Argentina: Record Exports In 2006

Argentina achieved record exports of $46.6 billion last year, according to figures released by the economy ministry. The 15% annual increase in sales led to an increase in the trade surplus to $12.4 billion, despite the 19% rise in imports to $34.2 billion. GDP growth of around 9% helped drive up the demand for capital goods imports, said the ministry.

Argentina Economy Expands 8.5%

Argentina’s economy grew by 8.5% between January and November last year, according to the government. Year on year, the economy expanded by 8.6% in November, driven by construction and industrial production and rose 0.6% on a monthly basis.

Moody’s Improves Ratings Outlook For Argentina Local Government

Moody's Investors Service has changed the rating outlook to positive, from stable, for two local governments in Argentina. The agency said the action was prompted by a similar, recent, outlook change for Argentina’s B2 foreign currency country ceiling for bonds. The governments and ratings affected are: City of Buenos Aires foreign currency bonds rated B2 (global scale) and Aa3.ar (Argentina national scale). Both were assigned a positive outlook; these ratings are constrained by Argentina's foreign currency country ceiling. The outlook for domestic currency bonds rated B1 and Aa2.ar remains stable, said the agency. Meanwhile, Province of Mendoza foreign currency bonds due September 2018 rated B2 (global scale) were assigned a positive outlook; this rating is constrained by Argentina's foreign currency country ceiling. The outlook for the province's domestic currency issuer ratings of B1 (global scale) and Aa3.ar (Argentina national scale), as well as for its foreign currency bonds due September 2018 rated Aa3.ar (Argentina national scale), remains stable.

Moody’s Improves Argentina Outlook

Moody’s Investors Service has raised the outlook on its B3 foreign- and local-currency rating of Argentina’s sovereign bonds from stable to positive. The change was due to “continued improvement in the fiscal accounts that, combined with robust economic growth and substantial accumulation of international reserves, has contributed to strengthening the government's overall credit profile and to reducing external vulnerabilities”, according to Moody’s. An outlook change to positive from stable was also made to Argentina’s B2 foreign currency country ceiling for bonds and to the Caa1 ceiling for foreign currency bank deposits. Unaffected by the rating action is Argentina’s Ba1 local currency bond ceiling, the highest possible rating that could be assigned to obligors and obligations denominated in local currency within the country remains stable, as well as the Ba1 local currency deposit ceiling.

IRSA To Issue $150 Million Bonds

Argentine property conglomerate IRSA is to issue 10 years bonds worth up to $150 million. The money raised will be used to finance expansion of its office-building business, including acquisitions. The bonds have been awarded a local A+ rating from Standard & Poor’s and an A minus national scale rating from Fitch. The issue will be coordinated by Citigroup and Credit Suisse.

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Lavagna Declares As Presidential Candidate

Roberto Lavagna, the former economy minister who led Argentina out of financial meltdown, has officially confirmed he will be contesting the presidency later this year. Lavagna managed the economy from the start of 2002 until he resigned in November 2005 following disagreements with President Néstor Kirchner. He has been hinting at running for the “Casa Rosada” for the past six months but formally confirmed his plans to stand in October’s elections in interviews with the country’s leading dailies on Friday. Lavagna will face either President Kirchner, seeking a second term, or his wife, senator Cristina Fernández de Kirchner.

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Argentina’s Growth Trends Up Again

After a slight slowdown in April, Argentina’s economic growth rate is accelerating once more, up 8% - year on year - in May, according to official figures. In April, the economy registered year-on-year growth of 6.3% after GDP expanded by 8.6% between January and March, compared with the same period in 2005.

Mercosur And Cuba To Sign Agreement

Almost a quarter of all products traded between Mercosur countries and Cuba will soon be free of all duty, following an agreement between the trading bloc and the Caribbean country. The accord, due to be signed today, July 20, at the Mercosur meeting in Córdoba, Argentina, doubles the number of goods currently exchanged, tariff free, between the trading partners. This week, Argentina will be handing the Mercosur chair for the next six months to Brazil.

Argentina’s June Output Exceeds Expectations

Argentina’s industrial output in June was higher than expected at 8.9%, compared with the same month the previous year. Overall output was driven by automotive production and cement sales, the latter reflecting a booming construction sector.

Argentina Doubles Chile’s Gas Price

Argentina has effectively doubled the price of gas it exports to Chile, a result –its says – of the increase in cost it has to pay to Bolivia for the natural resource. At the end of June, Bolivia and Argentina agreed to a price rise of $1.65 per one million British thermal units (BTUs). Argentina says it must pass on this higher cost in the gas it then sells to Chile, which will now have to pay around $2 more for every one million BTUs it buys from its neighbor. Meanwhile, Chile’s president, Michelle Bachelet, has announced that her government is planning to make the country “energy independent” within two years, as a matter of national security.

Kirchner Wins Over Senate

Argentina’s Senate voted early Thursday morning in favor of granting the government “superpowers” over budgetary allocation. The bill proposed by the government allows permanently the executive to reallocate part of the budget without Congressional approval and is necessary, says President Nestor Kirchner, to allow him to govern effectively. In the past, budgetary flexibility was approved on a year-by-year basis. The legislation must now be debated by the lower house. Critics of the president and the government’s proposed legislation say that the move is anti-Constitutional and an attack against the rule of law.

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Argentina Debates Presidential Superpowers

Argentina’s Senate was due to vote yesterday, Wednesday, whether to approve the proposal by president Nestór Kirchner to be granted the power to allocate around $4.5 billion of budgetary funds without approval from the nation’s lawmakers. Greater flexibility in budgetary allocation is not a new concept for Argentina’s governments but Kirchner’s critics are worried about the increasing control being exerted by the president over the country’s institutions and his tendency to govern“by decree”. The president has countered that greater control is needed if anything is to be done and has accused some lawmakers of holding him to ransom and stopping him from governing effectively.

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Sykes Buys Apex

US technology company Sykes has bought Argentine call center operator Apex for $27.4 million. The acquisition will be funded 80% by cash and 20% by stock. Apex is headquartered in the city of Córdoba and has two other call centers in Argentina, serving clients in Argentina, Mexico and the US. Sykes plans to manage its Spanish business from its new base in Argentina.

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More Boden For Venezuela

Venezuela is to buy imminently a further $245 million of Argentina’s Boden 2012 US dollar-denominated debt, ahead of the “bono sur” joint bond to be launched by both nations. In the past 18 months, Argentina has sold a total of $3.5 billion of its dollar debt to Venezuela.

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Argentine Investors Continue To Favor Trust Securities

Domestic investors in Argentina continue to favor financial trusts (fideicomisos financieros) as their instrument of choice. According to financial services company Gainvest, during the first half of the year, $1 billion of the instruments were traded, a year-on-year increase of 100%. Of the total transacted, $712 million corresponded to securitizations with underlying private risk, with most growth seen yet again in the securitization of consumer loans.

June Inflation Round-up

Argentina’s inflation for June is expected to be up at around 0.7%, putting the rate for the first half of the year just above 5%. Prices were driven by a rise in the cost of services, such as rents, education and medical cover. Consumer prices in Chile meantime rose 0.6% last month, more than expected, and took annual inflation to 3.9%. Peru’s inflation headed downwards for a second consecutive month, dropping 0.13% on the back of falling food prices. And prices fell too in Uruguay, declining from 0.63% in May to 0.32% in June. Inflation for the year is now running at 3.88%.

Aluar Joins Merval

Local aluminum producer Aluar was incorporated Monday into Argentina’s Merval Index, with a weighting of 2.49%. Merval is the stock index of Argentina’s leading companies. The index will comprise 12 companies now until the end of September. Steel producer Tenaris continues to hold the greatest weighting, with 31.19%, followed by Petrobras with 12.65% and then Siderar with 11.15%.

Banco Hipotecario To Buy Back Bonds In Default

Argentine Banco Hipotecario has made a tender offer to buy back 10 of its Series Notes of US dollar and euro-denominated debt that remained unrestructured after its debt swap program of two years ago. The Bank will pay 108% of the principal amount of the notes tendered but will not pay any additional accrued but unpaid interest or past due interest on the notes. The tender offer expires on July 31. Citigroup Global Markets is acting as the dealer manager for the offer.

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