (Financial Times)
December 23, 2015

Argentina’s new president, Mauricio Macri, has extended his move to scrap taxes on agricultural exports to the mining sector, eliciting purrs of approval from gold miner Patagonia Gold.

The company said on Wednesday:

This measure coupled with the recent announcement removing exchange controls and the import restrictions continues to improve the overall economic environment in Argentina and opens new opportunities for Patagonia Gold.

Mr Macri was elected on a reform platform in last month’s elections, and he has wasted no time in giving Argentina’s economy a full-on makeover.

Last week he lifted capital controls, allowing the Argentine peso to plummet more than 36 per cent against the dollar.

Patagonia Gold said earlier in the week that this move would result in an “improvement in margins”.

It also praised Mr Macri’s move to abolish “restrictive and complicated” regulations on imports, which, it says:

will expedite the process of importing necessary machinery and spare parts as well as services for the Company, which is expected to improve efficiencies and have a positive impact on production.

Andes Energia, a London-listed but Argentina and Colombia-focused oil and gas explorer, recently said it is excited about the prospects for Argentina’s shale oil industry under Mr Macri.

3. ANALYTICAL GUIDANCE: HOW ARGENTINA’S NEW PRESIDENT WILL REVIVE THE ECONOMY (Stratfor Global Intellinge)
December 22, 2015

Summary

Eager to dismantle his predecessor’s economic policies, Argentine President Mauricio Macri marked his first week in office by taking aggressive steps to liberalize the Argentine economy. So far, the new president has managed to slash taxes on agricultural exports and lift currency controls, causing the value of the Argentine peso to plunge by 30 percent.

Macri’s “shock therapy” policy will undoubtedly hike the country’s already-high inflation even further, putting additional strain on the struggling economy, at least at first. And as Argentines begin to feel the potentially painful side effects, resistance to the president’s approach will build.

Analysis

In Argentina, December is often a month of conflict. Soaring heat, intermittent blackouts, high spending levels and salary negotiations for the coming year push societal tensions to their peak. With Macri’s rapid and dramatic adjustments to the economy, this December is shaping up to be no exception. Since assuming his post on Dec. 10 Macri has focused the bulk of his efforts on reversing Argentina’s economic deterioration. After more than a decade of the protectionist policies and a heavily regulated foreign currency exchange system put in place by the previous adminsitrations, the country is in dire need of a new — and according to Macri, drastic — approach.

Macri’s efforts to shock the economy out of its stupor began on Dec. 14, when he announced his intention to remove the export taxes in place on some of Argentina’s most competitive agricultural products, including beef, wheat and corn. He also plans to reduce the export taxes on soybeans from 35 to 30 percent. The move marks a significant change in Argentine policy: Beginning in 2008, former President Cristina Fernandez de Kirchner maintained high taxes despite farmers’ complaints to fund her energy subsidies and price-control programs.

While Macri’s move may win the support of Argentine farmers, he runs the risk of making enemies elsewhere. The decision to reduce export taxes comes alongside his declaration of a state of emergency within Argentina’s electricity sector as part of a plan to raise tariffs on electricity and natural gas starting in early January. The Kirchner-Fernandez clan’s energy subsidies were among its most popular social policies; by undercutting them, Macri could risk inciting protests by the former leaders’ power bases.

Still, the more pressing concern will be the rapid impact Macri’s policies will have on inflation. After he lifted capital controls, the value of the Argentine peso fell by 30 percent, dropping from 9.8 pesos to the U.S. dollar to 15 pesos. (It has now settled at 14 pesos to the dollar.) As a result, inflation is expected to surge by the end of the month, potentially rising even further in 2016.

Compared with Fernandez’s sudden devaluation of the peso in 2014, Macri’s removal of capital controls was widely expected. Argentina’s private banks have promised to lend about $7 billion to the country’s central bank to help combat the climbing inflation rate. This will offer much-needed relief to the government, whose international reserves are dwindling. Alfonso Prat-Gray, the country’s recently appointed finance minister, is also seeking $10 billion from Wall Street firms to help Argentina settle its debt with foreign bondholders, which currently exceeds $7 billion. Additionally, Argentina has managed to secure $5 billion with the help of the Inter-American Bank and $3.1 billion worth of yuan through a currency swap with China.

Who to Watch

In the coming weeks, Stratfor will be closely monitoring the reactions of the actors who play an important role in Argentine politics:
◾Members of the former administration: Members of the former ruling party, including Fernandez herself, have already begun to criticize Macri’s plans to liberalize the economy. It will be particularly important to monitor figures such as Hugo Moyano, Hector Recalde, Carlos Kunkel and Hugo Yasky, who have enough clout within the labor unions and the legislative branch to slow Macri’s progress.
◾Pro-Kirchner groups and labor unions: Groups that support the previous administration, such as La Campora, will be important to watch because they will heed any encouragement by the former president to launch protests against Macri’s moves to reduce social spending, especially ahead of the next midterm and presidential elections. Meanwhile, the General Confederation of Labor, the Central Argentinean Workers Union and the Transportation Union — all of which are led by opposition figures — are calling for protests in the coming week to obtain 5,000-peso bonuses in response to the currency’s recent depreciation. Though these unions do not have the power to completely derail Macri’s liberalization plan, they could use their influence among transportation and manufacturing workers to instigate strikes and protests among the low- and middle-income classes.
◾Sergio Massa and Daniel Scioli: Massa, the leader of the dissident faction of the Peronist movement Front for Renewal Dissident Peronist Party (the third-largest faction in the lower house of parliament), has refrained from commenting on Macri’s policies so far. However, because Massa’s party has 27 seats in the lower house, its support will be crucial to Macri’s coalition (92 seats) as it looks to push through new legislation. Scioli, the presidential candidate for the former ruling party who warned against Macri’s “neoliberal” plans for Argentina during the recent campaign, represents a powerful Kirchernist faction and will likely try to persuade Massa to join the opposition, which currently holds 109 seats.
◾Macri’s allies: The Radical Civic Union Party is the biggest ally of the new ruling party, Let’s Change. Together, the two control 92 seats in the lower house of parliament. With both houses politically fragmented, Macri will need the support of the party and its leaders, including Ernesto Sanz, Mario Negro, Angel Rozas and Jose Corral, to successfully push toward further economic liberalization. In exchange, Macri may need to yield to their requests for particular appointments to the Supreme Court and the Cabinet, as well as to their policy preferences more generally.
◾Residents of Buenos Aires province: December heat and the possibility of blackouts mean street protests unrelated to Kirchnerist politics could occur.

What to Expect

Since Argentines typically travel in January, the country will likely remain tense but relatively calm for the first month of 2016. However, teachers’ unions and others may start demanding higher salaries in response to Macri’s policies come February, which could lead to protests and/or strikes. If protests occur, demonstrators will probably focus their demands on increased salaries, not on calls for the president’s resignation.

Back to contents

4. MACRI-ECONOMICS IN ARGENTINA (Council on Foreign Relations)
By Robert Kahn and Ted Liu
December 22, 2015

While markets have focused attention on China as the primary source of market risk in 2016, Latin America has provided the more significant headlines in recent weeks. Political turmoil in Brazil has resulted in the resignation of a market-friendly finance minister, and default looms in Venezuela. But perhaps nowhere in Latin America is more at stake than with the economic revolution now underway in Argentina.

As the first non-Peronist president in more than a decade, Mauricio Macri has promised to roll back populist policies of his predecessors and implement market-friendly measures in Argentina. Following his election, his administration moved quickly to lift currency controls, resulting in a substantial devaluation of the official exchange rate, reduced trade taxes, installed a new central bank president, and raised $5 billion in financing from a group of international banks. He has also promised to settle the country’s decade long legal battle with creditors, normalizing the country’s economic relations and turning Argentina outward. At a time when populism is constraining economic reform across the industrial and emerging world, many in markets see Argentina as a bright spot in the region.

Markets have responded quite positively to this big-bang approach. After dropping over 25 percent, the currency has stabilized and a number of banks have raised their recommendation on Argentine assets. Still, the economic challenge is daunting. Diminishing foreign exchange reserves raise uncertainty in Argentina’s ability to defend peso’s value should crises occur (Figure 1). Inflation is rampant, over 25 percent as of October. The expansionist fiscal policy has also created a deficit that private estimates by companies including Goldman Sachs place between 6 and 7 percent. The sharply weaker currency will exacerbate these challenges, at least temporarily, even as it sets the basis for competitiveness in the longer term. Without much room to maneuver in collecting revenue, Macri’s fiscal consolidation will most likely rely on cutting expenditure, including popular energy subsidies instituted by his predecessors. Finding alternative sources of expenditure cut and revenue increases will be a difficult though critical task.

The broader question is whether this time is different, and whether Argentina can break out of its history of populist economic cycles. While all these measures are necessary, they will be painful and likely induce economic contraction in the short term. Accustomed to years of economic populism, the Argentine people will now need to support policies previously deeply unpopular. Meanwhile, his party lacks a majority in the Argentine congress. Historically, investors would have done well from buying Argentina after default and selling on efforts at normalization. There’s a danger of political and social backlash, and perhaps this is not the end of populism for Argentina.

Against a weak global economic backdrop, the country will face challenging fiscal outlook and likely economic contraction. Getting the sequencing and coordination of reforms right will require a delicate balance between economic change and disruption. Macri’s shock therapy is rare in Latin America, and the track record of shock programs (including notably in post-Soviet Eastern Europe) is mixed. A critical question will be his ability to sustain support until reform produces material improvement in growth prospects. Populist pressure could return quickly if the program falters. There is a lot riding on the outcome.

Argentina

Source: Central Bank of Argentina

Back to contents

5. MERCOSUR-EU TRADE TALKS COULD ADVANCE SLOWLY NEXT YEAR (Oxford Analytica)
December 22, 2015

Venezuela’s domestic woes and the loosening of Argentine trade restrictions may help languishing EU talks along

Argentine President Mauricio Macri and Venezuelan Foreign Minister Delcy Rodriguez clashed at the Mercosur summit in Asuncion yesterday, with Macri calling for the bloc to press for the release of political prisoners in Venezuela and Rodriguez accusing him of interference in Venezuela’s internal affairs. However, following Venezuela’s National Assembly elections Macri has desisted from earlier plans to seek to apply Mercosur’s democratic clause to Caracas. Summit participants signed a declaration in support of human rights, but made no progress on issues such as the long-stalled free-trade talks with the EU. Taking over the pro tempore presidency of the bloc, Uruguayan President Tabare Vazquez promised to give new impetus to economic integration projects.

Our judgement

Difficulties in advancing with EU trade talks have not been overcome, although recent Argentine moves to end foreign trade curbs may help in this direction. Tensions between Buenos Aires and Caracas are set to rise, but Venezuela’s crisis is likely to reduce its influence in Mercosur and also the activities of competing integration efforts such as the Bolivarian Alliance for the Peoples of Our America (ALBA).

THURSDAY

1. ARGENTINA ECONOMY: PRESSING FISCAL CHALLENGES AWAIT (Economist Intelligence Unit – ViewsWire)

2. CAN ARGENTINA RISE ABOVE ECONOMIC POPULISM? (The National Interest)

3. NEW POLITICAL REALITY IN POPE’S NATIVE COUNTRY (National Catholic Register)

4. THE UNITED STATES: PROGRESS AND PROMISE IN LATIN AMERICA (Stratfor Global Intelligence)

1. ARGENTINA ECONOMY: PRESSING FISCAL CHALLENGES AWAIT (Economist Intelligence Unit – ViewsWire)
23 December 2015

The fiscal imbalance, which has climbed to peaks not seen since the late 1980s, will be a huge challenge for the new president, Maurcio Macri. Fiscal tightening will be difficult. Financing the deficit and meeting growing debt-service commitments will also be challenging, and will require the new government to negotiate with “holdout” creditors in order to exit default and potentially access international capital markets. A deal with holdouts would ease fiscal and financing pressures enormously, but securing such a deal will be difficult politically, and in the meantime expenditure cuts will need to be made.

Data on the public finances are available for the first ten months of 2015 and show a dramatic deterioration of the fiscal position. The overall non-financial public-sector deficit doubled as total expenditure grew by 36%, while revenue grew by 29% (barely positive in real, inflation-adjusted terms). The deterioration came despite a deceleration of current transfers to the private sector during the year reflecting the impact of lower oil prices on energy subsidies. But other important expenditure items, including social security expenditure and wages, have not shown any signs of slowdown, while capital transfers to provinces have actually accelerated, driven by the electoral calendar.

Growing debt-service burden

Reflecting election-related spending pressures, the then president, Cristina Fernández de Kirchner, signed a series of decrees over the course of 2015 increasing the budget and providing for the issuance of new debt, including Ps11.1bn (US$804m) in promissory notes falling due in March 2016. These new liabilities add to an already burdensome debt-service schedule in 2016. According to the latest official data, peso-denominated debt-service climbs to Ps99.5bn (US$7.2bn) in 2016, with capital repayment accounting for Ps83.8bn and interest payments Ps15.7bn. A significant portion of this debt is held by government agencies and domestic institutional investors, and is extremely likely to be rolled over. However, US-dollar-denominated debt service is also expected to rise, to nearly US$8bn, of which U$4.3bn reflects capital repayments, mainly to bondholders of restructured debt, as well as some liabilities with multilateral organisations and Paris Club creditors.

With the foreign reserves cushion remaining extremely thin as the government seeks to meet demand for dollars following the removal of controls, financing these dollar amortisations will be tricky. To help to reverse capital flight and ease its financing requirements for 2016, the Macri administration is considering the implementation of a new tax amnesty for repatriated capital. A similar amnesty was introduced by the Fernández government in 2013, but failed to attract dollar inflows amid growing economic distortions and devaluation pressures. The Macri government’s efforts to improve confidence in the policymaking framework (it has already removed foreign-exchange controls and allowed the peso to devalue) could help a fresh tax amnesty to produce better results.

Difficult holdout negotiations on the way

However, the crucial determinant of the sovereign’s access to dollars to finance amortisations will be the effort to exit default. The Fernández government swore never to repay holdout creditors who are seeking payment in full of defaulted debt bought at distressed prices, choosing to fall into technical default rather than negotiate a settlement with these creditors in the aftermath of an unfavourable US court ruling in mid-2014. But this position, and Argentina’s exclusion from international capital markets, has become increasingly untenable amid a drop in the foreign reserves to below US$25bn in recent weeks. A deal with holdouts that allows the sovereign to exit default and reduces risk of attachment of Argentinian assets abroad would pave the way for a return to external debt issuance; an agreement could potentially even involve new credits as part of a settlement. The Macri administration began formal negotiations with the mediator assigned by US courts in late December, with the debt in question (including debts owed to some “me too” creditors who have joined the suit in the past year) estimated at US$10bn.

Negotiations will not be easy: holdouts are aware of Argentina’s desperate need for dollars, while the government will need to get congressional approval to remove the so-called lock law, which currently prevents the executive from offering better terms to holdouts than it offered in the 2005 and 2010 debt restructurings. Although our forecasts assume that a deal will occur at some point in 2016, it is uncertain therefore whether this will happen quickly enough to meet the public sector’s most pressing financing needs. In this context, and also considering the government’s desire to tackle rampant inflation by tightening policy, it is clear that fiscal adjustment will need to take place in 2016.

Fiscal adjustments on the cards

Although the government has emphasised that it will need to take time to review and revise the unrealistic budget for 2016 presented by the Fernández government, it has already given hints of the likely drivers of fiscal adjustment. First, there are plans to raise electricity and natural gas tariffs, which are especially low for households in the metropolitan area of Buenos Aires. This rise aims to reduce energy subsidies, a major driver of public expenditure in the past decade. The government is also expected to review the rise in public employment-and wage costs-of recent years, and seems all but certain to implement some sort of restructuring that involves a reduction in public-sector employment (Mr Macri undertook such a restructuring as mayor of the capital. Buenos Aires).

Both moves will have political costs, and although the president is attempting to emphasise that short-term adjustments will produce long-term benefits in the form of more solid, sustainable growth that boosts employment, they will not be easy to push through. Nevertheless, given the primary importance of reducing inflation and boosting external competitiveness to avoid economic crisis, and of reducing public-sector financial pressures, the Macri administration appears to have little alternative, and appears committed to adjustment. This forms the basis for our forecast that the non-financial public-sector (NFPS) deficit will narrow from an estimated 5.1% of GDP to 3.5% of GDP in 2016. More broadly, it supports our assumption that successful macroeconomic adjustment will pave the way for a recovery in the growth outlook in the medium term.

2. CAN ARGENTINA RISE ABOVE ECONOMIC POPULISM? (The National Interest)
By Robert Kahn and Ted Liu
December 23, 2015

While markets have focused attention on China as the primary source of market risk in 2016, Latin America has provided the more significant headlines in recent weeks. Political turmoil in Brazil has resulted in the resignation of a market-friendly finance minister, and default looms in Venezuela. But perhaps nowhere in Latin America is more at stake than with the economic revolution now underway in Argentina.

As the first non-Peronist president in more than a decade, Mauricio Macri has promised to roll back populist policies of his predecessors and implement market-friendly measures in Argentina. Following his election, his administration moved quickly to lift currency controls, resulting in a substantial devaluation of the official exchange rate, reduced trade taxes, installed a new central bank president, and raised $5 billion in financing from a group of international banks. He has also promised to settle the country’s decade long legal battle with creditors, normalizing the country’s economic relations and turning Argentina outward. At a time when populism is constraining economic reform across the industrial and emerging world, many in markets see Argentina as a bright spot in the region.

Markets have responded quite positively to this big-bang approach. After dropping over 25 percent, the currency has stabilized and a number of banks have raised their recommendation on Argentine assets. Still, the economic challenge is daunting. Diminishing foreign exchange reserves raise uncertainty in Argentina’s ability to defend peso’s value should crises occur. Inflation is rampant, over 25 percent as of October. The expansionist fiscal policy has also created a deficit that private estimates by companies including Goldman Sachs place between 6 and 7 percent. The sharply weaker currency will exacerbate these challenges, at least temporarily, even as it sets the basis for competitiveness in the longer term. Without much room to maneuver in collecting revenue, Macri’s fiscal consolidation will most likely rely on cutting expenditure, including popular energy subsidies instituted by his predecessors. Finding alternative sources of expenditure cut and revenue increases will be a difficult though critical task.

The broader question is whether this time is different, and whether Argentina can break out of its history of populist economic cycles. While all these measures are necessary, they will be painful and likely induce economic contraction in the short term. Accustomed to years of economic populism, the Argentine people will now need to support policies previously deeply unpopular. Meanwhile, his party lacks a majority in the Argentine congress. Historically, investors would have done well from buying Argentina after default and selling on efforts at normalization. There’s a danger of political and social backlash, and perhaps this is not the end of populism for Argentina.

Against a weak global economic backdrop, the country will face challenging fiscal outlook and likely economic contraction. Getting the sequencing and coordination of reforms right will require a delicate balance between economic change and disruption. Macri’s shock therapy is rare in Latin America, and the track record of shock programs (including notably in post-Soviet Eastern Europe) is mixed. A critical question will be his ability to sustain support until reform produces material improvement in growth prospects. Populist pressure could return quickly if the program falters. There is a lot riding on the outcome.

3. NEW POLITICAL REALITY IN POPE’S NATIVE COUNTRY (National Catholic Register)
By Jorge Rouillon
December 23, 2015

NEWS ANALYSIS: Argentinian journalist Jorge Rouillon assesses the triangular relationship between Pope Francis and the country’s incoming and outgoing presidents.

BUENOS AIRES — Mauricio Macri became the new president of Argentina on Dec. 10, succeeding Cristina Fernández de Kirchner ceased holding the political office. The relationship between the two was so tense that they did not meet face to face, as political power was exchanged in Pope Francis’ native country.

In fact, Macri’s accession to the presidency is just the most recent development in the complex triangular relationship among the trio of famous Argentinians.

Macri took the oath in Congress, then went to the Pink House or Government House where the provisional leader of the Senate officially handed to him the emblems of power, with, at his side, the chief justice of Argentina. Several South American presidents and the King of Spain were in attendance.

The Pink House is in Buenos Aires’ Plaza de Mayo, an iconic square that is highly symbolic for Argentina. There the locals met when the first autonomous Argentine government was formed in May of 1810. There a mass of workers demanded the freedom of their arrested political leader Col. Juan Perón in 1945; he was elected president the following year and ruled till he was ousted by the military in 1955. There from 1977 on the Mothers of Plaza de Mayo perseveringly cried out for their “disappeared” children.

And there, in the last decade, a triangular game — of political, symbolic, economic and spiritual power — was played out by Buenos Aires Archbishop Jorge Bergoglio,1998-2013, now Pope Francis; the couple Néstor (president 2003-2007) and Cristina Kirchner (elected in 2007 and 2011), and Mauricio Macri, mayor of Buenos Aires 2007-2015.

Three landmarks face this historic plaza: the Pink House, where the president works, the cathedral and chancery of the Buenos Aires Archdiocese, and city hall. Although separated from each other by only 500 feet, communication among the highest occupants of the three has not been fluid recently. At times a certain distance has been kept and on occasion they’ve even collided.

Néstor Kirchner

When Néstor Kirchner took office the country was returning to stability after the grave economic and social crisis of 2001. Cardinal Bergoglio presided over the thanksgiving ceremony or Te Deum, in the Metropolitan Cathedral on May 25, 2003. In the following year’s Te Deum, the cardinal criticized “those who find themselves so included that they exclude the others, so clear-sighted that they have become blind,” and he reflected on intolerance.

So, Kirchner decided to no longer attend a Te Deum officiated by Cardinal Bergoglio and in the following years he went to similar ceremonies in different provincial cities; his wife continued that tradition when she became president. Néstor Kirchner and the cardinal did not see each other again, except in 2006 at a religious ceremony for three Pallotine priests and two Pallotine seminarians killed in 1976 during the military dictatorship. The archbishop invited the president on that 30th anniversary occasion. That event, coordinated by the Community of Sant’Egidio, also honored Christians killed under Communism, Nazism and other totalitarian regimes, as well as during the Spanish civil war and the Mexican Cristero War.

Néstor Kirchner let it be known at least once that he saw Cardinal Bergoglio as the leader of the opposition. “To consider me an opponent seems to me to be a manifestation of misinformation,” the cardinal told journalists Francesca Ambrogetti and Sergio Rubin in their book-long interview, when Kirchner still lived. And he added that people knew “my effort and that of the whole Church to build bridges, but with dignity.”

Yet more than once signs pasted by government sympathizers reviled the cardinal, and some declarations made by politicians or articles written by journalists close to the government did so too.

Cristina Kirchner

In fact, when Bergoglio became Pope on March 13, 2013, President Cristina Kirchner (whose husband had died of a heart attack in 2010) did not rejoice. At the tail end of a long speech she mentioned in passing that a “Latin American” Pope had been elected, not using the adjective “Argentinian” nor calling him by his name — and yet giving him advice.

Also at that time, government legislators refused to congratulate the new pope, and some prominent voices linked to the government — among them, Estela Carlotto, the head of the Grandmothers of Plaza de Mayo, who nevertheless a month later would travel to St. Peter’s Square — accused him of being a dark figure of the Church.

But a few days later, realizing there was generalized jubilation in the country due to the election of the Argentinian pope — who as archbishop had taken the subway as merely one more passenger and had frequently visited Buenos Aires slums — the government and its allies changed their tune. Presidenta Kirchner, for whom 200 meters seemed too long a distance to go to visit Cardinal Bergoglio, traveled thousands of miles on several occasions to see Pope Francis, who received her pleasantly, without alluding to previous snubs or differences of opinion.

She journeyed seven times to see the Pope. Four audiences took place in Rome and three in Latin America: the latter were informal, non-exclusive meetings on occasion of papal visits, to Brazil for World Youth Day, and to Paraguay and Cuba this year.

Cristina was nervous at her first meeting with Francis, five days after his election. Not so a year later, on March 17, 2014, at a private and friendly Vatican encounter, where they had lunch and talked for four hours.

On Sept. 19, 2014, Francis again received Cristina at the St. Martha residence. And on June 7, 2015, she was received by the Holy Father in the audience room of the Paul VI hall, in a more formal style.

When, in July of 2013, Cristina went, with other heads of state, to the Rio World Youth Day, she took her party’s candidate for first deputy for the Buenos Aires Province, Martín Insaurralde, with her. It was two weeks before the election primaries, and the photograph of both politicians with the Pope was reproduced in thousands of posters. Despite that marketing, Isaurralde lost. On that occasion, Pope Francis, always attentive to details of affection and courtesy, gifted Cristina with little white shoes and socks for her newborn grandson. He had similar warm gestures for the little daughter of Mauricio Macri, when he greeted the Pope that same year at the Vatican.

The Bergoglio-Macri Relationship

The Bergoglio-Macri relationship in Buenos Aires was probably more fluid: Macri often attended the Masses for educators that the cardinal celebrated each year in the cathedral; and more than once they were together at events with students in Plaza de Mayo. Yet there was friction too.

Once, Macri walked past the columns of the cathedral to visit then-Archbishop Bergoglio to try to explain to him why he had not appealed a homosexual civil marriage that had been authorized by a city magistrate when there was, yet, no national law approving it. Macri’s explanation did not satisfy the cardinal, and much less did he like the official version of that meeting made known by city hall. Archbishop Bergoglio said at the time that Macri “gravely failed in his duty as ruler.” (Since 1994 the mayor of the “Autonomous” City of Buenos Aires is called the Chief of Government of the 3-million-strong city; a constitutional amendment made it a first-level district together with 23 provinces. Before then, the mayor was appointed by the Argentinian president.)

In other difficult topics, such as abortion, the position of the movement that has just won the national elections — with 51 % of the vote in a second round, against the candidate of the party of the Kirchners — is not clear, and it respects personal conscience positions. An adviser of Macri, the Ecuadorian pollster Jaime Durán Barba, said the day before the election that any woman who would like to have an abortion could do so, and minimized the value of what the Pope says on the subject — a comment which upset many Macri sympathizers.

Macri then distanced himself from his adviser, expressed his respect for Francis, and pointed out that personally he is pro-life. A few years earlier, in October of 2012, without being clear, he had declared that in a few days the first legal abortion would take place in the Autonomous City of Buenos Aires (CABA). “She is a 32-year-old woman, in a case that has gone through all legal instances,” he declared.

Even though Mrs. Kirchner had dissuaded her legislators from supporting abortion bills that they wished to introduce, in 2012 a Supreme Court decision gave a wide interpretation to the fact that there are abortions that are not punishable by law, favoring the procedure. It was a decision of questionable constitutional validity. Cristina’s last health minister established a protocol for public hospitals that makes abortion easy to obtain, since no violation of the law is denounced. In fact, it is a weak measure that can be easily taken to court because it establishes practical administrative guidelines that cannot have the force of law or go against the current law.

The runoff, held Nov. 22, gave 51% of the votes to Macri and 49% to Daniel Scioli, a moderate Peronist. When Scioli early on that night admitted electoral defeat, he twice asked God to enlighten the winner, Macri. The latter, a graduate of a Christian Brothers’ school, a wealthy businessman, and a former head of the soccer club Boca Juniors, also invoked God that night, asking him to illuminate him in his presidency.

This background of transcendence continues to be present in top-tier leaders in a nation where, over and above social behavior, of corruption, of much irregular conduct, faith continues to have force, and is present in the collective vision and in customs such as multitudinous pilgrimages to Marian shrines, like the Basilica of Our Lady of Luján.

On Dec. 2, the authorities of the bishops’ conference of Argentina, led by Santa Fe Archbishop José María Arancedo, who is very close to the Pope, issued a harsh statement pointing out that “drug trafficking is a national drama” and judging that its spread “is incomprehensible without the complicity of power in all its forms.” That same day, to soften the blow, the conference’s top bishops visited President Kirchner in her office “to transmit a formal greeting for the end of her mandate and anticipating a Christmas greeting.”

The Macri-Kirchner Relationship

How has the relation between the other two sides of the triangle been: Macri and Kirchnerism? Regular to bad, though often they have had to work together in certain policies. The Kirchners at the Pink House and Macri at city hall were opponents and did not have an easy relationship. Crime and traffic delays increased in Buenos Aires City under a certain ambiguity in the role of two police forces: Federal and Metropolitan (created by Macri). Because of the disagreements between the two jurisdictions it took several years to build a short section of the highway that now allows thousands of drivers to exit the city more rapidly.

Also, Macri — who obtained 64% of the votes of the city that he governed — was unable to build many miles of subway lines because the Kirchner government refused to provide security for international loans that Macri would have easily gotten.

Between Nov. 22 (runoff) and Dec. 10 (assumption of office) Cristina Kirchner and Macri met only once, briefly, to deal with formal aspects of the transfer of power. She also instructed her ministers to not pass on information to their successors until Dec. 9. Although that position was softened somewhat and several ministers did meet with their counterparts earlier than that.

Ultimately, Plaza de Mayo continued being a symbol. The presidenta left the house from where she and her late husband ruled before Macri arrived.

The Peronist movement has been in power in 25 of the last 32 years of democratic government. Cambiemos (“Let Us Change”), Macri’s coalition, is attempting to govern differently. Macri named several ministers and civil servants with business and managerial background, but he does not claim to be anti-statist in education, health, airlines, and so forth. He says he wants the government to be efficient and to manage well.

On Dec. 11, Macri and his cabinet participated in an interreligious service at the cathedral. Buenos Aires Archbishop Mario Poli asked Macri to “bow in front of the poor.” Macri began strolling before noon from the Pink House to the cathedral, together with several of his ministers, to take part in the Te Deum or thanksgiving ceremony, presided over by Cardinal Poli. He walked some 250 meters, greeting supporters.

During the liturgical ceremony Poli quoted Pope Francis, and a 1966 poem by famous poet Jorge Luis Borges which says that “nobody is the homeland, but we are all it.”

“To imitate the merciful God is to bow before the poor, looking at them from below, not from above. It is to listen to the voiceless, those who fall between the cracks of the system, God’s little privileged ones. Everything we can do for them we do it for him, and God does not let himself be outdone in generosity,” said the cardinal.

Then Macri committed himself before God to be an instrument of concord, peace and social friendship, and to fight against the afflictions of the most needy. Later on, leaders of other religions spoke.

Papal Visit Speculation

Along with the change of political direction in Argentina, international attention was expected to focus on Argentina in 2016 courtesy of a rumored papal visit. However, the Argentine Catholic news agency AICA confirms that Pope Francis will not travel to the country in 2016. Nobody is expecting him. Sources close to the Pope say this, unofficially. And it has been officially denied that Francis would attend the Eucharistic Congress organized by the Argentine bishops for the bicentennial of the nation, in July, in Tucumán, where in 1816 the declaration of independence was made.

4. THE UNITED STATES: PROGRESS AND PROMISE IN LATIN AMERICA (Stratfor Global Intelligence)
December 23, 2015

Summary

This year has brought many foreign policy challenges for the United States, particularly throughout Eurasia and the Middle East as conflicts in Syria and Ukraine drag on. But Washington has also seen numerous gains closer to home. The United States has normalized its ties with Cuba, Venezuela’s anti-U.S. ruling party was defeated in parliamentary elections, and Latin American economies that are integrated with the United States generally performed better those that are not. As Washington seeks to advance its geopolitical position in the region even further in 2016, it will likely achieve some measure of success, though certain constraints will prevent it from being able to fully shape Latin America around its interests.

Analysis

Several significant developments occurred in Latin America in 2015 that had an important impact, whether direct or indirect, on the United States. Chief among them was the formal normalization of ties between the United States and Cuba on July 1. The two re-established diplomatic relations and put in place plans to eventually reopen their embassies in Havana and Washington. This diplomatic coup marked the culmination of a gradual warming of ties that had been taking place since late 2013, when U.S. President Barack Obama shook hands with his Cuban counterpart, Raul Castro, on the sidelines of Nelson Mandela’s funeral. Bilateral talks then began in 2014 on a variety of issues, including the release of political prisoners, the closure of Guantanamo Bay and the U.S. embargo on Cuba, while restrictions on travel and tourism began to ease.

One of the most important driving forces behind the U.S.-Cuba normalization was the political and economic evolution taking place in nearby Venezuela. Former Venezuelan President Hugo Chavez was one of Cuba’s biggest political and financial backers and a vocal critic of U.S. policies in the region. Under his rule, Venezuela began sending its oil to Cuba in exchange for the employment of tens of thousands of Cuban technical specialists, including security, intelligence and military advisers, as well as doctors and teachers. But Chavez’s death in 2013 and a subsequent, steep decline in global oil prices placed tremendous pressure on Venezuela. Chavez’s successor, President Nicolas Maduro, has struggled to maintain the country’s internal stability and external relationships ever since.

It is likely no coincidence that Cuba, a longtime dependent of Venezuela, began to more actively pursue a relationship with the United States as the fortunes of its primary patron worsened. Meanwhile, the downturn in Venezuela’s outlook has worked in the United States’ favor. Caracas is home to one of the few remaining anti-U.S. governments in Latin America, and its position has declined in the past few years, as shown by the ruling United Socialist Party of Venezuela’s stunning loss to an opposition umbrella group during the country’s Dec. 6 legislative elections. Though the party and Maduro still have a hold on the executive office for now, the embattled president could face a referendum against his rule in mid-2016. At the very least, he will be far more constrained than his openly anti-U.S. predecessor was in his ability to rule Venezuela.

The U.S. gains over the past year have not been limited to Cuba and Venezuela. For example, Argentina’s presidential election in late November replaced the leftist Cristina Fernandez de Kirchner with the pro-business Mauricio Macro. Though not strictly a move toward the United States, Macri’s victory will probably set Argentina on a more cooperative path with its foreign creditors during negotiations over defaulted bonds, and the new leader has already begun to pursue more open trade and investment policies.

Meanwhile, Colombia — a strong U.S. ally — made considerable progress in its negotiations with the leftist Revolutionary Armed Forces of Colombia, better known by its Spanish acronym, FARC. The United States has long supported these talks, though it has had some reservations on specific issues such as granting amnesty to FARC members, some of whom are currently in U.S. jails. All signs point to a formal deal between Bogota and the FARC being wrapped up in 2016, which would increase stability in the country.

https://www.stratfor.com/sites/default/files/styles/stratfor_full/public/main/images/latin-america-trade-blocs.png?itok=gKmGEM1o
More broadly, Latin America’s economic performance over the past year has generally favored countries that are closely integrated with the United States, including Mexico, Central American states and Pacific Alliance members (Colombia, Peru and Chile). More left-leaning countries, such as Venezuela, Brazil, Argentina and Ecuador, have seen negative or negligible growth. These trends upset the political balance in many of these countries and made some Latin American states more willing to cooperate economically with the United States.

Greater Gains Lie Ahead

And so, in Latin America, 2015 proved to be a rewarding year for the United States in many respects, and several of its successes will likely see even further progress in the coming year. That said, not all news will be good news for Washington: Despite the formal normalization of ties with Cuba, the United States is unlikely to fully lift its embargo on the country in 2016 since the move would require congressional approval in an election year. At the same time, the Venezuelan opposition’s latest win will not mean that Caracas suddenly becomes friendly with the United States, though deeper economic cooperation between the two is a possibility if Venezuela’s financial climate continues to deteriorate. Elsewhere in Latin America, major powers such as Brazil and Argentina will seek closer trade ties with the United States to buoy their sluggish economies. Again, though, political constraints and cultural differences will keep this from translating into the full adoption of a U.S.-style open economic system.

Still, in spite of these potential roadblocks, the United States will likely strengthen its already advantageous position in Latin America in 2016, even as it encounters difficulties elsewhere in the world.

Responder Responder a todos Reenviar Más

ARGENTINE UPDATE – Dec 22, 2015

2 enero, 2016

1. MEDIATOR: ARGENTINA DEBT TALKS SET FOR 2016 (The Washington Post)

2. ARGENTINA’S MACRI: FREE VENEZUELA’S POLITICAL PRISONERS (The Washington Post)

3. ARGENTINA’S MACRI: VENEZUELA MUST FREE POLITICAL PRISONERS (Miami Herald)

4. ARGENTINA’S MACRI SPARS WITH VENEZUELA IN FIRST TRIP ABROAD (Bloomberg News)

5. ARGENTINA TO BEGIN ‘SUBSTANTIVE’ HOLDOUT TALKS IN EARLY JANUARY (Bloomberg News)

6. ARGENTINE PESO GAINS AS EXPORTERS BRING DOLLARS AFTER FREE FLOAT (Bloomberg News)

7. ARGENTINA AND BONDHOLDERS TO HOLD JANUARY DEBT TALKS –MEDIATOR (Reuters News)

8. NEW LEADER PLAYS SANTA CLAUS TO POOR ARGENTINES HIT BY INFLATION (Reuters News)

9. ARGENTINA AND ELLIOTT GIVE PEACE A CHANCE IN 2016 (Reuters News Blog)

10. ARGENTINA’S MACRI ASKS FOR VENEZUELA OPPOSITION LEADERS’ FREEDOM (Thomson Reuters Foundation)

11. VENEZUELA ACCUSES ARGENTINA OF MEDDLING IN INTERNAL ISSUES (Fox News)

12. ARGENTINA ROLLS THE DICE WITH BIG BANG ECONOMIC REFORMS; MACRI PUTS PRICE LIBERALIZATION
AHEAD OF MACROECONOMIC STABILITY (MarketWatch)

13. ARGENTINA TO SIT DOWN WITH CREDITORS IN NEW YEAR — MARKET TALK (Dow Jones Institutional News)

14. STATEMENT OF DANIEL A. POLLACK, SPECIAL MASTER IN ARGENTINA DEBT LITIGATION, DECEMBER 21, 2015 (PR Newswire (U.S.))

15. USFWS ISSUES PROPOSED RULE TO APPROVE SUSTAINABLE-USE MANAGEMENT PLAN DEVELOPED BY MANAGEMENT AUTHORITY OF ARGENTINA FOR BLUE-FRONTED AMAZON PARROTS (US Fed News)

16. WILD BIRD CONSERVATION ACT; BLUE-FRONTED AMAZON PARROTS FROM ARGENTINA’S SUSTAINABLE-USE MANAGEMENT PLAN (Department of the Interior Documents)

1. MEDIATOR: ARGENTINA DEBT TALKS SET FOR 2016 (The Washington Post)
December 21, 2015

NEW YORK — Argentina has agreed to negotiate in January 2016 with bondholders seeking $10 billion, a court-appointed mediator said on Monday.

The long-running legal dispute has isolated the South American country and its ailing economy from global credit markets. But Daniel Pollack, who was appointed mediator last year, said in a statement that the settlement talks will begin in the second week of January in New York City.

The announcement came after Pollack met with Argentina’s finance chief Luis Caputo and Mario Quintana, the country’s deputy Cabinet chief. The mediator also has had meetings with bondholders, who include representatives of U.S. hedge funds.

The dispute over Argentina’s debt emerged after the South American nation had its worst economic crisis and defaulted on $100 billion in debt in 2001. Most creditors accepted lower-valued bond swaps in 2005 and 2010. But U.S. hedge funds led by billionaire hedge fund investor Paul Singer’s NML Capital Ltd. refused took Argentina to court and won.

Former Argentine President Cristina Fernandez had long refused to negotiate with the hedge fund creditors, often calling them “vultures.”

The holdouts spent more than a decade litigating for payment in full rather than agreeing to provide Argentina with debt relief. They also sent lawyers around the globe trying to force Argentina to pay its defaulted debts and were able to get a court in Ghana to temporarily seize an Argentine naval training ship. The threat of seizures even forced Fernandez to stop using her presidential plane and instead fly on private jets.

Argentina is facing one of the world’s highest inflation rates and dangerously low foreign reserves. Newly-elected President Mauricio Macri has promised to implement a series of free-market measures to jumpstart the weak economy. He has also vowed to solve the dispute with creditors, which has scared off many would-be investors and return Argentina to international credit markets.

Back to contents

2. ARGENTINA’S MACRI: FREE VENEZUELA’S POLITICAL PRISONERS (The Washington Post)
By Pedro Servin
December 21, 2015

ASUNCION, Paraguay — Argentine President Mauricio Macri asked Venezuela’s government on Monday to free prisoners being held for political reasons.

Macri made his appeal during a meeting of the Mercosur trade bloc in the Paraguayan capital. He recently said he would seek to suspend Venezuela from the South American block over its government’s jailing of opposition leaders. But that’s no longer likely because President Nicolas Maduro’s government respected the results of Venezuela’s Dec. 6 congressional elections.

Mercosur members say that the suspension would only have been in order if Venezuela had not accepted the vote results and broken the group’s so-called “democratic clause,” which says a member country can be sanctioned if it has “broken the democratic order.”

“Venezuela’s government must work toward achieving a true culture of democracy for our region,” Macri said during the meeting in Asuncion. “There’s no room for persecution based on ideological reasons or for thinking differently.”

To emphasize his commitment to the cause, Macri took a picture on the night he was elected president on Nov. 22 with Lilian Tintori, the wife of Leopoldo Lopez, an opposition leader in Venezuela jailed early last year.

Venezuela became a full member of the South American bloc in 2012 in an effort to link the region’s most powerful agricultural and energy markets.

Maduro is absent from the group’s meeting, but Venezuela’s Foreign Minister Delcy Rodriguez defended her country’s socialist government and accused Macri of interfering in Venezuela’s internal affairs.

“Macri is defending the political violence of 2014, when (opposition demonstrators) used bazookas, set the public ministry on fire,” Rodriguez said of protests last year in Venezuela, in which several dozen people died.

In a heated retort, Rodriguez also said Macri had freed criminals who were responsible for torture and murders during Argentina’s 1976-1983 military dictatorship. Argentina’s Foreign Minister Susana Malcorria later said the information provided by her Venezuelan counterpart was wrong. She said Macri has not proposed an amnesty of dictatorship-era human rights abusers or agreed to their release.

During the Mercosur meeting, Paraguay proposed reviving a protocol that would oversee that human rights are respected by its member states. The bloc’s final statement after the meeting encouraged Venezuela to join the other countries that have already signed the agreement.

The economies of the Mercosur members have been badly hit by a slowdown in China which has decreased the Asian giant’s demand for the region’s commodities. The International Monetary Fund expects that Brazil, Latin America’s largest economy, will shrink 3 percent in 2015. The IMF forecasts that Argentina will grow just 0.4 percent this year and contract 0.7 percent in 2016.

“To defend ourselves from the global economic crisis we have to strengthen our internal markets. We can guarantee the region’s economic growth through greater integration,” said Bolivian President Evo Morales.

Argentina has been criticized by Brazil and others for its protectionist policies. But Argentina’s foreign minister said Mercosur members praised her country’s recent decision to lift distortive policies such as heavy foreign exchange controls enacted by the previous administration.

Macri’s government put an end on the unpopular restrictions on buying U.S. dollars last week that made it difficult for businesses to operate and spawned a booming black market for greenbacks.

The decision, combined with the recent lifting of export taxes on many agricultural products, will expose Latin America’s third-largest economy to international market forces in ways not seen in over a decade.

Back to contents

3. ARGENTINA’S MACRI: VENEZUELA MUST FREE POLITICAL PRISONERS (Miami Herald)
By Jim Wyss
December 21, 2015

BOGOTA, COLOMBIA -Argentine President Mauricio Macri used his first appearance abroad since winning election to take Venezuela to task over the quality of its democracy and human rights record.

On Monday, during a Mercosur conference in Asunción, Paraguay, Macri asked for the “swift liberation of all the political prisoners in Venezuela.”

“Within the Mercosur countries there is no room for political persecution for ideological reasons or the illegal detention of those who think differently,” he added.

Venezuelan Foreign Minister Delcy Rodríguez shot back, saying Argentina shouldn’t meddle in sovereign affairs and that the people that Macri considers political prisoners had been detained for inciting violence during national protests in 2014.

She also defended Venezuela’s human rights record.

“There’s not a country in the world that has social programs like Venezuela, despite the media, financial, commercial and economic attacks our people are facing,” she said.

Macri won Argentina’s presidency last month, putting an end to more than a decade of Kirchnerismo, which had allied the nation with Venezuela. Shortly after his election he’d threatened to expel Venezuela from the Mercosur, but softened his position after that nation’s opposition won a landslide congressional victory early this month.

The leaders of Mercosur — Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela — were expected to talk about jump-starting a languishing trade deal with the European Union and increasing ties with the Pacific Alliance countries, which include Chile, Peru, Colombia and Mexico.

But the potential Venezuela-Argentina showdown was generating most of the buzz around the meeting.

Venezuela’s opposition claims more than 70 people are under arrest for political reasons. The government blames many of them (including former presidential candidate Leopoldo López) for inciting violence during national protests over the economy and crime.

The opposition has said that freeing those detainees will be one of its top priorities when the new legislative session begins Jan. 5.

Back to contents

4. ARGENTINA’S MACRI SPARS WITH VENEZUELA IN FIRST TRIP ABROAD (Bloomberg News)
By Charlie Devereux
December 21, 2015

* Mercosur shouldn’t tolerate political persecutions, Macri says
* Venezuelan minister says new president is defending violence

Argentine President Mauricio Macri, in his first trip abroad since assuming office, inserted himself into an international dispute by calling for the release of prisoners in Venezuela that human rights groups say are being held for political reasons.

Speaking at the Mercosur summit in Asuncion, Paraguay, Macri called on Venezuela to respect its citizens’ democratic rights. The move came 11 days after Macri took office and two weeks after Venezuela’s opposition won control of congress for the first time since 1999. Opposition lawmakers have said one of their priorities is freeing prisoners including Leopoldo Lopez, the former mayor of a district of Caracas who they say was unjustly imprisoned.

“I want to expressly call on all the presidents of the members states of Mercosur for the swift liberation of political prisoners in Venezuela,” Macri said. “In Mercosur, we can’t allow political persecution for ideological reasons or illegitimate imprisonment for thinking differently.”

Venezuelan Foreign Minister Delcy Rodriguez, standing in for President Nicolas Maduro, accused Macri of double standards and said he was defending the violent perpetrators of protests last year that left at least 43 people dead.

Venezuela Reaction

“You are meddling in Venezuela’s affairs. You are defending this political violence,” Rodriguez said, holding up a photo of a man wielding a bazooka that she said was an opposition protester.

While the governments of Brazil and Argentina insisted after a meeting between Macri and President Dilma Rousseff in Brasilia on Dec. 4 that their positions on Venezuela are similar, Rousseff on Monday was more cautious than Macri. She didn’t mention political prisoners and, instead, congratulated Maduro for the democratic nature of the legislative elections carried out Dec. 6.

In a closing statement, Mercosur called on all its member states to adhere to a 2005 protocol on human rights. Venezuela is the only member of the bloc that hasn’t yet signed up.

On the economic front, Macri urged Mercosur, whose founding members were Argentina, Brazil, Paraguay and Uruguay, to modernize and accelerate a long-delayed effort to sign a trade deal with the European Union. He also thanked members of the trade bloc for their support in backing Argentina’s claim to the Falkland Islands.

Mercosur’s closing statement made no specific mention of the EU accord, though it did call for a meeting to discuss improving relations with the Pacific Alliance, a trade bloc comprised of Chile, Peru, Colombia and Mexico.

Back to contents

5. ARGENTINA TO BEGIN ‘SUBSTANTIVE’ HOLDOUT TALKS IN EARLY JANUARY (Bloomberg News)
By Carolina Millan
December 21, 2015

* Caputo and Quintana met with mediator in New York on Monday
* Macri has said he intends to reach settlement with creditors

Argentina’s new government is planning to begin “substantive” talks with disgruntled creditors left over from the country’s decade-old debt dispute in early January, according to court-appointed mediator Daniel Pollack.

Pollack said that he met Argentine Finance Secretary Luis Caputo and cabinet-vice chief Mario Quintana for an hour Monday, according to an e-mailed statement.

“The meeting was constructive, covering a range of issues, and it was agreed that they will return to New York City in the second week of January to commence substantive negotiations with the bondholders,” Pollack said in the statement.

Mauricio Macri’s presidency is expected to mark a turning point in the debt saga that has kept Argentina ostracized from international capital markets since 2001 as he seeks a settlement. Macri named former JPMorgan Chase & Co. banker Alfonso Prat-Gay as his finance minister, who in turn tapped the 50-year-old Caputo, a former head of Deutsche Bank AG in Buenos Aires, to oversee the holdout debt issue and review financing options.

“We want the negotiations that are coming to be as quick as possible but also as tough as possible,” Prat-Gay said at his swearing-in ceremony on Dec. 11.

Argentina defaulted for a second time last year after then-President Cristina Fernandez de Kirchner refused to abide by a U.S. court order to repay the creditors.

Back to contents

6. ARGENTINE PESO GAINS AS EXPORTERS BRING DOLLARS AFTER FREE FLOAT (Bloomberg News)
By Carolina Millan
December 21, 2015

* Currency rebounds after plunging as much as 30% on Thursday
* Importers holding off on purchases as they await new rules

Argentina’s peso climbed for a second day after Thursday’s devaluation as grain exporters bring dollars to the country while importers held off on purchases of greenbacks as they awaited the implementation of new rules for accessing the market.

The peso rallied 3.8 percent to 12.76 pesos per dollar at 2:22 p.m. on the MAE electronic platform in Buenos Aires, rebounding from a tumble of as much as 30 percent Thursday after newly elected President Mauricio Macri lifted currency controls as part of a pledge to kick start economic growth by implementing free-market policies.

The peso is gaining because farmers, who had withheld crops in stored bags as they waited for a better exchange rate, have sold their goods while importers aren’t using the market, according to Alejo Costa, the head of research at brokerage Puento Hnos Sociedad de Bolsa SA. This is leading to an oversupply of dollars among traders.

“The flows are limited on the demand side,” Costa said from Buenos Aires. “There isn’t an idea on where the exchange would be if everything was operating freely.”

A new system of automatic approval for imports announced by Macri isn’t yet “well-oiled,” Costa said. In addition, several large importers aren’t participating in the currency markets because they plan to purchase a bond announced by the Finance Ministry late Friday, he said. The sale would give importers a way to access dollars to send overseas.

A lack of dollar demand from individuals who are spending their free cash on Christmas gifts is also skewing the exchange rate, Costa said. Cristina Fernandez de Kirchner’s government had installed monthly limits to how many greenbacks individuals could buy for savings or tourism, leading to the emergence of a black-market for dollars to cope with the pent-up demand.

“The risk now is that this is generating an undershooting of the peso,” Costa said.

Back to contents

7. ARGENTINA AND BONDHOLDERS TO HOLD JANUARY DEBT TALKS –MEDIATOR (Reuters News)
By Tariro Mzezewa, Nate Raymond and Nicolás Misculin
Dec 21, 2015

Dec 21 Argentina’s new government and holdout bondholders are to meet in the second week of January to start “substantive” talks toward settling a more than decade-old sovereign debt dispute, the U.S. court-appointed mediator said on Monday.

The talks would mark a major breakthrough in the dispute, which has caused Argentina to be shut out of the international capital markets and encouraged the prior governments of both Cristina Fernandez and Nestor Kirchner to adopt unorthodox economic policies.

Mauricio Macri, the first non-Peronist president in more than a decade, was sworn into office on Dec. 10. He has moved to start reversing some of the populist policies of the prior governments and said it was a priority to settle the debt issue.

Daniel Pollack, a New York lawyer who is the mediator, said in a statement that he met for about one hour on Monday in his office with Argentina’s newly installed finance secretary, Luis Caputo, and the vice chief of the cabinet, Mario Quintana.

“The meeting was constructive, covering a range of issues, and it was agreed that they will return to New York City in the second week of January to commence substantive negotiations with the Bondholders,” Pollack said in a statement released through his law firm, McCarter & English.
U.S. District Judge Thomas Griesa, who has long overseen the litigation, urged in a hearing last Thursday that Argentina and its creditors resolve the dispute stemming from the $100 billion default on sovereign bonds in early 2002. The case is being heard in the United States because the bonds were issued under U.S. law.

“The government will start negotiating now and once they have the blueprint of a deal it will be brought to Congress. It should all be settled by the middle of the year,” said Senate leader Federico Pinedo, who is a close ally of Macri.

Pinedo said there a chance that Congress will be presented with the outline of a deal as soon as next month.

“It may happen that the president decides to raise it in a special in January or February. That would be doable,” Pinedo said.
Holdout investors led by Elliott Management’s NML Capital Ltd and Aurelius Capital Management have a judgment in their favor of $1.33 billion, plus interest, which has brought their total closer to $2 billion, sources with direct knowledge of the situation say.

A spokesman for Elliott declined to comment on Monday’s statement. A representative for Aurelius was not immediately available.

Monday’s meeting between Caputo and Pollack was the second since the new Argentine government took office.
Caputo, shaking his head, did not answer any questions upon entering Pollack’s office building via a side entrance on Monday. He and Quintana were not seen leaving by a small handful of reporters and photographers who were waiting outside Pollack’s office.

Solving the sovereign debt dispute between Argentina and investors, who rejected two prior restructurings in 2005 and 2010, is seen as critical to getting the Latin American nation’s economy on a more stable growth path.

Pollack has said the total amount of debt held by bondholders with judgments against Argentina is approximately $10 billion. These judgments are based upon the principal of equal treatment, referred to in the bond agreement document as the pari passu clause.

In addition to NML and Aurelius, bondholders who did not participate in prior restructurings filed “me too” claims before Griesa on the same pari passu principle and were recognized by the court in October.

Over the course of the two restructurings, 92 percent of bondholders accepted the terms offered by Argentina, which left them on the whole being paid less than 30 cents on the dollar.

Argentina defaulted again in July 2014 after it refused to honor Griesa’s order to pay NML and Aurelius at the same time it paid these bondholders their principal and interest.

Back to contents

8. NEW LEADER PLAYS SANTA CLAUS TO POOR ARGENTINES HIT BY INFLATION (Reuters News)
By Sarah Marsh and Jorge Otaola
Dec 21, 2015

Argentina’s new President Mauricio Macri said on Monday that the country’s poorest families would receive a cash handout over the Christmas holiday to compensate for an increase in prices after a near 30 percent devaluation of the peso last week.

Since taking office 10 days ago, the free markets advocate has already fulfilled many of his campaign pledges to cut export taxes, lift capital controls and float the peso in a bid to improve Argentina’s competitiveness.

Critics have said Macri is helping big business at the expense of the poor as the measures will immediately benefit exporters operating in the grains powerhouse while fuelling inflation, thereby hurting consumers, especially those with low incomes.

“We have noted some prices of basic goods creeping up, which is why …. we have decided on this contribution of 400 pesos while we work with businesses and unions so that this transition is as orderly possible” Macri said at a news conference.
Around 8 million people will receive the aid by the end of next week. It will cost public coffers around 3.300 billion pesos (US$257 million).

Economists have said Macri’s measures will likely cause Latin America’s third largest economy to contract at the start of next year, as the devaluation fuels inflation already running at around 25 percent and affects private consumption.

But if the government manages to put a lid on price increases, the economy should return to growth by the end of 2016 as exports increase and investment starts flooding in, and expand strongly in 2017.
Alejo Puente, chief strategist at local investment bank Puente, said he expected inflation to accelerate to around 4 percent over the coming months from 1.9 percent monthly now, reaching an annual rate of around 34 percent in February.

The big challenge will be getting Argentina’s mighty unions to agree on hikes more in line with projected full-year inflation than the inflation at the start of the year. Wage talks are scheduled for March. Macri looks set to use a possible reduction in the number of workers paying income tax as a bargaining chip in negotiations.
Macri said the finance ministry was also working on issuing a new bill worth more than 100 pesos, which is the highest denomination note in Argentina and worth 7.8 U.S. dollars.

The peso closed on Monday at 12.85 per dollar. It is now 23.5 percent weaker than before Macri floated it last Thursday, after initially losing nearly 30 percent in value.

Macri’s predecessor Cristina Fernandez used to prop up the peso with central bank reserves.

Back to contents

9. ARGENTINA AND ELLIOTT GIVE PEACE A CHANCE IN 2016 (Reuters News Blog)
By Reynolds Holding and Martin Langfield
December 21, 2015

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Argentina and Elliott Management will finally give peace a chance in 2016. There may never be a better time for Latin America’s third-largest economy and Paul Singer’s hedge fund to end a 14-year standoff over defaulted bonds. New President Mauricio Macri needs access to global credit markets to implement his economic plan, and another defiant Peronist like predecessor Cristina Fernandez could take over if he fails.

An Elliott affiliate has sought repayment of the bonds since Argentina’s 2001 default. It and other investors refused to swap them for discounted debt in 2005 and 2010, and in 2012 won a court order saying creditors that accepted the exchange could not be paid first. Argentina protested mightily, even appealing to the U.S. Supreme Court, but to no avail.

Obstinance has come at a high price. The nation faces double-digit inflation, dwindling foreign reserves and a gaping fiscal deficit. The economy will grow just 0.4 percent this year and shrink 0.7 percent in 2016, the International Monetary Fund forecast in October. A settlement with the holdouts, owed up to $15 billion, could reopen sources of foreign capital and help reboot growth.

A resolution is far less urgent for Elliott, considering its total sovereign debt holdings are less than 2 percent of its more than $27 billion of assets under management. Yet the expense of battling for repayment is mounting, and the firm is eager for a return on its investment.

Fernandez called the holdout bondholders “vultures.” But just before his Dec. 10 inauguration, Macri sent an emissary to meet the court-appointed mediator in the dispute. Though the shape of any deal is unclear, it would surely exceed the less than 30 cents on the dollar offered in the 2010 exchange.

The trick for Macri will be getting any deal through a left-leaning Congress, where he might be able to bargain, among others, with pragmatic Peronists not loyal to Fernandez. If the new president can’t fix the economy, his administration could quickly founder. A far less amenable counterparty might then succeed him – maybe even Fernandez herself, who could try to return in 2019. That alone should persuade Elliott and Argentina that further stalemate is pointless.

Back to contents

10. ARGENTINA’S MACRI ASKS FOR VENEZUELA OPPOSITION LEADERS’ FREEDOM (Thomson Reuters Foundation)
By Daniela Desantis
Dec 21, 2015

ASUNCION, Dec 21 (Reuters) – Argentine President Mauricio Macri started his second week in office by asking regional trade bloc Mercosur to back his appeal for the freedom of jailed opposition leaders in Venezuela.

The center-right Macri won the presidency last month promising free-market solutions to Argentina’s long list of economic problems. He spoke during his election campaign about suspending Venezuela from Mercosur until the jailed politicians are freed.

“I ask for the prompt liberation of political prisoners in Venezuela,” Macri said in addressing a Mercosur meeting on Monday in the outskirts of the Paraguayan capital of Asuncion.

Venezuelan President Nicolas Maduro did not attend the meeting. But Venezuela’s representative in Asuncion, Foreign Minister Delcy Rodriguez, told Macri to back off.

“You are meddling in Venezuela’s affairs,” she said.

This month Venezuela’s opposition took two-thirds of the legislature’s 167 seats in a landslide victory driven by anger over the country’s prolonged economic crisis. It will hold a congressional majority for the first time since Maduro’s mentor, the late socialist leader Hugo Chavez, rose to power in 1999.

The opposition has said the first priority for the new Congress will be an amnesty for the release of jailed opposition leaders, many of whom were jailed for their involvement in anti-government protests in 2014.

The United States, the United Nations, the European Union and others have increasingly pressured Maduro over jailed opposition leaders, particularly hard-liner Leopoldo Lopez who was convicted of fomenting 2014 protests that led to 43 deaths.

During the campaign Macri said Venezuela should be suspended from Mercosur, citing a clause in the bloc’s charter that seeks to punish anti-democratic governments with isolation from the group. He backtracked for the comments after Maduro recognized the opposition’s win in the legislative election.

Macri, meanwhile, faces tough economic challenges at home, including low central bank reserves, double-digit inflation and a sovereign bond default left by Argentina’s previous leader, Cristina Fernandez.

Macri let the Argentine peso float for the first time in years last week. It was the first test of his market-friendly policies after eight years of Fernandez, who believed in strong state control of the economy.

The Argentine currency strengthened 4.08 percent to 12.73 per U.S. dollar on Monday, after the lifting of capital controls on Thursday sparked a devaluation of more than 26.5 percent.

Back to contents

11. VENEZUELA ACCUSES ARGENTINA OF MEDDLING IN INTERNAL ISSUES (Fox News)
December 21, 2015

Argentine President Mauricio Macri’s call here Monday at the start of a Mercosur summit for the release of political prisoners in Venezuela provoked an angry response from the Venezuelan foreign minister

“You are interfering in Venezuelan matters,” said Delci Rodriguez, who is representing President Nicolas Maduro at the Mercosur summit of heads of state.

She also accused Madro of defending “this political violence,” as she showed photos of armed people, including a man with a bazooka, which she said had been taken during the “peaceful demonstrations” in Venezuela in 2014.

“These are the peaceful protests of 2014, for those who have not seen … They burned the Attorney General’s Office, they burned essential public services, they attacked Venezuelans’ access to food, education, 19 universities were burned,” Rodriguez said.

“I want to expressly ask here before the Mercosur member heads of state for the quick release of political prisoners in Venezuela, because in the states that are party (to Mercosur) there can be no place for political persecution for ideological reasons or for different thinking,” Macri said in his opening remarks at the summit.

The leading political prisoner is Leopoldo Lopez, an opposition leader sentenced to 14 years behind bars on charges he instigated the violence that marred the anti-government protests in 2014.

“If we’re going to talk about human rights, we’re going to talk sincerely, we’re on the front rank for this debate,” said the Venezuelan foreign minister in her address.

“I understand that Macri wants to ask for the release of these violent people. I know it because one of his first announcements was to release those responsible for torture in the (1976-1983 Argentine military) dictatorship,” she said.

Macri, the conservative scion of a prominent family of industrialists, took office in Argentina Dec. 10.

Back to contents

12. ARGENTINA ROLLS THE DICE WITH BIG BANG ECONOMIC REFORMS; MACRI PUTS PRICE LIBERALIZATION AHEAD OF MACROECONOMIC STABILITY (MarketWatch)
By Mohamed A. El-Erian
21 December 2015

Last week, the government of newly elected Argentine President Mauricio Macri launched a bold plan to revitalize a bruised and beleaguered economy plagued by high inflation. At a time of daunting crisis conditions, one should not underestimate the importance of this move not just for Argentina, but also for other countries, where leaders are watching closely for clues about how to deal with their own economic woes.

Thanks to years of economic mismanagement, Argentina’s economy has been badly underperforming for decades. Previous governments sought to avoid difficult policy choices and obfuscate fundamental issues by implementing inefficient controls that grossly misallocated resources and undermined Argentina’s ability to generate the foreign-exchange earnings needed to cover its import bill, resulting in domestic shortages.

The recent drop in commodity prices has exacerbated the situation, depleting what little growth dynamism the economy had left, while fueling inflation, deepening poverty, and spreading economic insecurity and financial instability.

In theory, governments in such a situation have five basic options to contain crisis conditions, pending the effects of measures to reinvigorate growth and employment engines.

• Run down the financial reserves and wealth that were accumulated when the economy was doing better.

• Borrow from foreign and domestic lenders.

• Cut public-sector spending directly, while creating incentives to induce lower private-sector expenditure.

• Generate revenues through higher taxes and fees, and earn more from abroad.

• Use the price mechanism to accelerate adjustments throughout the economy, as well as in trade and financial interactions with other countries.

Through careful design and sequencing, these five measures can help not only to deal with immediate economic and financial problems, but also to create the conditions for higher growth, job creation, and financial stability in the longer term. In this manner, they can contain the spread of economic hardship among the population, protect the most vulnerable segments, and put future generations on a better footing.

In practice, however, governments often face complications that undermine effective implementation of these measures. If policy makers are not careful, two problems, in particular, can reinforce each other, potentially pushing the economy over the precipice.

The first problem arises when specific factors, real or perceived, block some options from the adjustment menu. Some measures may already have been exhausted: the country may not have any wealth or reserves left to tap, and there may be a shortage of willing lenders. Other measures, such as fiscal adjustment, must be implemented very carefully, in order to avoid torpedoing the growth objective.

The second problem is timing, with governments struggling to ensure that the measures take effect in the right sequence. Effective implementation requires understanding key features of economic and financial interactions, including not just feedback effects, but also the behavioral aspects of private-sector responses. And all of this must be closely coordinated with the pursuit of supply-side reforms that promote robust, durable, and inclusive growth.

Here is where the Macri government’s approach is an historical exception.

Macri took over the presidency with a bang, launching an audacious — and highly risky — strategy that places aggressive price liberalization and the removal of quantitative controls front and center, ahead of the five measures relating to demand management and financial assistance.

Already, most export taxes and currency controls have been scrapped, income taxes have been cut, and the exchange rate has been freed up, allowing for an immediate 30% depreciation of the peso.

Historically, few governments have pursued this type of sequencing, much less with such fervor; indeed, most governments have hesitated, especially when it comes to full currency liberalization. When governments have taken similar steps, they usually have done so after — or at least alongside — the provision of financial injections and efforts to restrain demand.

The reason is clear: by taking time to set the stage for liberalization, governments hoped to limit the initial spike in price inflation, thereby avoiding a wage-price spiral and curbing capital flight. They worried that, if these problems emerged, they would derail reform measures and erode the public support needed to press on.

To revive the Argentine economy in a durable and inclusive manner, Macri’s government needs to act fast to mobilize sizeable external financial assistance, generate additional domestic resources, and implement deeper structural reforms. If it does, Argentina’s bold economic strategy will become a model for other countries, both now and in the future.

But if the approach falters — whether because of incorrect sequencing or a surge of popular dissatisfaction — other countries will become even more hesitant to lift controls and fully liberalize their currencies. The resulting policy confusion would be bad for everyone.

Project Syndicate; Mohamed A. El-Erian, chief economic adviser at Allianz and a member of its international executive committee, is chairman of President Barack Obama’s Global Development Council. He previously served as CEO and co-chief investment officer of PIMCO.

Back to contents

13. ARGENTINA TO SIT DOWN WITH CREDITORS IN NEW YEAR — MARKET TALK (Dow Jones Institutional News)
21 December 2015

Argentina and its creditors will begin “substantive” negotiations in the second week of January, says Daniel Pollack, the US district court appointee charged with overseeing negotiations with creditors owed $10B in judgments against the country. Bond markets have been expecting an end to the long-standing feud now that a new president is in place in Argentina. Mauricio Macri has been quick to begin unwinding the economic policies of his predecessor, beginning last week with the lifting of capital controls on the peso.


Partnering with Civil Society in the Pursuit of Human Rights !
State Dept Human Rights Officer – Wesley Reisser deservedly awarded
the UNA-NCA Tex Harris Diplomacy Award for 2015

https://shar.es/1G5QOm

Responder Responder a todos Reenviar Más


Seguir

Recibe cada nueva publicación en tu buzón de correo electrónico.

Únete a otros 60 seguidores